PRA Issues Policy Statement on Pillar 2A Capital Rules and Disclosure
PRA published the Policy Statement PS30/17, which provides feedback to the responses to the consultation paper CP12/17 on Pillar 2A capital requirements and disclosure. PRA also sets out, in Appendices, the final amendments to SS31/15 on the Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) and the Statement of Policy on PRA methodologies for setting Pillar 2 capital. The Statement of Policy was updated following updates on PS30/17 and SS31/15. PS30/17 will be effective from January 01, 2018.
In CP12/17, PRA had proposed to:
- Set Pillar 2A capital as a firm-specific capital requirement under section 55M of the Financial Services and Markets Act 2000 (FSMA), rather than as individual guidance
- Update existing capital terminology, in particular to introduce the term “Total Capital Requirement” (TCR) to refer to the amount and quality of capital a firm must maintain to comply with the minimum capital requirements under the Capital Requirements Regulation (575/2013) (CRR) (Pillar1) and the Pillar 2A capital requirement
- Revise PRA’s Pillar 2A disclosure policy, introducing an expectation that firms disclose their TCR or, where a Pillar 2A capital requirement has not yet been set, total Pillar 1 and Pillar 2A guidance
- Provide clarity on when and how individual Pillar 2A capital requirements may be set
As a result of feedback, PRA made a minor change to the draft Supervisory Statement to the TCR disclosure expectation for sub-consolidated ring-fenced bodies (RFBs). This change clarifies that the disclosure expectation for RFBs applies only at the sub-consolidated group level, where one has been set up, and not at subsidiary or individual (solo) level. Minor further corrections to the Supervisory Statement and Statement of Policy have been made to reflect the change of terminology from individual capital guidance (ICG) to TCR, and minor linguistic corrections. The updates are intended to provide additional clarity and transparency to the Pillar2A framework of PRA. PS30/17 is relevant to banks, building societies, and PRA-designated investment firms.
Related Links
Effective Date: January 01, 2018
Keywords: Europe,UK, Banking, Pillar2a,Capital Requirements, Disclosure, PRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Next Article
APRA Announces Stronger Capital Benchmarks for BanksRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.