Featured Product

    PRA Revises Approach to Reporting and Disclosures Amid COVID-19 Crisis

    June 26, 2020

    PRA published a statement that outlines its revised approach to regulatory reporting and Pillar 3 disclosures for banks in response to the COVID-19 outbreak. The statement highlights that PRA will expect on-time submission for future regulatory reporting—that is, for submission of returns with deadline of June onward. Going forward, PRA expects that the publication timeline for Pillar 3 disclosures should not be affected by COVID-19 in most cases. However, PRA will continue to take a flexible approach in its expectations of firms’ publication timeline for Pillar 3 disclosures (compared to the publication date of the financial statements). Additionally, PRA published an update to its statement on the regulatory treatment of the UK Coronavirus Business Interruption Loan Scheme (CBILS) and the UK Coronavirus Large Business Interruption Loan Scheme (CLBILS) to include clarifications on the application of credit risk approaches for firms.

    PRA has provided following clarifications on the application of credit risk approaches for firms:

    • Clarification for firms using the standardized approach for exposures to the obligor. The portion of an exposure benefiting from the protection of a guarantee provided by the Secretary of State under the schemes is assigned the relevant sovereign risk-weight prescribed by the standardized approach. The residual part of the exposure—that is, the portion that does not benefit from the protection of a guarantee provided under these schemes—is assigned the standardized approach risk-weight that would apply if the exposure were not guaranteed.
    • Clarification for firms using the internal ratings-based (IRB) approach for exposures to the obligor and the standardized approach for exposures to the guarantor (under permanent partial use or rollout). The portion of an exposure benefiting from the protection of a guarantee provided by the Secretary of State under the schemes is assigned the relevant sovereign risk weight prescribed by the standardized approach. The residual part of the exposure is risk-weighted according to the relevant approved IRB approach as if the exposure were not guaranteed.
    • Clarification for firms using the IRB approach for exposures to the obligor and the IRB approach for exposures to the guarantor. Firms should adopt an approach to reflect the effect of the guarantee provided by the Secretary of State that is consistent with their approved IRB models and their IRB permissions.

    Coming back to the statement on regulatory reporting, PRA, in April 2020, had issued a statement setting out that it would accept delayed submission of certain regulatory returns with deadlines on or before May 31, 2020. That statement noted that PRA would consider in due course the treatment of those returns with a deadline of June onward. Having considered that firms have now had time to adjust to new ways of working and the prudential benefits to supervisors of the timely submission of regulatory data, PRA has concluded that it would not be appropriate to continue to apply the reporting measures set out in the statement to future submissions. Firms experiencing difficulty with timely submission should contact their usual supervisor to discuss. 

     

    Related Links

    Keywords: Europe, UK, Banking, COVID-19, Reporting, Disclosures, Basel, Credit Risk, CBILS, CLBILS, Loan Guarantee, Standardized Approach, IRB Approach, PRA

    Featured Experts
    Related Articles
    News

    Regulators Fine Goldman Sachs for Risk Management Failures

    FCA and PRA in the UK, FED in the US, and the authorities in Singapore have fined Goldman Sachs for risk management failures in connection with the 1Malaysia Development Berhad (1MDB).

    October 23, 2020 WebPage Regulatory News
    News

    Canada Hosts International Conference of Banking Supervisors

    BCBS announced that OSFI and the Bank of Canada hosted the 21st International Conference of Banking Supervisors (ICBS) virtually on October 19-22, 2020.

    October 22, 2020 WebPage Regulatory News
    News

    FCA Proposes More Measures to Help Insurance Customers Amid Crisis

    FCA proposed guidance on how firms should continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19, after October 31, 2020.

    October 21, 2020 WebPage Regulatory News
    News

    EBA Issues Opinion to Address Risk Stemming from Legacy Instruments

    EBA issued an opinion on prudential treatment of the legacy instruments as the grandfathering period nears an end on December 31, 2021.

    October 21, 2020 WebPage Regulatory News
    News

    ESRB Publishes Non-Bank Financial Intermediation Risk Monitor for 2020

    ESRB published the fifth issue of the EU Non-bank Financial Intermediation Risk Monitor 2020 (NBFI Monitor).

    October 21, 2020 WebPage Regulatory News
    News

    HM Treasury Publishes Policy Statement Amending Benchmarks Regulation

    HM Treasury announced that the new Financial Services Bill has been introduced in the Parliament.

    October 21, 2020 WebPage Regulatory News
    News

    APRA Initiates Action Against a Bank for Liquidity Compliance Breach

    APRA announced that it has increased the minimum liquidity requirement of Bendigo and Adelaide Bank for failing to comply with the prudential standard on liquidity.

    October 21, 2020 WebPage Regulatory News
    News

    PRA Consults on Implementation of Certain Provisions of CRD5 and CRR2

    PRA published the consultation paper CP17/20 to propose changes to certain rules, supervisory statements, and statements of policy to implement elements of the Capital Requirements Directive (CRD5).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule to Reduce Impact of Large Bank Failures

    US Agencies adopted a final rule that applies to advanced approaches banking organizations and aims to reduce interconnectedness in the financial system as well as to reduce contagion risks associated with the failure of a global systemically important bank (G-SIB).

    October 20, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Rule on Net Stable Funding Ratio Requirements

    US Agencies (FDIC, FED, and OCC) adopted a final rule that implements the net stable funding ratio (NSFR) for certain large banking organizations.

    October 20, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6004