On 30 July 2024, the Prudential Regulation Authority (PRA) published a consultation paper, CP11/24, on International firms: Updates to Supervisory Statement (SS5/21) and branch reporting.
SS5/21 sets out its approach to supervising international banks with activities in the UK. CP11/24 proposes targeted updates to reflect developments since SS5/21 was published and to provide detail or clarification on certain aspects of the PRA’s approach, although the FCA notes that its proposals in CP11/24 do not alter the overall framework in SS5/21.
The PRA’s proposed updates to its approach to international banks include:
- The introduction of some additional indicative criteria that the PRA would consider when determining whether it would be appropriate for an international bank to operate in the UK as a branch rather than a subsidiary.
- Clarifications to the expectations of firms’ booking arrangements and extending their formal application to a subset of UK banks.
- Amendments to the PRA branch return designed to improve the collection of whole-firm liquidity data.
- Minor amendments to SS5/21 to clarify some of the PRA’s existing expectations and processes.
The PRA also notes that:
- It is due, together with the Financial Conduct Authority (FCA), to publish a consultation on the review of the Senior Managers and Certification Regime during 2024, with relevance to the existing text in SS5/21 on the SMF7 Group Entity Senior Manager function. The PRA would aim to implement any proposed amendments to SS5/21 following that consultation at the same time as changes proposed in CP11/24.
- It is currently reviewing the deposit protection limit (as it is required to do by January 2025) and will consult later in 2024. In the event of future limit changes, these would affect what deposits in branches count towards the existing indicative thresholds in SS5/21 relating to Financial Services Compensation Scheme covered deposits.
Next steps
The deadline for responses to CP11/24 is 30 October 2024.
The PRA proposes that the changes to SS5/21 resulting from CP11/24 would be implemented during Q2 2025, and the changes to the material relating to branch reporting would be implemented on 31 December 2025.