Featured Product

    PRA Publishes Policy Statement Related to Credit Risk Mitigation

    March 13, 2019

    PRA published a policy statement (PS8/19) that contains the final policy in the updated supervisory statement SS17/13 on credit risk mitigation (Appendix 1) as well as the statement SS31/15 on Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process or SREP (Appendix 2). PS8/19 also provides feedback to the responses to the consultation paper (CP6/18) that proposed changes to SS17/13 to clarify expectations about the eligibility of guarantees as unfunded credit protection under credit risk mitigation. The changes to SS17/13 and SS31/15 will be effective from September 13, 2019.

    The consultation  took place from February to May 2018 and PRA had received 31 responses to CP6/18. Respondents generally welcomed the clarification of PRA expectations regarding the eligibility of guarantees as credit risk mitigation. However, several respondents raised concerns about the impact of the proposals on certain types of guarantees. Several respondents also requested further clarification on certain aspects of the proposals. Following the consideration of responses, PRA has made the following three significant changes to the proposals that were the subject of consultation in CP/18:

    • Removal of the proposal around the meaning of pay out in a timely manner
    • New expectation around risks arising from eligible guarantee arrangements
    • New expectation around recognizing any residual risks

    PRA has made other changes to the draft policy which, in the opinion of PRA, are not significant. This includes minor changes to the proposal on legal effectiveness and enforceability of qualifying guarantees and to the proposal around qualifying guarantees being clearly defined and incontrovertible. Further details on these changes have been set out in Chapter 2 of PS8/19. PRA does not consider that the impact is significant, or significantly different, for mutuals. Therefore, the assessment of the impact on mutuals and the cost-benefit analysis in respect of these changes has not been updated. PS8/19 is relevant to all firms bound by the Capital Requirements Regulation (575/2013) or CRR.

     

    Related Links

    Effective Date: September 13, 2019

    Keywords: Europe, UK, Banking, Credit Risk, Credit Risk Mitigation, CRR, PS8/19, CP6/18, ICAAP, SREP, PRA

    Featured Experts
    Related Articles
    News

    BIS and BoE Launch Innovation Hub in London

    BIS and BoE launched the BIS Innovation Hub Center in London, which is the fourth new Innovation Hub Centre to be opened in the past two years.

    June 11, 2021 WebPage Regulatory News
    News

    ESRB Recommends Reciprocation of Certain Macroprudential Measures

    ESRB published recommendations on the reciprocation of macro-prudential measures in Belgium, France, Luxembourg, Norway, and Sweden.

    June 11, 2021 WebPage Regulatory News
    News

    EC Publishes Regulation on Key Aspects of Implementation of SA-CCR

    EC published the Delegated Regulation 2021/931, which supplements the Capital Requirements Regulation (CRR or Regulation 575/2013) with regard to the regulatory technical standards specifying the method for identifying derivative transactions with one or more than one material risk driver.

    June 10, 2021 WebPage Regulatory News
    News

    BCBS Consults on Prudential Treatment of Cryptoasset Exposures

    BCBS is consulting on preliminary proposals for the prudential treatment of cryptoasset exposures of banks.

    June 10, 2021 WebPage Regulatory News
    News

    EBA Revises List of Validation Rules for Reporting

    EBA issued a revised list of validation rules under the implementing technical standards on supervisory reporting.

    June 10, 2021 WebPage Regulatory News
    News

    Banking Authorities and Private Sector Collaborate on Wholesale CBDC

    BIS Innovation Hub, BDF, and SNB announced that, together with a private-sector consortium led by Accenture, they will conduct an experiment using wholesale central bank digital currency (wCBDC) for cross-border settlement.

    June 10, 2021 WebPage Regulatory News
    News

    ESAs Publish Amended Implementing Standards on Mapping of ECAIs

    ESAs published two amended implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs).

    June 10, 2021 WebPage Regulatory News
    News

    EBA Revises Guidelines on Major Incident Reporting Under PSD2

    EBA published revised guidelines on major incident reporting under the Payment Service Directive (PSD2).

    June 10, 2021 WebPage Regulatory News
    News

    BCBS Updates Supporting Information for G-SIB Assessment in June 2021

    BCBS updated the year-end and annual average exchange rates in context of the global systemically important bank (G-SIB) assessment exercise.

    June 10, 2021 WebPage Regulatory News
    News

    HKMA Revises Implementation Timeline for Basel Standards

    HKMA issued a circular informing the industry about its intention to revise the target effective dates for the revised frameworks on credit risk, operational risk, output floor, leverage ratio, market risk, and credit valuation adjustment risk.

    June 10, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7083