PRA to No Longer Require Certain Firms to Submit FSA047/048 Returns
PRA published a letter confirming that firms are no longer expected to submit the FSA047/048 returns after January 23, 2020. This letter from Sarah Breeden, the Executive Director of UK Deposit Takers Supervision, and David Bailey, the Executive Director of International Banks Supervision, has been addressed to the CFOs. This letter refers only to the enhanced liquidity monitoring by PRA in the lead up to EU withdrawal. Liquidity coverage and other business-as-usual obligations (including firm-specific Pillar 2 guidance) remain unchanged and continue to apply. In line with the published PRA policy, PRA expects firms to continue to prudently manage their liquidity positions on an individual currency basis.
PRA has been monitoring the liquidity positions of the largest and most systemically important banks and investment firms active in the UK against a bespoke risk appetite. This had been designed to reflect the potential for market volatility, should the UK leave the European Union without a Withdrawal Agreement, to impact firms’ liquidity positions. This risk appetite has been based on the firms’ liquidity positions reported through the FSA047/048 returns and expressed as a minimum survival period calculated under different wholesale stress scenarios. The parliamentary stages of the European Union (Withdrawal Agreement) Bill were completed on January 22. Since, as of the date of this letter, the likelihood that the UK would leave the EU without a Withdrawal Agreement appeared very low, PRA no longer considered the bespoke risk appetite to be required.
Following the third extension of Article 50, in October 2019, PRA had asked the firms to continue to submit FSA047/048 returns after December 31, 2019, the date at which it had previously planned to cease their collection, to facilitate the continued monitoring against the bespoke risk appetite. With the change in risk appetite, PRA can confirm that firms are no longer expected to submit these returns after January 23. However, where firms had been asked to continue reporting their FSA047/048 returns after December 31, 2019, PRA asks that they maintain this capability to report, if required, until the end of February 2020. PRA states that firms should continue to assess, manage, and mitigate risks arising from the UK’s withdrawal from the European Union on an ongoing basis. The Authority expects firms to remain mindful of the operational implications of withdrawal, ensuring they are able to maintain good governance and manage their post-Brexit operations appropriately.
Related Link: Letter (PDF)
Keywords: Europe, UK, Banking, Liquidity Risk, Brexit, Withdrawal Agreement, Reporting, FSA 047, FSA 048, Pillar 2, PRA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
PRA Amends Pillar 2 Capital Framework for BanksNext Article
DNB Publishes Supervisory Priorities for 2020Related Articles
BoE Clarifies Approach to Treatment of Payment Holidays on Form PL
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE Provides Reporting Update on Form AS and Form FV
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED Announces Capital Requirements for Large Banks
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB Publishes Guidance on Implementation of Bail-In Tool
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS Publishes Update on G20 TechSprint Initiative
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI Provides Update on Implementation of IFRS 17 in Canada
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA Provides Clarity on Implementation of Guidance on COVID Reporting
EBA updated the report on the implementation of selected COVID-19 policies.
FSI Note Discusses Challenges Associated with COVID Relief Measures
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS Consults on Principles for Operational Risk and Resilience
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE Updates Template and Definitions for Form ER
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
