HM Treasury Consults on Approach to Transposition of CRD 5
HM Treasury launched a consultation on the approach of UK to transposition of the Capital Requirements Directive 5 (CRD 5) before the end of the transition period of the withdrawal of UK from EU. As per the consultation paper, comment period on the proposed approach closes on August 19, 2020. CRD 5, which entered into force on June 27, 2019, amends the original 2013 CRD 4 provisions, to update the regulatory framework of EU for capital and liquidity requirements. HM Treasury's implementation of CRD 4 delegated significant responsibility to PRA. Therefore, HM Treasury only intends to legislate via secondary legislation to update the implementation of CRD 4 in UK—to reflect the amendments to CRD 4 that have been made by CRD 5. This includes providing PRA with new or updated powers to implement CRD 5 and to ensure that PRA can update its rulebook as needed.
The government will transpose the EU legislation that applies before the end of 2020 and this includes CRD 5, which must be transposed by December 28, 2020. The consultation only seeks comment on the areas requiring legislation, which include:
- The intention to exempt investment institutions prudentially regulated by FCA from the scope of CRD 5, given the planned introduction of the Investment Firms Prudential Regime by summer 2021
- Various updates to the capital buffers that PRA can require from institutions, to allow the Financial Policy Committee and PRA to maintain their current level of macro-prudential flexibility
- Extension of powers of PRA for consolidated supervision of holding companies and creating a new approval regime for financial holding companies and mixed financial holding companies and granting, to PRA, of an express power to remove members of the management body of institutions and holding companies
- Amendments to the list of entities exempted from CRD 5
Given that PRA is independent of the UK government, with its own statutory objectives, the areas of CRD 5 that are to be implemented in PRA rules will not be included in this consultation. The government does not intend to legislate to prescribe changes to the framework for gender-neutral remuneration policies. As the legislation will form a part of the “retained EU law” at the end of the transition period, the government will also need to exercise powers under section 8 of the European Union (Withdrawal) Act 2018, prior to the end of the transition period, to correct any deficiencies arising in this retained EU law to ensure that UK maintains a functioning regulatory and legal framework following the end of the transition period.
Related Links
Comment Due Date: August 19, 2020
Keywords: Europe, UK, Banking, Basel, Brexit Transition, CRD, IFPR, Macro-Prudential Policy, Transposition of CRD5, PRA, HM Treasury
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.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FSC Korea Announces Plans to Promote Use of Big Data in FinanceRelated Articles
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
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.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
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.
UK Authorities Issue Regulatory and Reporting Updates for Banks
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.
BaFin Consults on Resolvability Requirements for Resolution Planning
The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.
EBA Consults on Certain Standards and Guidelines Under CRR and BRRD
The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.
OJK Publishes Regulatory Updates for Financial Sector Entities
The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)
EU Publishes Rules on DLT and Data Governance
The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).
EBA Publishes Phase 2 of Reporting Framework 3.2
The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications
