Featured Product

    PRA Updates the Policy on Approach to Systemic Risk Buffer

    December 13, 2018

    PRA published the final Statement of Policy on the PRA approach to the implementation of the systemic risk buffer (SRB), as proposed in the consultation paper CP29/18. As part of this update, PRA also updated the policy statement PS32/18, which is relevant to ring-fenced bodies within the meaning of section 142A of the Financial Services and Markets Act 2000 and large building societies that hold more than GBP 25 billion in deposits (where one or more of the account holders is a small business) and shares (excluding deferred shares)—jointly known as the "SRB institutions." The effective date for these changes is December 13, 2018.

    In CP29/18, PRA had proposed to do the following:

    • Remove the statement that PRA’s approach to reviewing the Statement of Policy every two years is mandated by the SRB regulations
    • Replace references to CP25/16 with the corresponding PRA Statement of Policy on its methodologies for setting Pillar 2 capital, following publication of the final policy
    • Include references to Supervisory Statement 45/15 titled ‘The UK leverage ratio framework," which was recently updated with respect to the application of an additional leverage ratio buffer (ALRB) rate to SRB institutions

    PRA had received no responses to the consultation. Therefore, PRA has made no changes to the draft policy consulted on in the consultation paper. However, PRA changed footnote 11 in the Statement of Policy to update references to the Delegated Regulation (EU) No 1222/2014. The Statement of Policy was also updated to simplify the formatting and aid readability, including sequential numbering of footnotes, the updating of hyperlinks to reflect the location of materials on the BoE website, and to make hyperlinks more easily identifiable. SRB is intended to increase the capacity of the UK domestic systemically important ring-fenced bodies and building societies to absorb stresses, thus increasing their resilience relative to the system and promoting the safety and soundness of the PRA-regulated firms. SRB is a firm-specific buffer that is based on a firm’s worldwide risk-weighted exposures and each firm will be required to ensure that it is met solely with the common equity tier 1 capital.

    In line with the recommendations of the Independent Commission on Banking, the UK legislation implementing the SRB Regulations requires the Financial Policy Committee (FPC) to establish a framework for an SRB that applies to large building societies and ring-fenced bodies. The SRB Regulations require PRA to apply that framework from January 01, 2019. FPC published "The Financial Policy Committee’s framework for the systemic risk buffer" (the SRB framework) in May 2016. Alongside the FPC framework, this Statement of Policy will form BoE's broader framework for SRB. PRA will review this Statement of Policy at least every two years.

     

    Related Links

    Effective Date: December 13, 2018

    Keywords: Europe, UK, Banking, Systemic Risk Buffer, SRB Regulation, Ring Fencing, PS32/18, CRR/CRD, PRA

    Featured Experts
    Related Articles
    News

    APRA Plans to Assess Climate Risks and Develop Prudential Guidance

    APRA published a letter that outlines its plans to undertake a climate change vulnerability assessment and develop a prudential practice guide focused on climate-related financial risks.

    February 24, 2020 WebPage Regulatory News
    News

    FDIC Publishes Guide to Help with Third-Party Risk Management

    The technology lab of FDIC (FDiTech) published a new guide to help financial technology, or fintech, companies and others partner with banks.

    February 24, 2020 WebPage Regulatory News
    News

    APRA to Transition to Annual Stress Testing of Large Banks in 2020

    APRA published key findings of the stress testing assessment conducted on authorized deposit-taking institutions.

    February 21, 2020 WebPage Regulatory News
    News

    IAIS Statement on Monitoring Period of Insurance Capital Standard

    IAIS published a statement from its Secretary General Jonathan Dixon on the Insurance Capital Standard (ICS) monitoring period.

    February 21, 2020 WebPage Regulatory News
    News

    EC Consults on Review of Non-Financial Reporting Directive

    EC is launched a consultation on the review of the Non-Financial Reporting Directive or NFRD (Directive 2014/95/EU, as part of its strategy to strengthen sustainable investment in Europe.

    February 20, 2020 WebPage Regulatory News
    News

    EIOPA Consults on Standards for Supervisory Reporting Under PEPP Rule

    EIOPA is consulting on the implementing technical standards for supervisory reporting and cooperation, as mandated by the Pan-European Personal Pension Product (PEPP) Regulation (Regulation 2019/1238).

    February 20, 2020 WebPage Regulatory News
    News

    EIOPA Publishes Statement on Adverse Interest Rate Environment

    EIOPA published a supervisory statement on the impact of the ultra-low or negative interest rate environment on the insurance sector in EU.

    February 20, 2020 WebPage Regulatory News
    News

    ECB Report on Transfer of Liquidity from EONIA Products to €STR

    ECB published a report on the transfer of liquidity from the cash and derivatives products of the Euro Overnight Index Average (EONIA) to the Euro Short-Term Rate (€STR).

    February 19, 2020 WebPage Regulatory News
    News

    ESRB Publishes Report on Systemic Cyberattacks

    ESRB published a report that explores systemic implications of cyber incidents, such as cyberattacks.

    February 19, 2020 WebPage Regulatory News
    News

    FSB Chair Sets Out Key Deliverables for G20 Presidency of Saudi Arabia

    FSB published a letter from the Chair Randal K. Quarles to the G20 finance ministers and Central Bank governors ahead of the meetings in Riyadh on February 22-23.

    February 19, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 4720