Featured Product

    BoE Announces Decisions from June Financial Policy Committee Meeting

    June 25, 2020

    BoE published the Record of the Financial Policy Committee (FPC), outlining the decisions taken since the May meeting. These decisions included setting of the UK Countercyclical Capital Buffer (CCyB) rate in the second quarter of 2020 and the postponement of certain planned initiatives in response to the ongoing disruption arising from COVID-19. In addition, FPC responded to the 2020 remit and recommendations letter from HM Treasury. The recommendations covered aspects that FPC should regard as relevant to its understanding of the financial stability objective of BoE and the responsibility of FPC in relation to the achievement of this objective.

    The key decisions outlined in the Record include the following:

    • FPC reaffirmed that it was important that banks should have clarity about the period of time it expected the CCyB rate to remain at 0%. It restated its previous judgment that it expected to maintain a UK CCyB rate of 0% until at least March 2021, absent any material change in the outlook. Due to the usual twelve-month implementation lag, any subsequent increase would not be expected to take effect until March 2022 at the earliest. As the outlook evolves, FPC would continue to closely monitor the credit conditions faced by UK households and businesses and stands ready to take further actions deemed appropriate to support UK financial stability.
    • FPC, along with the Prudential Regulation Committee (PRC), decided to postpone any decision on an enduring approach for incorporating IFRS 9 into the capital framework. The Committees agreed that this would also allow them to reflect further feedback from stakeholders on the performance of the provisioning framework in the current stress and to work with colleagues internationally on an enduring treatment in light of it. This decision was based on decision of BCBS, in April 2020, to extend transitional measures for implementation of IFRS 9. 
    • FPC had agreed in December 2019 that it would return to risks from the provision of cloud services to the UK financial sector in 2020. Given how the risks had evolved since the last discussion of FPC, and to focus on dealing with the COVID-19 disruption, FPC has agreed to return to risks from the provision of cloud services in 2021. Staff would continue to monitor the migration of services to the cloud and would bring this issue back to FPC sooner if warranted by developments.

    FPC also received a written update on the progress of LIBOR transition. FPC welcomed the announcement that the UK government intends to amend the existing framework for critical benchmarks in advance of the end of 2021 to give FCA enhanced powers. Additionally, the response letter to HM Treasury mentions that, while recognizing current pressures on firms and considering the responses to the December 2019 Discussion Paper on the climate biennial exploratory scenario, PRC and FPC have agreed to postpone the launch of the climate biennial exploratory scenario exercise until at least mid-2021. This delay reflects a desire to maintain the ambitious scope of the exercise, while giving firms enough time to invest sufficiently in their capabilities to allow them to deliver to a high standard. The next policy meeting of FPC will be on July 29, 2020 and the Record of that meeting will be published on August 06, 2020.

     

    Related Links

    Keywords: Europe, UK, Banking, Securities, CCyB, IFRS 9, COVID-19, Regulatory Capital, LIBOR, Interest Rate Benchmarks, FPC, Climate Change Risk, ESG, FCA, PRA, BoE

    Featured Experts
    Related Articles
    News

    PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK

    PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.

    April 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Standards on Methods of Prudential Consolidation

    EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).

    April 15, 2021 WebPage Regulatory News
    News

    EBA Updates List of Other Systemically Important Institutions in EU

    EBA updated the list of other systemically important institutions (O-SIIs) in EU.

    April 15, 2021 WebPage Regulatory News
    News

    BCBS Report Concludes Basel Risk Categories Can Capture Climate Risks

    BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.

    April 14, 2021 WebPage Regulatory News
    News

    UK Authorities Welcome FSB Review of their Remuneration Regime

    UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.

    April 14, 2021 WebPage Regulatory News
    News

    PRA and FCA Letter on Addressing Risks from Use of Deposit Aggregators

    PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.

    April 14, 2021 WebPage Regulatory News
    News

    MFSA to Amend Banking Act and Rules in Coming Months to Transpose CRD5

    MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.

    April 14, 2021 WebPage Regulatory News
    News

    EC Delegated Regulation on Specialized Lending Exposures Under CRR

    EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.

    April 14, 2021 WebPage Regulatory News
    News

    OSFI Proposes to Enhance Assurance Expectations for Basel Returns

    OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.

    April 13, 2021 WebPage Regulatory News
    News

    ECB Issues Results of Benchmarking Analysis of Recovery Plans of Banks

    ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.

    April 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6858