PRA to No Longer Require Certain Firms to Submit FSA047/048 Returns
PRA published a letter confirming that firms are no longer expected to submit the FSA047/048 returns after January 23, 2020. This letter from Sarah Breeden, the Executive Director of UK Deposit Takers Supervision, and David Bailey, the Executive Director of International Banks Supervision, has been addressed to the CFOs. This letter refers only to the enhanced liquidity monitoring by PRA in the lead up to EU withdrawal. Liquidity coverage and other business-as-usual obligations (including firm-specific Pillar 2 guidance) remain unchanged and continue to apply. In line with the published PRA policy, PRA expects firms to continue to prudently manage their liquidity positions on an individual currency basis.
PRA has been monitoring the liquidity positions of the largest and most systemically important banks and investment firms active in the UK against a bespoke risk appetite. This had been designed to reflect the potential for market volatility, should the UK leave the European Union without a Withdrawal Agreement, to impact firms’ liquidity positions. This risk appetite has been based on the firms’ liquidity positions reported through the FSA047/048 returns and expressed as a minimum survival period calculated under different wholesale stress scenarios. The parliamentary stages of the European Union (Withdrawal Agreement) Bill were completed on January 22. Since, as of the date of this letter, the likelihood that the UK would leave the EU without a Withdrawal Agreement appeared very low, PRA no longer considered the bespoke risk appetite to be required.
Following the third extension of Article 50, in October 2019, PRA had asked the firms to continue to submit FSA047/048 returns after December 31, 2019, the date at which it had previously planned to cease their collection, to facilitate the continued monitoring against the bespoke risk appetite. With the change in risk appetite, PRA can confirm that firms are no longer expected to submit these returns after January 23. However, where firms had been asked to continue reporting their FSA047/048 returns after December 31, 2019, PRA asks that they maintain this capability to report, if required, until the end of February 2020. PRA states that firms should continue to assess, manage, and mitigate risks arising from the UK’s withdrawal from the European Union on an ongoing basis. The Authority expects firms to remain mindful of the operational implications of withdrawal, ensuring they are able to maintain good governance and manage their post-Brexit operations appropriately.
Related Link: Letter (PDF)
Keywords: Europe, UK, Banking, Liquidity Risk, Brexit, Withdrawal Agreement, Reporting, FSA 047, FSA 048, Pillar 2, 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.
Karen Moss
Senior practitioner in asset and liability management (ALM) and liquidity risk who assists banking clients in advancing their treasury and balance sheet management objectives
Previous Article
PRA Amends Pillar 2 Capital Framework for BanksNext Article
DNB Publishes Supervisory Priorities for 2020Related Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
NGFS Report Explores Quantification of Climate Risk Differentials
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
EC Publishes Results on Review of Web Accessibility Directive
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
MAS Consults on Adjustment Spreads for Conversion of SOR Contracts
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
