General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
September 25, 2017

At the BoE's Financial Policy Committee (FPC) meeting, which was held on September 20, 2017, the key developments included review of developments since its June 21 meeting, particularly assessment of the outlook of financial stability risks, FPC's recommendation to the PRA to set the minimum leverage requirement at 3.25%, and discussion on the implementation of International Financial Reporting Standard (IFRS) 9 on January 01, 2018. It was decided that FPC will take steps to ensure that the interaction of IFRS 9 accounting with its annual stress test does not result in a de facto increase in capital requirements. The United Kingdom has supported EU authorities’ proposals that transitional arrangements should be used to smooth the impact of introducing IFRS 9. Final arrangements are expected to be decided later this year.

FPC confirmed its recommendation to the PRA to set the minimum leverage requirement at 3.25%, with central bank reserves removed from the leverage exposure measure. The PRA will shortly be publishing its rules on how this change will be implemented. FPC also continued to review the risks of disruption to financial services arising from Brexit, with the aim to take action to mitigate these risks. FPC is considering risks arising from discontinuity of cross-border contracts, particularly insurance and derivatives; restrictions on sharing of personal data between the EU and the UK; and restrictions after Brexit on cross-border banking, central clearing, and asset management service provision. Where it would be complex and difficult for firms to mitigate the risks fully, such as the continuity of contracts between the UK and the EU27 counterparties, FPC is exploring other mitigating actions. A fully effective mitigant to these risks will require some form of bilateral agreement between the EU and the UK.

 

Another highlight was the discussion on the continued resilience of the major banks in the UK. The aggregate common equity tier 1 capital ratio of major banks has increased to 14.3% of risk-weighted assets and they now have a capital ratio that is more than three times higher than it was ten years ago. The summary of the meeting highlights that FPC’s judgment of the necessary level of loss-absorbing capacity for the banking system is invariant to accounting standards. The change in accounting standard will not, by itself, change the cumulative losses banks incur during any given stress episode. FPC's judgment of the appropriate level of capital for the banking system was calibrated such that banks could absorb the cumulative losses in historical stress episodes and continue to provide essential services to the real economy, regardless of the timing of when those losses were actually measured.

 

Related Link: Press Release and FPC Statement (PDF)

Keywords: Europe, UK, Banking, Insurance, Financial Stability, Brexit, IFRS 9, Leverage Ratio, FPC, BoE

Related Insights
News

BCBS Finds Liquidity Risk Management Principles Remain Fit for Purpose

BCBS completed a review of its 2008 Principles for sound liquidity risk management and supervision. The review confirmed that the principles remain fit for purpose.

January 17, 2019 WebPage Regulatory News
News

HKMA Urges Local Banks to Start Working on FRTB Implementation

HKMA announced that it plans to issue a consultation paper on the new market risk standard in the second quarter of 2019.

January 17, 2019 WebPage Regulatory News
News

EBA Finalizes Guidelines for High-Risk Exposures Under CRR

EBA published the final guidelines on the specification of types of exposures to be associated with high risk under the Capital Requirements Regulation (CRR). The guidelines are intended to facilitate a higher degree of comparability in terms of the current practices in identifying high-risk exposures.

January 17, 2019 WebPage Regulatory News
News

MAS Guidelines on Risk Mitigation Requirements for OTC Derivatives

MAS published guidelines on risk mitigation requirements for non-centrally cleared over-the-counter (OTC) derivatives contracts.

January 17, 2019 WebPage Regulatory News
News

BoE Publishes the Schedule for Statistical Reporting for 2019

BoE published the updated schedule for statistical reporting for 2019. The reporting institutions use the online statistical data application (OSCA) to submit statistical data to BoE.

January 16, 2019 WebPage Regulatory News
News

PRA Delays Final Direction on Reporting of Private Securitizations

PRA and FCA have delayed the issuance of final direction, including the final template, on reporting of private securitizations, from January 15, 2019 to the end of January 2019.

January 15, 2019 WebPage Regulatory News
News

SNB Updates Forms on Supervisory Reporting for Banks

SNB published Version 1.7 of reporting forms (AUR_U, AUR_UEA, AUR_UES, AURH_U, AUR_K, AUR_KEA, and AURH_K) and the related documentation for supervisory reporting on an individual and consolidated basis.

January 15, 2019 WebPage Regulatory News
News

BCBS Finalizes Market Risk Capital Framework and Work Program for 2019

BCBS published the final framework for market risk capital requirements and its work program for 2019. Also published was an explanatory note to provide a non-technical description of the overall market risk framework, the changes that have been incorporated into in this version of the framework and impact of the framework.

January 14, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for January 2019

EBA published answers to 13 questions under the Single Rulebook question and answer (Q&A) updates for this week.

January 11, 2019 WebPage Regulatory News
News

PRA Proposes to Amend Supervisory Statement on Credit Risk Mitigation

PRA published the consultation paper CP1/19 that is proposing changes to the supervisory statement (SS17/13) on credit risk mitigation.

January 10, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2473