PRA published a policy statement (PS4/19) that provides feedback on responses to the consultation paper (CP27/18) on adjusting for the reduction of loss absorbency where own fund instruments are taxed on write down under Solvency II. Appendix 1 to PS4/19 contains the final policy of PRA on updating the supervisory statement (SS3/15) on quality of capital instruments under Solvency II. Appendix 2 to PS4/19 includes a reporting clarification on how the adjustments should be reflected in Solvency II reporting templates. The new policy will come into effect for all instruments issued on or after February 21, 2019.
PS4/19 is relevant to UK insurance firms within the scope of Solvency II, the Society of Lloyd’s, and firms that are part of a Solvency II group that will determine and classify capital instruments under the Solvency II own funds regime, together with their advisers. PRA had received six responses to CP27/18. Respondents made a number of observations and requests for clarification which, along with the PRA’s feedback, have been set out in Chapter 2 of PS4/19. Changes to the draft policy have been set out in Chapter 1 of PS4/19. SS3/15 covers the following topics:
- Prohibition on redemption of instruments within five years of the date of issue
- Liability management and capital reduction
- Principal loss‐absorbency mechanism for tier 1 instruments subject to limitation
- Additional considerations for instruments intended to contribute to group own funds
Effective Date: February 21, 2019
Keywords: Europe, UK, Insurance, Solvency II, Loss Absorbency, CP27/18, SS3/15, PS4/19, Reporting, PRA
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.