Featured Product

    FCA Registers Securitization Repositories; PRA Issues 2022 Priorities

    January 12, 2022

    The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022. Meanwhile, the Bank of England (BoE) published a summary of the meeting of the Data Standards Committee, with the participants agreeing that BoE Secretariat will provide a list of firms interviewed for commercial real estate, delivery group proposing that BoE and FCA standardize the counterparty category definitions, and members agreeing to commission a data standards review. In addition, the Prudential Regulatory Authority (PRA) published its 2022 priorities for UK deposit-takers and international banks active in UK. The priorities address factors such as financial resilience, credit and model risks, operational risk and resilience, regulatory reporting, and financial risks arising from climate change.

    PRA plans to continue to engage with deposit-takers to assess the robustness of their credit risk management practices, with four ongoing thematic reviews on wholesale problem debt management, unsecured personal loans, buy-to-let, and IFRS 9 retail models. PRA also plans to continue to focus on the implementation of internal ratings-based (IRB) hybrid mortgage models, IRB roadmap for non-mortgage portfolios, and IRB aspirant firm model applications. Another aim is to increase focus on the effectiveness of model risk management practices and the remediation actions firms are taking. In addition to this, PRA has set out the following common priorities for supervision of deposit-takers and international banks:

    • Financial resilience. PRA will continue to engage with firms to assess the challenges that the structural changes bring to sustainability of business models. BoE will conduct a stress test in 2022, using the Annual Cyclical Scenario framework, to explore the financial resilience of major UK banks and building societies. Assessing the risk culture and the incentive structures in place at firms and aligning remuneration with risk management practices will constitute key priorities of the supervisory work with firms engaged in equity finance and the broader prime brokerage business. In addition, the theme of global regulatory cooperation will continue into 2022.
    • Operational risk and resilience. PRA intends to continue to assess firms’ progress in developing dynamic, effective operational risk and control frameworks to manage the threat of operational disruptions. It expects firms to develop their security controls and capabilities to manage the increasing risk of cyber threats. It also encourages all firms, regardless of size, to test their resilience against such threats. By March 31, 2022, firms are expected to have identified and mapped their important business services, to have set impact tolerances for these business services, and to have initiated a program of scenario testing. PRA will continue to review firms’ programs and their implementation.
    • Financial risks arising from climate change. PRA expects firms to take a forward-looking, strategic, and ambitious approach to managing climate-related financial risks. This approach should be proportionate to the scale of the risks and the complexity of a firm’s operations. From 2022, PRA will incorporate supervision of climate-related financial risks into its core supervisory approach. The assessment of a firm’s management of climate-related financial risks will be included in all relevant elements of the supervisory cycle. PRA also expects firms to refine and innovate to better integrate climate-related financial risk management across their organization. PRA will focus on how firms quantify climate-related risks and incorporate those risks into business strategies, decision-making, and risk-taking. Furthermore, PRA will keep a range of supervisory tools under review for use where it deems progress to be insufficient.
    • Regulatory reporting and data quality. PRA expects the regulatory reporting process to receive no less care, diligence, and rigor than financial reporting. PRA is expanding its program of using skilled person’s reviews to verify the accuracy of regulatory returns, which will continue in 2022. Longer term, joint industry-BoE work on transforming data collection, creates the opportunity for better quality reporting at lower cost and PRA encourages firms to engage with this initiative.
    • Other areas of supervisory focus. Together with FCA, PRA will closely monitor actions to remove any remaining dependencies on LIBOR, including synthetic LIBOR. PRA also expects firms to use the most robust alternative reference rates to LIBOR. BoE and PRA will continue to prioritize resolution going forward. The Resolvability Assessment Framework applies to firms where the preferred resolution strategy is bail-in or partial-transfer. These firms should continue to work to ensure that they achieve, and can continue to maintain, the resolvability outcomes and ensure that they are transparent in their disclosures about the preparations for resolution.

     

    Related Links

    Keywords: Europe, UK, Banking, Securities, Securitization Repositories, Securitization Framework, Data Transformation, Credit Risk, Climate Change Risk, ESG, Operational Risk, LIBOR, Interest Rate Benchmarks, Work Priorities, Reporting, Modeling Risk, FCA, BoE, PRA

    Featured Experts
    Related Articles
    News

    EBA Sets Out Roadmap for 2023, Updates Reporting Framework 3.2

    The European Banking Authority (EBA) published its work program for 2023 as well as the technical package for phase 3 of version 3.2 of its reporting framework.

    September 30, 2022 WebPage Regulatory News
    News

    FED Announces Launch of Climate Scenario Analysis Exercise in 2023

    The Board of Governors of the Federal Reserve System (FED) announced a pilot climate scenario analysis exercise for six largest banks in the U.S.

    September 29, 2022 WebPage Regulatory News
    News

    BIS Paper Studies Impact of Fintech Lending on Small Businesses in US

    The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.

    September 26, 2022 WebPage Regulatory News
    News

    UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks

    The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).

    September 26, 2022 WebPage Regulatory News
    News

    EBA Launches EU-Wide Transparency Exercise in 2022

    The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.

    September 23, 2022 WebPage Regulatory News
    News

    SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks

    The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."

    September 22, 2022 WebPage Regulatory News
    News

    EC Rule Lists Advanced Economies for Market Risk Capital Calculations

    The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.

    September 21, 2022 WebPage Regulatory News
    News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8523