PRA Finalizes Policy to Support Transposition of BRRD2
PRA published the policy statement PS28/20 that sets out the amended Contractual Recognition of Bail-in Part of the PRA Rulebook and Stay in Resolution Part of the PRA Rulebook. PS28/20 also provides feedback to responses to the consultation paper CP18/20, which sets out proposals to reflect transposition of the revised Bank Recovery and Resolution Directive (BRRD2) into UK legislation.
HM Treasure developed a Statutory Instrument for BRRD2, on December 02, 2020, to deliver the transposition of BRRD2. The instrument affects changes to primary legislation that will impact the existing PRA regime for Contractual Recognition of Bail-in and Stay in Resolution. Most elements of the Statutory Instrument that are relevant to the Contractual Recognition of Bail-in and Stay in Resolution Rules will come into force on December 28, 2020, but will subsequently cease to have effect on December 31, 2020, the day the Brexit transition period ends. In CP18/20, PRA referred to this process as "sunsetting." To reflect these changes, PRA had proposed to:
- Temporarily suspend part of the Contractual Recognition of Bail-in Part of the PRA Rulebook from December 28, 2020
- Reinstate the existing Contractual Recognition of Bail-in Part, with minor amendments, to come into force on implementation period completion day
- Amend the Stay in Resolution Part of the PRA Rulebook from December 28, 2020 until implementation period completion day
- Reintroduce the existing Stay in Resolution Part on implementation period completion day
PRA had received one response to its consultation, with the respondent requesting clarification about proposal to amend the definition of “crisis management measure” in the Stay in Resolution Part of the PRA Rulebook. PRA has considered that request and decided to publish the final policy as consulted on. PS28/20 has been designed in the context of the withdrawal of UK from the European Union and entry into the transition period. During the transition period, UK remains subject to European law and must transpose Directives that become applicable before implementation period completion day. The RA policy that is applicable only during the end of the transition period and will cease to have effect on the implementation completion day will not need to be amended under the EU (Withdrawal) Act 2018 (EUWA). Therefore, no such EUWA changes will be made to the Stay in Resolution Part, which will be in place for four days. PS28/20 will come into effect at the end of the transition period (on implementation period completion day) and will need to be amended under the EUWA. These changes will be made separately through the PRA Rulebook (EU Exit) Instrument 2020.
Related Links
Keywords: Europe, UK, Banking, BRRD2, BRRD2 Transposition, Resolution Framework, Basel, Brexit, Bail-In, PRA Rulebook, PS28/20, CP18/20, HM Treasury, 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.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.
