Featured Product

    PRA Announces Additional Measures in Response to COVID-19 Outbreak

    April 09, 2020

    The Financial Policy Committee (FPC) of BoE met to review developments in the financial sector amid the COVID-19 crisis. PRA, with support from FPC, decided to maintain firms' systemic risk buffer at the rates set in December 2019, in response to the economic shock from COVID-19 pandemic. The systemic risk buffer rates will be reassessed in December 2021. The decision is relevant only to ring-fenced banks (RFBs) and large building societies subject to the systemic risk buffer. Additionally, in response to the COVID-19 outbreak, PRA published a modification by consent of the calculation of the total exposure measure of the leverage ratio. PRA also updated its statement on COVID-19 regulatory reporting and disclosure amendments to extend the deadline of two additional returns—credit risk return under the supervisory benchmarking exercise and high earners report (REP005).

    FPC Statement

    FPC usually assesses risks to UK financial stability and the resilience of the UK financial system and publishes that assessment in biannual Financial Stability Reports. Given the material developments in recent weeks, FPC decided to supplement its normal practice with an additional interim Financial Stability Report. That interim Report will be published on May 07, 2020. The interim Report will contain an assessment of the risks to UK financial stability and the resilience of the UK financial system to ongoing economic and market shocks. The assessment will, among others, draw on evidence from recent weeks and reflect the unprecedented actions taken to help alleviate the severe cash flow problems facing households and corporates over this period. The Committee also emphasized that, with tier 1 capital levels more than three times higher than at the start of the global financial crisis, major UK banks have shown, in repeated stress tests, their ability to absorb very severe market shocks by using their capital buffers.

    Decision on Systemic Risk Buffer Rates

    In December 2021, PRA expects to set an systemic risk buffer rate consistent with its statement of policy and the FPC framework. In doing so, PRA will take account of the evolution in firms’ balance sheets in response to COVID-19 and the extent to which they are temporarily inflated. Any decision on systemic risk buffer rates taken in December 2021 would take effect from January 2023. This decision applies to the Capital Requirements Directive (CRD) IV systemic risk buffer and any successor buffer that could be implemented following the adoption of CRD5. The Prudential Regulation Committee (PRC) and FPC also reiterate their expectation that all elements of banks’ capital and liquidity buffers can be drawn down as necessary to support the economy through this temporary shock. 

    Modification by Consent of Calculation of Total Exposure Measure of Leverage Ratio

    PRA notes that firms may calculate their exposure value of regular-way purchases and sales awaiting settlement in line with Article 429g of Capital Requirements Regulation (CRR) 2. PRA is offering a modification by consent so that banks subject to the UK Leverage Ratio would be required to apply this article, for the purpose of PRA rules, if they choose to do so. The statement on modification is relevant to firms subject to the Leverage Ratio Part of the PRA Rulebook. PRA has released a draft Direction addressing the modification to Leverage Ratio Reporting and Public Disclosure rules that provide that the quarterly average figures, to be disclosed or reported for the quarter in which the modification first applied, shall reflect the modification as if it had applied on each day of the quarter.

     

    Related Links

    Keywords: Europe, UK, Banking, COVID-19, Reporting, Systemic Risk Buffer, Leverage Ratio, Credit Risk, Supervisory Benchmarking, PRA Rulebook, FPC, CRD, CRR, Ring Fencing, PRA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News
    News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8596