Featured Product

    PRA Finalizes Policy for Non-Performing Exposure Securitizations

    October 21, 2021

    The Prudential Regulation Authority (PRA) published the final Policy Statement PS24/21 that contains the new Non-Performing Exposures Securitization Part of the PRA Rulebook and an updated Supervisory Statement SS10/18 on the general requirements and capital framework with respect to securitizations. The rules set out the approach for the calculation of risk-weighted assets for non-performing exposure securitizations. PS24/21 also provides feedback to the responses to the consultation paper CP10/21 on the implementation of non-performing loan securitizations. The updated SS10/18 as well as the rules for calculating capital requirements on exposures to the non-performing exposure securitizations will take effect from January 01, 2022. These will take effect in conjunction with any consequential amendments to the Capital Requirements Regulation (CRR) by Her Majesty's Treasury.

    Post the consultation feedback, PRA has made one change to the draft rules in CP10/21. The definition for non-performing exposure securitization within the draft rules has been amended such that the words "or any other relevant reason" are excluded from the definition. The definition now reads "NPE securitization means a securitization backed by a pool of non-performing exposures the nominal value of which makes up not less than 90% of the entire pool’s nominal value at the time of origination and at any later time where assets are added to or removed from the underlying pool due to replenishment or restructuring." PRA considers that while amending the definition of NPE securitizations is a small deviation from the standards recommended by the Basel Committee, the amended definition is consistent with the relative standing of the UK and the competitiveness of the UK while also better supporting finance to the real economy. PRA considers that this change will reduce uncertainty, will not have a significant impact on firms and will not have a significantly different impact on mutuals than for other firms. 

    PRA has also made minor changes to SS10/18 to reflect the withdrawal of the United Kingdom from the European Union and to improve clarity of drafting. When making Capital Requirements Regulation (CRR) rules, PRA must consider, and publish an explanation of, the ways in which PRA has had regard to the additional matters and how the additional "have regards" have affected the proposed rules. In CP10/21, PRA had set out this explanation in Chapter 3 and in PS24/21 it has provided an updated explanation of the "have regards" to take into account the consultation responses. PRA will keep this policy under review and welcome additional submission of evidence from firms regarding the nonperforming exposure securitizations. PS24/21 is relevant to UK banks, building societies, PRA-designated investment firms, the UK financial holding companies, and the UK mixed financial holding companies of certain PRA-authorized firms. 

     

    Related Links

    Effective Date: January 01, 2022

    Keywords: Europe, UK, Banking, Non-Performing Exposures, Securitization, SS 10/18, PRA Rulebook, NPLs, Regulatory Capital, Credit Risk, Basel, PRA

    Featured Experts
    Related Articles
    News

    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.

    January 04, 2023 WebPage Regulatory News
    News

    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.

    January 01, 2023 WebPage Regulatory News
    News

    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.

    December 30, 2022 WebPage Regulatory News
    News

    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.

    December 29, 2022 WebPage Regulatory News
    News

    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.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    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.

    December 22, 2022 WebPage Regulatory News
    News

    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.

    December 22, 2022 WebPage Regulatory News
    News

    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.

    December 20, 2022 WebPage Regulatory News
    News

    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.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697