UK Authorities Facilitate Sale of SVB UK to HSBC, Issue Other Updates
UK Authorities, including the Bank of England (BoE), the Prudential Regulation Authority (PRA), HM Treasury, and the Financial Conduct Authority (FCA) issued multiple regulatory updates for banks. The key development among these involves the sale of Silicon Valley Bank UK Limited to HSBC. The UK Government also issued a statutory instrument to amend existing law with the aim of enabling powers under Part 1 of the Banking Act 2009 to be used effectively in connection with the sale of Silicon Valley Bank UK Limited to a private sector purchaser (HSBC UK Bank plc). The statutory instrument will come into force on March 13, 2023.
Additionally, BoE published a letter to the chief financial officers of eight major UK banks to support and enhance firms’ resolvability preparations for the second Resolvability Assessment Framework (RAF) assessment. In yet another key development, PRA proposed (CP6/23) to remove the Common Equity Tier 1 (CET1) deduction requirement in the PRA Rulebook, regarding non-performing exposures (NPE) that are treated as insufficiently covered by firms’ accounting provisions. It also proposed to remove the associated reporting requirements for the NPE deduction. PRA considers that removing the NPE deduction requirement would enhance the definition of capital in a way that aligns with international standards. Removing the associated reporting requirements would reduce all firms’ costs of monitoring, compliance, and data gathering in relation to the NPE deduction requirement. The consultation is relevant to banks, building societies, PRA-designated investment firms and PRA-designated financial or mixed financial holding companies. The consultation closes on June 14, 2023 and the resulting changes are expected to come into force in the fourth quarter of 2023. Finally, FCA finalized the guidance (FG23/2) for firms supporting their existing mortgage borrowers impacted by the rising cost of living and updated next steps with regard to potential remedies proposed in the interim report on credit information market study.
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Keywords: Europe, UK, Banking, Reporting, Silicon Valley Bank, Resolvability Assessment Framework, NPE, Basel, Regulatory Capital, Lending, Credit Risk, Resolution Framework, PRA Rulebook, BoE, PRA, FCA, HM Treasury
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