PRA Proposes Changes to CRR; Basel 3.1 Effective Date Set to Jan 2025
The Bank of England (BoE) confirmed its intent to publish a consultation on the implementation of Basel 3.1 in the fourth quarter of 2022, with the changes expected to become effective on January 01, 2025. Additionally, the Prudential Regulation Authority (PRA) set out a proposal, via the occasional consultation paper CP3/22, to make minor amendments to the UK Technical Standards (UKTS), PRA rules, supervisory statements (SS), Legacy Supervisory Statements (LSS), and a Statement of Policy (SoP).
CP3/22 proposes changes that fall under the Capital Requirements Regulation (CRR) and Solvency II, with the consultation period ending on May 10, 2022. The proposed implementation date for the changes resulting from CP3/22 is expected to be July 28, 2022. Among other changes, CP3/22 consults on amendments to leverage ratio framework, CRR rules, and Pillar 3 Liquidity disclosure template and instructions. The key proposals in CP3/22 are included in the following chapters:
- In Chapter 3, PRA sets out its proposals to remediate a small inconsistency in relation to the leverage ratio framework. The proposal in this chapter would result in amendments to supervisory statement (SS45/15) on UK leverage ratio framework. The draft amendments to SS45/15 are set out in Appendix 2.
- In Chapter 4, PRA proposes a consequential modification to Part 2 (PRA) Binding Technical Standard 1152/2014 on the identification of the geographical location of the relevant credit exposures for calculating institution-specific countercyclical capital buffer rates. In Chapter 4, PRA also proposes changes to reporting requirements and one relevant UK Technical Standard for templates, definitions and IT-solutions following the implementation of Basel standards. PRA also proposes minor formatting corrections to rule references in the PRA rulebook. The proposals would result in consequential amendments to the following parts of the PRA Rulebook: the Reporting (CRR) Part of the PRA Rulebook; the Disclosure (CRR) Part of the PRA Rulebook; and the Regulatory Reporting Part of the PRA Rulebook. The Draft PRA Rulebook: (CRR 2 and other Consequentials) Modification Instrument 2022, along with Draft PRA Standards Instrument: the Technical Standards (Consequential Amendments) Instrument 2022 are set out in Appendix 3.
- In Chapter 5, PRA proposes to delete policy material that has become redundant. The proposal would result in the deletion of SS3/13 on capital requirements for major UK banks and building societies (Appendix 4) and SS29/15 on interim reporting on liquidity coverage requirement (Appendix 6). The proposals would also result in deletion of Legacy SS4/13 on liquidity and capital regime for UK banks and building societies (Appendix 7); Legacy SS6/13 on treatment in the Internal Capital Adequacy Assessment Process (ICAAP) for banks and building societies (Appendix 8), as well as thirteen guidelines and recommendations referred to in the statement of policy on interpretation of EU guidelines and recommendations on approach after the UK’s withdrawal from the EU (Appendix 9).
- In Chapter 6, PRA proposes to make minor consequential amendments to the PRA Rulebook as well as a set of relevant UK Technical Standards, following the introduction of the Investment Firms Prudential Regime (IFPR). Investment Firms Prudential Regime Amendment Instrument 2022 and Draft PRA Standards Instrument: The technical standards (Investment Firms’ Prudential Regime Consequential Amendments) are set out in Appendices 10 and 11, respectively.
- In the Disclosure (CRR) Part of the PRA Rulebook, PRA introduced a new Pillar 3 disclosure template (LIQ 2) for the net stable funding ratio (NSFR). PRA also decided to require firms to disclose NSFR data that are calculated as an average of four-quarter ends, rather than disclosing information on a spot basis. PRA has since identified aspects of the LIQ 2 reporting instructions and templates, which do not make clear enough the PRA’s policy on average disclosures, and proposes to make minor amendments to both the LIQ2 template and the instructions as a result.
- The proposals in this Chapter 7 would result in amendments to Pillar 3 disclosure template (LIQ 2) for the net stable funding ratio and related instructions on template. The draft amendments to Template LIQ 2 and related instructions on template are set out in appendices 12 and 13, respectively.
Related Links
Keywords: Europe, UK, Banking, Insurance, Reporting, PRA Rulebook, CRR, Basel, Leverage Ratio, Disclosures, Pillar 3, ICAAP, IFPR, Investment Firms, NSFR, Basel 3.1, BoE, PRA, Regulatory Capital, CP3 22, Headline
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
FSB Report Examines Impact of Pandemic on Market StructureRelated 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.
