PRA Proposes to Update the Policy on Approach to Systemic Risk Buffer

Along with the SRB framework, the Statement of Policy forms the Bank’s broader framework for SRB. PRA is proposing to make three minor amendments aimed at clarifying the Statement of Policy and bringing it up-to-date with the recent policy developments: 

• Remove the statement that the PRA approach to reviewing the Statement of Policy every two years is mandated by the SRB regulations
• Replace references to CP25/16 with the corresponding PRA Statement of Policy on its methodologies for setting Pillar 2 capital following publication of the final policy
• Include references to the supervisory statement SS45/15 titled "The UK leverage ratio framework," which was recently updated with respect to the application of an additional leverage ratio buffer (ALRB) rate to SRB institutions

SRB is intended to increase the capacity of the UK domestic systemically important ring-fenced bodies and building societies to absorb stresses, thus increasing their resilience relative to the system and promoting the safety and soundness of the PRA-regulated firms. In line with the recommendations of the Independent Commission on Banking, the UK legislation implementing the SRB Regulations requires the Financial Policy Committee (FPC) to establish a framework for an SRB that applies to large building societies and ring-fenced bodies. The SRB Regulations require PRA to apply that framework from January 01, 2019. FPC published "The Financial Policy Committee’s framework for the systemic risk buffer" (the SRB framework) in May 2016.

Related Links

• Notification
• CP29/18

Comment Due Date: December 06, 2018

Keywords: Europe, UK, Banking, Systemic Risk Buffer, SRB Regulation, CP29/18, Ring Fencing, PRA