On 26 September 2022, the PRA published Policy Statement 8/22 ‘Definition of capital: Updates to PRA rules and supervisory expectations’ (PS8/22).

In PS8/22 the PRA provides feedback and final policy following Consultation Paper 2/22 ‘Definition of capital: updates to PRA Rules and supervisory expectations’ (CP2/22). In CP2/22 the PRA set out its proposed approach to transferring the UK Technical Standards (UKTS) for own funds requirements for institutions into PRA rules, with amendments to reflect revisions to the revised Capital Requirements Regulation which applied from 27 June 2019. These revisions were not reflected in the relevant EU Regulatory Technical Standards before the end of the transition period and were therefore not included in the UKTS on own funds.

The PRA’s final policy is contained in:

  • Amendments to the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook.
  • Updated version of Supervisory Statement 7/13 ‘Definition of capital (CRR firms)’ (SS7/13).

The PRA states that after considering the feedback it received to the proposals in CP2/22 it has:

  • Amended the draft rules to require that, once permission is received, the general prior permission (GPP) amount should be deducted from own funds when there is sufficient certainty regarding the transaction.
  • Introduced an expectation in the SS7/13 that firms should notify the PRA every quarter regarding transactions taken under the GPP.

The changes introduced to the rules and SS7/13 will come into effect on 1 January 2023.