PRA Consults on Updates to Pillar 2 Reporting Requirements
PRA published the consultation paper CP25/17, which proposes updates to the Pillar 2 reporting requirements. PRA is also proposing to update the reporting instructions in the supervisory statement SS32/15, which relates to Pillar 2 reporting, including instructions for completing data items FSA071 to FSA082, along with the Statement of Policy titled “The PRA’s methodologies for setting Pillar 2 capital.” The consultation will close on March 06, 2018, following which PRA will issue the final policy that is proposed to be effective from October 01, 2018.
The proposals in CP25/17 would make changes to certain Parts of the PRA Rulebook, including Glossary, Regulatory Reporting, Reporting Leverage Ratio, and Reporting Pillar 2. This consultation is relevant to banks, building societies, and PRA-designated investment firms and it mainly proposes the following:
- The first proposal is to introduce a new data item (PRA111) to capture stress testing data, which is currently included in Internal Capital Adequacy Assessment Process (ICAAP) documents of firms. The purpose of this proposal is to to bring greater transparency, clarity, standardization, and comparability in stress test data provided along with the ICAAP documents. It would also decrease the operational risks associated with the manual capturing of stress test data for analysis.
- PRA proposes reduction in the frequency of reporting of the data items in the Reporting Pillar 2 Part of the PRA Rulebook (Pillar 2 data items) for some firms. The purpose this proposal is to make the PRA analysis of Pillar 2 risks more effective and to take a more proportionate approach.
- The proposal is to consolidate definitions in several reporting Parts of the PRA Rulebook into the Glossary.The proposed consolidation of the definitions in several reporting Parts is intended to make it easier for firms to use the PRA Rulebook.
Related Link: Consultation, Templates, and Instructions
Comment Due Date: March 06, 2018
Effective Date: October 01, 2018
Keywords: Europe, UK, Banking, Pillar 2, ICAAP, SS32/15, Stress Testing, Reporting, PRA
Featured Experts
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Nihil Patel
Data scientist; SaaS product designer; credit portfolio analyst and product strategist; portfolio modeler; correlation researcher
Previous Article
ESRB Report on Recovery and Resolution Framework for InsurersNext Article
EBA Launched 2016 CVA Risk Monitoring ExerciseRelated Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
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.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
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.
ECB is Conducting First Cyber Risk Stress Test for Banks
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.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
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.
EU and UK Agencies Issue Updates on Final Basel III Rules
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