BoE on Application of Transitional Power to CRD5 and BRRD2 Legislation
BoE published a statement on the application of the temporary transitional power to CRD5 and BRRD2 derived legislation. The statement confirms that no additional exceptions from the application of the transitional power are expected to be required in relation to onshoring changes to new rules and legislation implementing the fifth Capital Requirements Directive (CRD5) and the revised Banking Resolution and Recovery Directive (BRRD2). BoE has added guidance documents that support the draft transitional directions published as part of the consultation paper CP13/20 on changes before the end of the transition period. The documents provide guidance on transitional direction in relation to the PRA Rulebook, the Capital Requirements Regulation, the Solvency II regime, the Securitization Regulation, and the BRRD.
BoE and PRA have not identified the necessity of any further exceptions to its transitional directions as a result of onshoring amendments to the CRD5 and BRRD2 derived legislation. This means that transitional relief will apply to a small number of “relevant obligations” that are changed by onshoring amendments made to the CRD5 and BRRD2 derived legislation at the end of the transition period. The temporary transitional power, however, cannot apply to changes being made to the primary or secondary legislation to implement a Directive in domestic law. These changes are not onshoring amendments made under section 8 of the Withdrawal Act to which the temporary transitional power can apply. Firms must, therefore, ensure that they are ready to comply with changes to domestic law and PRA rules, which are being made to implement the CRD5 and the BRRD2 to the extent that these are relevant to firms.
In relation to the BRRD2, HM Treasury is making changes to primary legislation that will affect the existing PRA regime for Contractual Recognition of Bail-in and Stay in Resolution rules. Most of the elements of the Statutory Instrument that are relevant to Contractual Recognition of Bail-in and Stay in Resolution rules will come into force on December 28, 2020 but will subsequently cease to have effect from the end of the transition period. As a result of this process, the temporary transitional power will be of limited relevance to BRRD2. PRA has previously communicated that it does not intend to grant transitional relief in respect of Contractual Recognition of Bail-in and Stay in Resolution rules, except in relation to phase two liabilities as referenced in relation to Contractual Recognition of Bail-in rules. PRA intends that this policy outcome will remain the same irrespective of any changes to PRA rules made due to BRRD2.
Related Links
Keywords: Europe, UK, Banking, Insurance, CRD5, BRRD2, Brexit Transition, Temporary Transitional Power, CRR, PRA Rulebook, Solvency II, Contractual Recognition, Bail-In, Resolution Framework, PRA, BoE
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Related Articles
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
UK Authorities Issue Regulatory and Reporting Updates for Banks
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
BaFin Consults on Resolvability Requirements for Resolution Planning
The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.
EBA Consults on Certain Standards and Guidelines Under CRR and BRRD
The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.
OJK Publishes Regulatory Updates for Financial Sector Entities
The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)
EU Publishes Rules on DLT and Data Governance
The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).
EBA Publishes Phase 2 of Reporting Framework 3.2
The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications