PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis. In a statement issued on June 24, 2020, PRA had announced that it does not consider it necessary to extend, to UK credit institutions, the supervisory reporting elements of these EBA guidelines. Therefore, firms are not expected to prepare or transmit the reporting templates within these EBA guidelines to PRA. Additionally, PRA had announced that it was considering how the disclosure elements of the EBA guidelines are to be applied. PRA has now updated its earlier statement clarifying its stance on the application of disclosure elements of the EBA guidelines. As per the statement, PRA sees the benefit in disclosures related to these COVID-19 measures, but it plans to implement the EBA guidelines with a number of modifications and is in the process of finalizing the associated disclosure templates.
PRA considers that there is substantial benefit to disclosure-users from public information about the effects of the measures that UK firms have taken in response to the COVID-19 crisis. Nevertheless, PRA intends to exercise the options available in the EBA guidelines to ensure they are implemented in a proportionate manner. Thus, PRA expects that certain UK banks and building societies should make disclosures similar to those prescribed by the EBA guidelines while incorporating a number of modifications that PRA will set out. The UK banks and building societies that should make these disclosures are those that are, or are controlled by, global or other systemically important institutions designated by PRA in the most recent list and those that have retail deposits equal to or greater than GBP 50 billion on an individual or consolidated basis, PRA expects such firms to make these disclosures for the highest level of consolidation in the UK. PRA is finalizing the design of the disclosure templates, including to ensure they capture the full range of payment moratoria available within the UK, and will share these with relevant firms directly in due course.
PRA realizes that there may be practical difficulties caused by the publication of the EBA guidelines and templates and the details of the PRA implementation of the EBA guidelines, close to the June 30, 2020 disclosure reference date. With this in mind, PRA does not expect that firms include these disclosures in the main Pillar 3 disclosures made for the Tuesday June 30, 2020 reporting period and accepts that firms may need to make disclosures for the Tuesday June 30, 2020 reference date at a later time. However, any such delay to the publication of these additional disclosures should be no longer than necessary.
Keywords: Europe, UK, Banking, COVID-19, Loan Moratorium, Credit Risk, Disclosures, CRR, Basel, EBA, PRA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleEBA Updates List of Correlated Currencies Under CRR
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.