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    PRA Consults on Changes to the Large Exposures Framework

    October 04, 2017

    The PRA published a consultation paper CP20/17 that sets out its proposed changes and clarifications to requirements related to intragroup transactions in the large exposures Part of the PRA Rulebook. As part of this consultation, the PRA also proposes to update Supervisory Statement SS16/13 on large exposures, to reflect the updates to the PRA expectations. This consultation closes on January 04, 2018.

    The PRA is proposing the following regarding intragroup permissions:

    • Enhanced guidance on the application of criteria for core UK group (CUG) and non-core large exposures group (NCLEG) permissions
    • Changing the NCLEG calibration basis for firms that have both a CUG and an NCLEG permission
    • Changing how the NCLEG permission applies at the UK consolidated group level

    Due to minimum requirements of own funds and eligible liabilities (MREL), the PRA is also proposing to allow firms to apply to exempt from large exposures limit, exposures identified, and reported as internal MREL. CP20/17 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. The PRA has reviewed the intragroup large exposures framework as part of its overall review of the groups policy framework. The details of this review and the proposed guiding principles are included in CP19/17 “Groups policy and double leverage.” The proposals aim to simplify the overall intragroup large exposures framework, improve the consistency of the process of granting intragroup permissions, and facilitate the orderly resolution of banking groups.

     

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    Comment Due Date: January 04, 2018

    Keywords: Europe, UK, Banking, Large Exposures, CP20/17, SS16/13, PRA

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