On 12 September 2024, the Prudential Regulation Authority (PRA) published Consultation Paper CP7/24 – The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers (SDDTs) (CP7/24) which sets out proposals aimed at significantly simplifying the capital regime for SDDTs whilst maintaining their resilience.
In CP7/24, the PRA proposes simplifications to all elements of the capital stack – specifically:
- Pillar 1 risk-weighted assets would be calculated using Basel 3.1 rules, with some simplifications for SDDTs.
- Pillar 2 would be radically simplified.
- There would be a single, more constant and predictable capital buffer.
Next steps
The deadline for responses to CP7/24 is 12 December 2024, and the PRA proposes to implement the simplified capital regime for SDDTs on 1 January 2027.