On 12 September 2024, the Prudential Regulation Authority (PRA) published Consultation Paper 10/24: Updates to the UK policy framework for capital buffers (CP10/24).

CP10/24 is relevant to PRA-authorised UK banks, building societies, PRA-designated UK investment firms, and their qualifying parent undertakings, which for this purpose comprise financial holding companies and mixed financial holding companies, as well as credit institutions, investment firms, and financial institutions that are subsidiaries of these firms, regardless of their location. It is also relevant to counterparties of the aforementioned entities to the extent that counterparties have financial contracts with such entities governed by third-country law. It is not relevant to credit unions.

In CP10/24 the PRA sets out proposals to streamline some of its policy materials on capital buffers as part of its proposals to amend the UK framework on capital buffers. These proposals include:

  • The revocation of the UK Technical Standards (UKTS) on the methodology for the identification of Global Systemically Important Institutions (G-SII).
  • The introduction of a new Statement of Policy setting out the PRA’s approach to G-SII identification and buffers, which will replace the UKTS and relevant provisions to be revoked in the Capital Requirements (Capital Buffers and Macro-prudential Measures) Regulations 2014 (CBR).
  • Minor amendments to the PRA’s existing Statement of Policies on Other Systemically Important Institutions (O-SII) designation and O-SII buffer setting to reflect proposed amendments to the CBR.
  • Minor consequential amendments to PRA rules that refer directly to the current CBR.

Next steps

The deadline for comments on CP10/24 is 12 December 2024.