PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2
The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA) and the Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020). PS20/21 also contains a new Statement of Policy (SoP) on the supervisory measures and penalties in relation to financial holding companies and an updated SoP on the PRA approach to policy enforcement. The policy presented in PS20/21 will take effect on September 15, 2021.
PRA had proposed, in June 2021, the rules finalized now via the consultation paper CP12/21, to which PRA has received no responses and has thus made no changes. One of the proposals in CP12/21 involved ancillary amendments to the Definition of Capital, Groups, and Notifications Parts of the PRA Rulebook to ensure that, where the application of a consolidated prudential requirement also carries a secondary obligation, that obligation would rest at the appropriate level of application. The amendment to the Groups Part is made as part of the Rules at Annex F of the Rules instrument and will come into force on January 01, 2022, along with the other PRA Rules which implement Basel III. In addition, a new SoP on supervisory measures and penalties in relation to financial holding companies has been published; this SoP sets out the PRA approach to exercising supervisory measures and imposing penalties on UK parent financial holding companies and UK parent mixed financial holding companies (holding companies) pursuant to Part 12B of the Financial Services and Markets Act 2000 (FSMA), covering measures related to the imposition of penalties and the amount of penalties.
The finalized policy is aimed to give effect to the changes in the Capital Requirements Directive V (CRD V), as transposed, and the Capital Requirements Regulation 2 (CRR2), as "onshored," which impose direct responsibility for compliance with the consolidated prudential requirements on approved or designated holding companies. PS20/21 is relevant to financial holding companies, mixed financial holding companies, PRA-authorized banks, and PRA-designated investment firms that are part of a UK consolidation group, controlled by a UK parent financial holding company, or UK parent mixed financial holding company.
Related Links
- Notification
- PRA Rulebook Instrument 2021 (PDF)
- SoP on Measures and Penalties (PDF)
- SoP on Policy Enforcement (PDF)
- CP12/21 (PDF)
Effective Date: September 15, 2021
Keywords: Europe, EU, UK, Banking, CRD5, CRR2, PRA Rulebook, PS20/21, CP12/21, FSMA, Regulatory Capital, Prudential Requirements, Financial Holdings, Statement on Policy, Investment Firms, PRA
Featured Experts

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

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Trevor Howes
IFRS 17 technical advisor; AXIS actuarial modeling system expert; extensive experience in life insurance and life reinsurance, with focus on modeling, valuation, and financial reporting
Previous Article
Nordea Bank and EIB Sign Agreement to Fund Green Projects in NordicsRelated 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.
EP Reaches Agreement on Corporate Sustainability Reporting Directive
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
PRA Consults on Model Risk Management Principles for Banks
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
EC Regulation Amends Standards for Calculating Credit Risk Adjustments
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
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.
EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
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.
BIS Bulletins Discuss DeFi Lending and Aspects of Crypto-Assets
The Bank for International Settlements (BIS) published bulletins on lending in decentralized finance (DeFi) system, on blockchain scalability and fragmentation of crypto, and on extractable value and market manipulation in crypto and decentralized finance.
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.