PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2
The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA) and the Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020). PS20/21 also contains a new Statement of Policy (SoP) on the supervisory measures and penalties in relation to financial holding companies and an updated SoP on the PRA approach to policy enforcement. The policy presented in PS20/21 will take effect on September 15, 2021.
PRA had proposed, in June 2021, the rules finalized now via the consultation paper CP12/21, to which PRA has received no responses and has thus made no changes. One of the proposals in CP12/21 involved ancillary amendments to the Definition of Capital, Groups, and Notifications Parts of the PRA Rulebook to ensure that, where the application of a consolidated prudential requirement also carries a secondary obligation, that obligation would rest at the appropriate level of application. The amendment to the Groups Part is made as part of the Rules at Annex F of the Rules instrument and will come into force on January 01, 2022, along with the other PRA Rules which implement Basel III. In addition, a new SoP on supervisory measures and penalties in relation to financial holding companies has been published; this SoP sets out the PRA approach to exercising supervisory measures and imposing penalties on UK parent financial holding companies and UK parent mixed financial holding companies (holding companies) pursuant to Part 12B of the Financial Services and Markets Act 2000 (FSMA), covering measures related to the imposition of penalties and the amount of penalties.
The finalized policy is aimed to give effect to the changes in the Capital Requirements Directive V (CRD V), as transposed, and the Capital Requirements Regulation 2 (CRR2), as "onshored," which impose direct responsibility for compliance with the consolidated prudential requirements on approved or designated holding companies. PS20/21 is relevant to financial holding companies, mixed financial holding companies, PRA-authorized banks, and PRA-designated investment firms that are part of a UK consolidation group, controlled by a UK parent financial holding company, or UK parent mixed financial holding company.
Related Links
- Notification
- PRA Rulebook Instrument 2021 (PDF)
- SoP on Measures and Penalties (PDF)
- SoP on Policy Enforcement (PDF)
- CP12/21 (PDF)
Effective Date: September 15, 2021
Keywords: Europe, EU, UK, Banking, CRD5, CRR2, PRA Rulebook, PS20/21, CP12/21, FSMA, Regulatory Capital, Prudential Requirements, Financial Holdings, Statement on Policy, Investment Firms, PRA
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Trevor Howes
IFRS 17 technical advisor; AXIS actuarial modeling system expert; extensive experience in life insurance and life reinsurance, with focus on modeling, valuation, and financial reporting
Previous Article
Nordea Bank and EIB Sign Agreement to Fund Green Projects in NordicsRelated Articles
EBA Launches Stress Tests for Banks, Issues Other Updates
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.
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
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.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
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.
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.
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.
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.
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.
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.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
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.