PRA Amends the Large Exposures Framework and Reporting Rules for Banks
PRA published the Policy Statement PS14/18 that provides feedback to responses to the consultation paper CP20/17 on changes to the large exposures framework of PRA. It contains updates to the PRA rules on large exposures and regulatory reporting (Appendix 1), Supervisory Statement SS16/13 on large exposures (Appendix 2), and SS34/15 on guidelines for completing regulatory report (Appendix 3). PS14/18 also contains a simplified worked example of the application of the large exposures limits at the level of the UK consolidated group (Appendix 4). The changes to the rules and expectations will take effect from June 29, 2018.
SS16/13 was updated following publication of PS14/18. Specifically, Paragraph 1.1 has been updated to include reference to the resolution exemption. Paragraphs 2.4, 2.5A, 2.11, 3.2A, 3.4, 3.5, 3.8, 3.8A, 3.9 have been updated to provide additional guidance to firms on Core UK group (CUG) and non-core large exposures group (NCLEG) permissions. Section 6 has been added to set out the PRA expectations on the resolution exemption. PS14/18 is relevant to PRA-authorized UK banks, building societies, PRA-designated UK investment firms and their qualifying parent undertakings, which for this purpose comprise financial holding companies and mixed financial holding companies, as well as credit institutions, investment firms, and financial institutions that are subsidiaries of these firms, regardless of their location. SS34/15 on guidelines for completing regulatory reports was updated to remove the requirement to submit data item FSA018.
PRA had received five responses to CP20/17. Respondents supported the proposals to provide additional guidance in SS16/13. Most respondents agreed with the proposal to change the NCLEG limit for firms with both a CUG and an NCLEG permission and the exemption of individual NCLEG exposures at the UK consolidated level. Some respondents sought clarity on certain aspects of these proposals. Respondents also welcomed the proposal to exempt internal minimum requirements for own funds and eligible liabilities (internal MREL) exposures from large exposure limits to facilitate the orderly resolution of banking groups. However, they questioned the process, scope, and the timing of implementation for this exemption.
Related Links
- Policy Statement 14/18
- PRA Rulebook Large Exposures Amendment (Appendix 1)
- SS16/13 (Appendix 2)
- SS34/15 (Appendix 3)
- CP20/17
Effective Date: June 29, 2018
Keywords: Europe, UK, Banking, Large Exposures, PS14/18, SS34/15, SS16/13, Reporting, 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.
David Fihrer
Skilled life insurance actuary; subject matter expert on IFRS 17 and source of earnings
Previous Article
EIOPA Publishes Risk Dashboard for the First Quarter of 2018Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.