Featured Product

    PRA Finalizes Policy for Non-Performing Exposure Securitizations

    October 21, 2021

    The Prudential Regulation Authority (PRA) published the final Policy Statement PS24/21 that contains the new Non-Performing Exposures Securitization Part of the PRA Rulebook and an updated Supervisory Statement SS10/18 on the general requirements and capital framework with respect to securitizations. The rules set out the approach for the calculation of risk-weighted assets for non-performing exposure securitizations. PS24/21 also provides feedback to the responses to the consultation paper CP10/21 on the implementation of non-performing loan securitizations. The updated SS10/18 as well as the rules for calculating capital requirements on exposures to the non-performing exposure securitizations will take effect from January 01, 2022. These will take effect in conjunction with any consequential amendments to the Capital Requirements Regulation (CRR) by Her Majesty's Treasury.

    Post the consultation feedback, PRA has made one change to the draft rules in CP10/21. The definition for non-performing exposure securitization within the draft rules has been amended such that the words "or any other relevant reason" are excluded from the definition. The definition now reads "NPE securitization means a securitization backed by a pool of non-performing exposures the nominal value of which makes up not less than 90% of the entire pool’s nominal value at the time of origination and at any later time where assets are added to or removed from the underlying pool due to replenishment or restructuring." PRA considers that while amending the definition of NPE securitizations is a small deviation from the standards recommended by the Basel Committee, the amended definition is consistent with the relative standing of the UK and the competitiveness of the UK while also better supporting finance to the real economy. PRA considers that this change will reduce uncertainty, will not have a significant impact on firms and will not have a significantly different impact on mutuals than for other firms. 

    PRA has also made minor changes to SS10/18 to reflect the withdrawal of the United Kingdom from the European Union and to improve clarity of drafting. When making Capital Requirements Regulation (CRR) rules, PRA must consider, and publish an explanation of, the ways in which PRA has had regard to the additional matters and how the additional "have regards" have affected the proposed rules. In CP10/21, PRA had set out this explanation in Chapter 3 and in PS24/21 it has provided an updated explanation of the "have regards" to take into account the consultation responses. PRA will keep this policy under review and welcome additional submission of evidence from firms regarding the nonperforming exposure securitizations. PS24/21 is relevant to UK banks, building societies, PRA-designated investment firms, the UK financial holding companies, and the UK mixed financial holding companies of certain PRA-authorized firms. 

     

    Related Links

    Effective Date: January 01, 2022

    Keywords: Europe, UK, Banking, Non-Performing Exposures, Securitization, SS 10/18, PRA Rulebook, NPLs, Regulatory Capital, Credit Risk, Basel, PRA

    Featured Experts
    Related Articles
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    News

    SEC Extends Comment Period on Climate Risk Disclosures

    The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.

    May 09, 2022 WebPage Regulatory News
    News

    APRA Reduces Committed Liquidity Facility, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.

    May 09, 2022 WebPage Regulatory News
    News

    CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks

    The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.

    May 06, 2022 WebPage Regulatory News
    News

    PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down

    The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.

    May 06, 2022 WebPage Regulatory News
    News

    EBA Updates Standards for 2023 Benchmarking of Internal Approaches

    The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.

    May 06, 2022 WebPage Regulatory News
    News

    EIOPA Responds to Stakeholder Views on Blockchain in Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.

    May 06, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8168