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
Previous ArticleIAIS Publishes Newsletter for February 2020
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.