PRA published a letter from Mel Beaman, the Director for UK Deposit Takers, to suspend the relevant guidance levels on fixed rate lending limits in the “Specialist Sourcebook” for an initial period of six months, running from August 01, 2020 to January 31, 2021. The letter has been issued, to chief executive officers of non-systemic building societies, in response to a suggestion from the Building Societies Association proposing a six-month suspension of the relevant guidance levels on fixed rate lending limits in the “Specialist Sourcebook.”
The Sourcebook is guidance, not rules, and intended specifically to achieve alignment between risk appetite and risk capability. It is also open to any Society to apply for an extension to any of the guidelines and many of these have been agreed without undue process, including a number of extensions to fixed rate lending risk appetites. Nevertheless, PRA acknowledged the desire of some Societies to be able to react more quickly in the current environment and agree to suspend the relevant guidance levels on fixed rate lending limits in the Sourcebook for an initial period of six months. The only proviso is to limit any self-administered extension to 10% above the lower of the Sourcebook benchmark or the Society’s current limit, and still expect boards to undertake the appropriate risk assessment (as detailed in supervisory statement 20/15) before undertaking any such change. PRA also wants to be informed of any changes the Societies make in this respect, together with sight of the relevant board minutes. PRA will review this COVID-19 related dispensation prior to January 31, 2021.
Keywords: Europe, UK, Banking, COVID-19, Fixed Rate Lending Limits, Specialist Sourcebook, Building Societies, PRA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleFASB to Conduct Post-Implementation Review of CECL Standard
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.