Featured Product

    PRA to Amend Pre-Issuance Notification Regime for Capital Instruments

    September 09, 2019

    PRA proposed, via CP20/19, amendments to the Pre-Issuance Notification, or PIN, regime applicable to the PRA-authorized Capital Requirements Regulation (CRR) firms. CP20/19 also proposed to amend the supervisory statement SS7/13 that sets out expectations of PRA on the quality of regulatory capital resources that firms are required to hold under Capital Requirements Directive (CRD IV) and CRR. The proposals in CP20/19 reflect the adoption of certain amendments in CRR II and make improvements identified through the PRA experience of assessing the quality of capital instruments. The consultation closes on December 09, 2019, with the proposed implementation date for the proposals being April 01, 2020.

    The Pre-Issuance Notification rules are intended to enhance and maintain the quality of firms’ capital resources by providing PRA with the opportunity to comment on the terms and conditions of proposed capital instruments prior to the issuance of such instruments. PRA considers that the proposed improvements would make the Pre-Issuance Notification regime more risk-sensitive and proportionate, in addition to allowing firms greater flexibility in issuing capital instruments. Appendix 1 to CP20/19 contains the proposed amendments to the Pre-Issuance Notification regime, as set out in the Definition of Capital Part of the PRA Rulebook. The proposed revisions to SS7/13 have been set out in Appendix 2, which is proposed to be renamed "Definition of Capital."

    CRR II amends various aspects of CRR including Article 26(3), which now allows a firm to classify subsequent issuances of an approved Common Equity Tier 1 (CET1) instrument as CET1, subject to meeting certain conditions, including notification to PRA. As a result of these amendments, there is an overlap between the PRA rules in Chapter 7 of the Definition of Capital Part and Article 26(3) of the CRR, as amended. On June 10, 2019, PRA made available a modification by consent as an interim solution to address this overlap ahead of formally consulting on rule changes. PRA proposes to amend the Rulebook to strengthen the governance of CET1 issuance, align the requirements for subsequent issuances of Additional Tier 1 instruments to those for subsequent issuances of CET1 instruments, and remove the requirement to make a pre-issuance notification of Tier 2 instruments. The proposed restructure of Chapter 7 of the Definition of Capital Part is intended to ease understanding of the rules.

    PRA proposes to update SS7/13 to emphasize its preference for simpler CET1 capital structures and to set out its proposed expectations of firms’ senior management in relation to the quality of capital resources. PRA also proposes to clarify two terms introduced by CRR II (that is "substantially the same" and "sufficiently in advance"), to ensure common understanding of notification requirements in relation to subsequent issuances of CET1 and Additional Tier 1 capital instruments. The proposals set out in this consultation paper have been designed in the context of the current UK and EU regulatory framework. PRA has assessed that the proposals will not be affected in the event that the UK leaves the EU with no implementation period in place. In case of an implementation period,  PRA may need to amend the definition of CRR for the purposes of Chapter 7 of the Definition of Capital Part to explicitly include relevant amendments via CRR II.

     

    Related Links

    Comment Due Date: December 09, 2019

    Effective Date: April 01, 2020 (Proposed)

    Keywords: Europe, UK, Banking, CRR, CRD IV, CRR 2, CET 1, Regulatory Capital, PIN Regime, PRA Rulebook, CP 20/19, SS 7/13, Additional Tier 1, Basel III, Brexit, PRA

    Featured Experts
    Related Articles
    News

    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.

    August 11, 2020 WebPage Regulatory News
    News

    BoE Provides Reporting Update on Form AS and Form FV

    BoE updated the known issues document for the statistical reporting Forms AS and FV.

    August 10, 2020 WebPage Regulatory News
    News

    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.

    August 10, 2020 WebPage Regulatory News
    News

    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.

    August 10, 2020 WebPage Regulatory News
    News

    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.

    August 10, 2020 WebPage Regulatory News
    News

    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.

    August 07, 2020 WebPage Regulatory News
    News

    EBA Provides Clarity on Implementation of Guidance on COVID Reporting

    EBA updated the report on the implementation of selected COVID-19 policies.

    August 07, 2020 WebPage Regulatory News
    News

    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.

    August 06, 2020 WebPage Regulatory News
    News

    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.

    August 06, 2020 WebPage Regulatory News
    News

    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.

    August 05, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5649