PRA Updates Pre-Issuance Notification Regime for Capital Instruments
PRA published the policy statement PS5/20, which contains amendments to the Pre-Issuance Notification, or PIN, regime for PRA-authorized Capital Requirements Regulation (CRR) firms. PS5/20 also provides feedback to responses to the consultation paper CP20/19, which proposed amendments to the Pre-Issuance Notification regime. The proposals were intended to reflect the adoption of amendments to Part Two of the CRR via CRR2 and to make improvements identified through the PRA assessment on the quality of capital instruments. The changes in PS5/20 take effect from April 01, 2020.
PS5/20 contains the final policy on amendments to the Definition of Capital Part of the PRA Rulebook, an updated supervisory statement (SS7/13) on definition of capital (CRR firms), an updated Pre-Issuance Notification form, an updated common equity tier 1 (CET1) compliance template, and a summary table showing the final clarification of "sufficiently in advance" notification and "substantially the same" terms (as defined in updated SS7/13). The policy set out in PS5/20 has been designed in the context of the withdrawal of UK from EU and entry into the transition period, during which time UK remains subject to European law. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with EU take effect. PRA has assessed that the proposals would not need to be amended under the EU (Withdrawal) Act 2018 at the end of the transition period.
The Pre-Issuance Notification rules are designed to enhance and maintain the quality of capital resources of firms by providing PRA with the opportunity to comment on the terms and conditions of the proposed capital instruments prior to the issuance of, or amendments to, such instruments. In CP20/19, PRA proposed a number of changes to the Pre-Issuance Notification regime for CRR firms. PRA intended the proposed improvements to make the Pre-Issuance Notification regime more risk-sensitive and proportionate and to allow firms greater flexibility in issuing or amending capital instruments. PRA has received three responses to CP20/19, with respondents being generally supportive of the proposals and making a number of observations and requests for clarification.
Related Links
Effective Date: April 01, 2020
Keywords: Europe, UK, Banking, CRR, CRD IV, CRR2, CET1, Regulatory Capital, PIN Regime, PS5/20, CP20/19, SS7/13, Basel III, 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.
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Previous Article
EBA Updates List of Validation Rules Under Reporting Framework 2.9Related 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.
