Featured Product

    BoE and PRA Consult on Changes to Resolution Policy for Banks

    October 28, 2020

    BoE and PRA launched a package of proposals on the resolution policy in UK. The package includes three consultation papers, two of which relate to amendments to the reporting and disclosure dates of resolution assessments (CP19/20) and updates to the policy on operational continuity in resolution, also known as OCIR (CP20/20). The third consultation paper (CP18/20) addresses transposition of the revised Bank Recovery and Resolution Directive (BRRD2) into national law and has been discussed separately. Along with this package, BoE also published a consultation paper on updates to its approach to assessing resolvability and this paper is related to the proposals in CP19/20 and CP20/20. The comment period on CP19/20, CP20/20, and the BoE consultation paper on assessing resolvability ends on January 31, 2021. Comments on the PRA consultations in CP19/20 and CP20/20 and on the BoE consultation paper may be included in a single response.

    PRA CP19/20: Consultation on reporting and disclosure dates

    This consultation paper sets out proposals to extend, by one year, the dates by which firms are first required to submit a report of their assessment of the preparation for resolution and to first publish a summary of that report under Rule 3.1(1) and Rule 4.1(1), respectively, of the Resolution Assessment Part of the PRA Rulebook. In this consultation paper, PRA also proposes consequential amendments to the supervisory statement SS4/19 on resolution assessment and publication disclosure by firms. The consultation is relevant to UK banks and building societies with GBP 50 billion or more in retail deposits on an individual or consolidated basis, as at the date of their most recent annual accounts. The changes resulting from the feedback received would be incorporated into the final policy and would take effect following the publication of the final policy in the first half of 2021. The proposal would amend dates in the Rules 3.1(1) and 4.1(1) as follows:

    • Resolution Assessment 3.1(1), to reflect that the date by which firms must submit a report of their assessment would change from the first Friday in October 2020, to the first Friday in October 2021.
    • Resolution Assessment 4.1(1), to reflect that the date by which firms must publish a summary of the most recent report would change from the second Friday in June 2021 to the second Friday in June 2022.

    PRA CP20/20: Consultation on operational continuity in resolution

    The consultation paper sets out the proposals to revise the policy on operational continuity in resolution. The purpose of the proposals is to improve firms’ resolvability and support the approach of BoE to resolution as set out in the Statement of Policy titled ”The Bank of England’s approach to assessing resolvability.” The proposals would make amendments to the Operational Continuity Part of the PRA Rulebook (refer to Appendix 1 of consultation paper) and PRA expectations on operational continuity in resolution, with the result being a new Supervisory Statement on operational continuity in resolution (Appendix 2). The new supervisory statement would supersede SS9/16 titled “Ensuring operational continuity in resolution.” PRA proposes that the changes resulting from this consultation would take effect from January 01, 2022. The PRA intends to publish the final policy on operational continuity in resolution in the first half of 2021. Many firms' existing operational continuity in resolution arrangements may already be consistent with some of these proposals. PRA would, therefore, expect that firms would be able to leverage their existing operational continuity in resolution arrangements when considering the extent to which further work may be necessary ahead January 01, 2022.

    The consultation paper is relevant for PRA-authorized UK banks, building societies, and PRA-designated UK investment firms currently in scope of, or likely to come into scope of, these Rules. For a firm to be in scope of the Rules, it must receive critical services and must meet one of the three thresholds set out in Operational Continuity 1.1. 

    BoE Consultation Paper: Proposed updates to approach to assessing resolvability

    BoE and PRA are consulting in parallel on a package of proposals related to the policy on operational continuity in resolution. The BoE consultation proposes amendments to the Statement of Policy (SoP) on its approach to assessing resolvability, which was in 2019. This Statement of Policy, as a component of the Resolvability Assessment Framework, sets out how BoE, as resolution authority, intends to assess individual firms’ resolvability and the resolvability outcomes that BoE deems necessary to support resolution. The proposals in this consultation include:

    • Changes to the Operational Continuity in Resolution section of the Approach to Assessing Resolvability SoP, including updates to how BoE would assess whether firms meet the Operational Continuity in Resolution objective and clarification of the BoE approach to assessing whether hosted material subsidiaries meet the Operational Continuity in Resolution objective in the Resolvability Assessment Framework
    • Changes to resolution measures, first announced in May 2020, aimed at alleviating operational burdens on PRA-regulated firms in response to the COVID-19 outbreak (reflects changes proposed in CP19/20)

    BoE is also proposing smaller amendments to the following Statements of Policy in light of the proposals in the PRA consultation paper CP20/20:

    • The restructuring planning section of the Approach to Assessing Resolvability Statement of Policy (in Appendix 1 to BoE consultation).
    • The BoE Statement of Policy on Restructuring Planning (in Appendix 2).
    • The BoE Statement of Policy on Management, Governance and Communication (in Appendix 3).

     

    Related Links

    Comment Due Date: January 31, 2021

    Keywords: Europe, UK, Banking, Resolution Framework, Operational Continuity, CP19/20, CP 20/20, COVID-19, PRA Rulebook, Governance, Resolvability Assessment, Statement of Policy, PRA, BoE

    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    FASB Proposes Improvements to 2023 GAAP Reporting Taxonomy

    The Financial Accounting Standards Board (FASB) is seeking comments, until November 03, 2022, on the proposed technical and other conforming improvements for the 2023 GAAP Financial Reporting Taxonomy.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8588