PRA Finalizes Policy to Support Transposition of BRRD2
PRA published the policy statement PS28/20 that sets out the amended Contractual Recognition of Bail-in Part of the PRA Rulebook and Stay in Resolution Part of the PRA Rulebook. PS28/20 also provides feedback to responses to the consultation paper CP18/20, which sets out proposals to reflect transposition of the revised Bank Recovery and Resolution Directive (BRRD2) into UK legislation.
HM Treasure developed a Statutory Instrument for BRRD2, on December 02, 2020, to deliver the transposition of BRRD2. The instrument affects changes to primary legislation that will impact the existing PRA regime for Contractual Recognition of Bail-in and Stay in Resolution. Most elements of the Statutory Instrument that are relevant to the Contractual Recognition of Bail-in and Stay in Resolution Rules will come into force on December 28, 2020, but will subsequently cease to have effect on December 31, 2020, the day the Brexit transition period ends. In CP18/20, PRA referred to this process as "sunsetting." To reflect these changes, PRA had proposed to:
- Temporarily suspend part of the Contractual Recognition of Bail-in Part of the PRA Rulebook from December 28, 2020
- Reinstate the existing Contractual Recognition of Bail-in Part, with minor amendments, to come into force on implementation period completion day
- Amend the Stay in Resolution Part of the PRA Rulebook from December 28, 2020 until implementation period completion day
- Reintroduce the existing Stay in Resolution Part on implementation period completion day
PRA had received one response to its consultation, with the respondent requesting clarification about proposal to amend the definition of “crisis management measure” in the Stay in Resolution Part of the PRA Rulebook. PRA has considered that request and decided to publish the final policy as consulted on. PS28/20 has been designed in the context of the withdrawal of UK from the European Union and entry into the transition period. During the transition period, UK remains subject to European law and must transpose Directives that become applicable before implementation period completion day. The RA policy that is applicable only during the end of the transition period and will cease to have effect on the implementation completion day will not need to be amended under the EU (Withdrawal) Act 2018 (EUWA). Therefore, no such EUWA changes will be made to the Stay in Resolution Part, which will be in place for four days. PS28/20 will come into effect at the end of the transition period (on implementation period completion day) and will need to be amended under the EUWA. These changes will be made separately through the PRA Rulebook (EU Exit) Instrument 2020.
Related Links
Keywords: Europe, UK, Banking, BRRD2, BRRD2 Transposition, Resolution Framework, Basel, Brexit, Bail-In, PRA Rulebook, PS28/20, CP18/20, HM Treasury, 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
Related Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
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.