The Prudential Regulation Authority (PRA) published the final policy statement PS25/21, which was issued post a consultation (CP13/21) proposing minor amendments to the PRA Rulebook, supervisory statements, and reporting data items and instructions, including the Branch Return and the associated guidance and notes. The final policy entails changes to certain parts of the PRA Rulebook (Pillar 2 and Regulatory Reporting parts and Definition of Capital part) and to reporting forms and guidance for data items FSA071 to FSA082, FSA017, PRA111, Mortgage Lenders & Administrators Return (MLAR), and Branch Return. It is applicable to regulated entities such as banks (CRR firms), third-country branches, investment firms, and insurers and reinsurers (Solvency II firms).
In particular, the final policy covers the following key aspects:
- With respect to Pillar 2, PS25/21 provides final rules on amendments to the reporting Pillar 2 Part of the PRA Rulebook (Appendix 1), SS32/15 on Pillar 2 reporting (Appendix 2), FSA081 template (Appendix 3), and the associated FSA081 instructions (Appendix 4).
- With respect to reporting changes due to LIBOR discontinuation, PS25/21 provides an update to the regulatory reporting Part of the PRA Rulebook (Appendix 5), an update to SS34/15 on guidelines for completing regulatory reports (Appendix 6), amendments to the FSA017 instructions (Appendix 7), and amendments to the Notes for completion of MLAR (Appendix 8).
- With respect to the Definition of Capital, PS25/21 provides changes to the scope of the Definition of Capital Part of the PRA Rulebook (Appendix 9) and SS7/13 titled "Definition of capital (CRR firms)" (Appendix 10).
- With respect to the Branch Return, PS25/21 includes amendments to the Regulatory Reporting Part of the PRA Rulebook (Appendix 5), an update to SS34/15 on guidelines for completing regulatory reports (Appendix 11), an updated Branch Return template (Appendix 12), and reporting guidance to the Branch Return (Appendix 13).
- With respect to auditing, PS25/21 modifies Audit Committee Part of the PRA Rulebook (Appendix 14) and SS1/16 titled "Written reports by external auditors to the PRA" (Appendix 15).
With respect to the regulatory timelines, PRA announced that amendments to the method of submission, minor formatting corrections to the Branch Return, and clarifications to the accompanying reporting guidance will be implemented from May 31, 2022. The deletion of FSA042 will come into force on November 10, 2021. The changes to the FSA017 instructions and MLAR guidance notes will come in to force on January 01, 2022 to align the instructions with the timing of the discontinuation of LIBOR. SS34/15 will be updated on November 10, 2021, to delete the link to FSA042, and again on January 01, 2022, to include the updated links to the FSA017 and MLAR guidance notes; this amendment will also align with the Financial Conduct Authority’s effective date for changes to MLAR guidance note. Amendments to the scope of Chapter 4 of the Definition of Capital Part of the PRA Rulebook will be implemented from January 01, 2022. Correction and updating a reference in Rule 2.4(5) in the Audit Committee Part of the PRA Rulebook, and correction to an error in SS1/16 on written reports by external auditors to the PRA will also be implemented from January 01, 2022.
Keywords: Europe, UK, Banking, Insurance, Securities, PRA Rulebook, PS25/21, CP13/21, LIBOR, CRR, Reporting, Branch Return, Investment Firms, Pillar 2, Basel, Regulatory Capital, Benchmark Reforms, PRA
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
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.
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.
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.
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.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
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.