Featured Product

    PRA to Amend Pre-Issuance Notification Regime for Capital Instruments

    September 09, 2019

    PRA proposed, via CP20/19, amendments to the Pre-Issuance Notification, or PIN, regime applicable to the PRA-authorized Capital Requirements Regulation (CRR) firms. CP20/19 also proposed to amend the supervisory statement SS7/13 that sets out expectations of PRA on the quality of regulatory capital resources that firms are required to hold under Capital Requirements Directive (CRD IV) and CRR. The proposals in CP20/19 reflect the adoption of certain amendments in CRR II and make improvements identified through the PRA experience of assessing the quality of capital instruments. The consultation closes on December 09, 2019, with the proposed implementation date for the proposals being April 01, 2020.

    The Pre-Issuance Notification rules are intended to enhance and maintain the quality of firms’ capital resources by providing PRA with the opportunity to comment on the terms and conditions of proposed capital instruments prior to the issuance of such instruments. PRA considers that the proposed improvements would make the Pre-Issuance Notification regime more risk-sensitive and proportionate, in addition to allowing firms greater flexibility in issuing capital instruments. Appendix 1 to CP20/19 contains the proposed amendments to the Pre-Issuance Notification regime, as set out in the Definition of Capital Part of the PRA Rulebook. The proposed revisions to SS7/13 have been set out in Appendix 2, which is proposed to be renamed "Definition of Capital."

    CRR II amends various aspects of CRR including Article 26(3), which now allows a firm to classify subsequent issuances of an approved Common Equity Tier 1 (CET1) instrument as CET1, subject to meeting certain conditions, including notification to PRA. As a result of these amendments, there is an overlap between the PRA rules in Chapter 7 of the Definition of Capital Part and Article 26(3) of the CRR, as amended. On June 10, 2019, PRA made available a modification by consent as an interim solution to address this overlap ahead of formally consulting on rule changes. PRA proposes to amend the Rulebook to strengthen the governance of CET1 issuance, align the requirements for subsequent issuances of Additional Tier 1 instruments to those for subsequent issuances of CET1 instruments, and remove the requirement to make a pre-issuance notification of Tier 2 instruments. The proposed restructure of Chapter 7 of the Definition of Capital Part is intended to ease understanding of the rules.

    PRA proposes to update SS7/13 to emphasize its preference for simpler CET1 capital structures and to set out its proposed expectations of firms’ senior management in relation to the quality of capital resources. PRA also proposes to clarify two terms introduced by CRR II (that is "substantially the same" and "sufficiently in advance"), to ensure common understanding of notification requirements in relation to subsequent issuances of CET1 and Additional Tier 1 capital instruments. The proposals set out in this consultation paper have been designed in the context of the current UK and EU regulatory framework. PRA has assessed that the proposals will not be affected in the event that the UK leaves the EU with no implementation period in place. In case of an implementation period,  PRA may need to amend the definition of CRR for the purposes of Chapter 7 of the Definition of Capital Part to explicitly include relevant amendments via CRR II.

     

    Related Links

    Comment Due Date: December 09, 2019

    Effective Date: April 01, 2020 (Proposed)

    Keywords: Europe, UK, Banking, CRR, CRD IV, CRR 2, CET 1, Regulatory Capital, PIN Regime, PRA Rulebook, CP 20/19, SS 7/13, Additional Tier 1, Basel III, Brexit, PRA

    Featured Experts
    Related Articles
    News

    EIOPA Report Analyzes Use and Impact of Long-Term Guarantee Measures

    EIOPA submitted—to the European Parliament, the Council of the European Union, and EC—its 2020, fifth, and last annual report on long-term guarantee measures and measures on equity risk.

    December 03, 2020 WebPage Regulatory News
    News

    BIS, SNB, and SIX Announce Successful Completion of CBDC POC

    The BIS Innovation Hub Swiss Centre, SNB, and the financial infrastructure operator SIX announced the successful completion of a joint proof-of-concept (PoC) experiment as part of the Project Helvetia.

    December 03, 2020 WebPage Regulatory News
    News

    EBA Sets Out Treatment of Certain Banking Book Positions Under FRTB

    EBA published the final draft regulatory technical standards for calculation of own funds requirements for market risk, under the standardized and internal model approaches of the Fundamental Review of the Trading Book (FRTB) framework.

    December 03, 2020 WebPage Regulatory News
    News

    EIOPA Consults on Integrating Climate Change into SII Standard Formula

    EIOPA published discussion paper on a methodology for the potential inclusion of climate change in the Solvency II (sometimes also written as SII) standard formula when calculating natural catastrophe underwriting risk.

    December 02, 2020 WebPage Regulatory News
    News

    EU Issues Corrigenda to Investment Firms Directive and Regulation

    EU published, in the Official Journal of the European Union, corrigenda to the Directive and the Regulation on the prudential requirements and supervision of investment firms.

    December 02, 2020 WebPage Regulatory News
    News

    MAS Proposes Changes to Rules Arising from Banking Amendment Act

    MAS proposed amendments to certain regulations, notices, and guidelines arising from the Banking (Amendment) Act 2020.

    December 02, 2020 WebPage Regulatory News
    News

    PRA to Elaborate on Approach to Transposition of CRD5 by Mid-December

    PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.

    November 30, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Aspects of Insurance Act, Solvency Standards & IFRS17

    RBNZ launched consultations on the scope of the Insurance Prudential Supervision Act (IPSA) 2010 and on the associated Insurance Solvency Standards.

    November 30, 2020 WebPage Regulatory News
    News

    SRB Sets Out Work Program for 2021-2023

    SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.

    November 30, 2020 WebPage Regulatory News
    News

    EIOPA Consults on KPIs on Sustainability for Non-Financial Reporting

    EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.

    November 30, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6191