PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK. SS3/21 provides an overview of how the supervisory expectations on the new and growing non-systemic UK-incorporated banks evolve, as these entities grow from the point of authorization to being regarded as fully established banks. PS8/21 also updates SS31/15 on the Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) as well as the Statement of Policy on methodologies of PRA for setting Pillar 2 capital (which contain references to SS3/21). PS8/21 took effect upon its publication on April 15, 2021.
SS3/21, which constitutes Appendix 1 of the PS8/21, provides background on the to-date progress with respect to new bank authorizations, common issues of new and growing banks, and an overview of how the supervisory approach of PRA evolves as banks grow and develop. It provides details about the supervisory expectations from new and growing banks, with a focus on common issues related to business model, governance, risk management, and controls. SS3/21 also sets out the expectations of PRA for capital management in new and growing banks and presents a revised and simplified PRA methodology for calibrating the PRA buffer for these banks. Finally, it sets out the coordinated approach of PRA and BoE to ensure that new and growing banks can exit the market in an orderly manner, followed by the supervisory approach of PRA once banks become established.
PS8/21 also provides feedback to responses to the consultation paper CP9/20, which proposed this supervisory approach for new and growing non-systemic UK banks. The proposals in CP9/20 constituted clarifications about the current supervisory approach of PRA, with the exception of proposed changes to the calculation of PRA buffer for new banks, and set out expectations for solvent wind-down plans. PRA had received 17 responses to the CP9/20. Respondents generally welcomed the proposals, but made a number of observations and clarification requests. After considering the comments, PRA revised the proposal to provide greater clarity on the PRA expectations in specific areas.
Effective Date: April 15, 2021
Keywords: Europe, UK, Banking, Non-Systemic Banks, SREP, ICAAP, Regulatory Capital, CP9/20, Resolution Framework, Basel, Pillar 2, PRA
Previous ArticleOCC Issues Booklet on Allowances for Credit Losses
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.
The Basel Committee on Banking Supervision (BCBS) launched consultation on a Pillar 3 disclosure framework for climate-related financial risks, with the comment period ending on February 29, 2024.
The U.S. President Joe Biden signed an Executive Order, dated October 30, 2023, to ensure safe, secure, and trustworthy development and use of artificial intelligence (AI).
The Monetary Authority of Singapore (MAS) launched an integrated digital platform, Gprnt, also known as “Greenprint.”