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PRA actions – Non-systemic UK banks: approach to new and growing banks

PRA actions – Non-systemic UK banks: approach to new and growing banks

 

Background

  • On 22 July 2020, the Prudential Regulation Authority (PRA) published its Consultation Paper CP 9/20 (“Non-systemic UK banks: The Prudential Regulation Authority’s approach to new and growing banks”).
  • In this consultation paper (CP), the Prudential Regulation Authority (PRA) set out its proposed approach to supervising new and growing, non-systemic UK banks (collectively referred to as ‘banks’).
  • All the proposals are clarifications of the PRA’s current supervisory approach with the exception of: (i) proposed changes to the calculation of the PRA buffer for new banks; and (ii) setting expectations in relation to solvent wind down plans.
  • This CP is primarily relevant to new and growing non-systemic UK Banks, though not all, as some firms in this category will have sufficient experience and resources to be able to move quickly to the standard expected of most established banks.

Impacts

The proposals in this CP would:

  • create a new supervisory statement (SS): ‘Non-systemic UK Banks: The Prudential Regulation Authority’s approach to new and growing banks’;
  • reference to the new SS in paragraph 5.25 of Pillar 2 capital policy in SS31/15 ‘The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)’; and
  • reference the new SS in paragraph 9.45 of the Statement of Policy (SoP) ‘The PRA’s methodologies for setting Pillar 2 capital’

Timeline with relevant dates to be logged on regulatory calendar

  • Consultation opens on 22 July 2020
  • Consultation closes on 14 October 2020
  • Policy Statement is planned before 31 March 2021
  • Expected effective date will be during H1 2021

Next steps

The PRA invites feedback on the proposals set out in this consultation.

All impacted firms need to be aware of relevant published policy statements from the PRA, currently expected during Q1 2021.