PRA published a policy statement (PS3/20) that provides updates to certain supervisory statements (SS20/15, SS28/15, and SS35/15) and statements of policy (SoP). The proposals on these updates were covered in Chapters 2 and 3 of an occasional consultation paper CP25/19. The proposals in chapter 2 were to update SS20/15 on supervising building societies’ treasury and lending activities (Appendix 1) and Statement of Policy on the methodologies for setting Pillar 2 capital (Appendix 2) to remove references to the London Inter-Bank Offered Rate (LIBOR). In chapter 3, PRA proposed to update certain redundant references and make minor corrections to SS28/15 on strengthening individual accountability in banking (Appendix 3) and to SS35/15 on strengthening individual accountability in insurance (Appendix 4). PRA received no responses to these chapters of CP25/19 and has, therefore, made no changes to the draft policy.
PS3/20 will take effect from its date of publication. The policy set out in PS3/20 has been designed in context of the Brexit and the entry of UK into the transition period, during which time the UK remains subject to European law. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with the EU take effect. PRA has assessed that the proposals would not need to be amended under the EU (Withdrawal) Act 2018 at the end of the transition period.
PRA plans to publish feedback and final policy for chapter 5 of the CP25/19, alongside the final policy for CP21/19 on probability of default and loss given default estimation under credit risk at a later date, as both consultations proposed changes to SS11/13 on the internal ratings-based approaches.
Effective Date: February 24, 2020
Keywords: Europe, UK, Banking, Insurance, Securities, PS 3/20, CP 25/19, Pillar 2, IRB Approach, Credit Risk, LIBOR, PRA
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EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).