On 10 December 2020, the PRA published Consultation Paper 22/20: Designation of firms within certain consolidation groups (CP22/20).
The proposals on CP22/20 are relevant to banks and PRA-designated investment firms that are part of a UK consolidation group controlled by a UK parent financial holding company or a UK parent mixed financial holding company.
From 28 December 2020, the Capital Requirements Regulation II (CRR II) requires a UK consolidation group’s approved parent holding company – where it has one – to become responsible for ensuring that consolidated prudential requirements are met. The CRR II does not, however, specify the entity or entities responsible for ensuring compliance with consolidated prudential requirements for a transitional period from 28 December 2020 until the date on which the parent financial holding company’s application for approval or exemption is finally determined.
In CP22/20 the PRA sets out its proposed approach to designating entities within certain UK banking consolidation groups as responsible for ensuring that consolidated prudential requirements are met during the transitional period. Relevant holding companies will need to apply for approval or exemption in accordance with The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020. The PRA proposes to create a new Part of the PRA Rulebook (the Designation Part).
The deadline for comments on CP22/20 is 16 December 2020. The PRA proposes that the implementation date for the changes arising from CP22/20 will be 28 December 2020.