On 27 July 2020, the PRA published Policy Statement 18/20 ‘Asset encumbrance’ (PS18/20).

In PS18/20 the PRA provides feedback to responses to Consultation Paper 24/19 ‘Asset encumbrance’ (CP24/19). It also contains updated versions of:

  • Supervisory Statement (SS) 24/15 ‘The PRA’s approach to supervising liquidity and funding risks’.
  • SS9/17 ‘Recovery planning’.
  • SS20/15 ‘Supervising building societies’ treasury and lending activities’.

The PRA reports that it received two responses to CP24/19. Having considered the responses, the PRA has made the following changes to the draft policy in SS20/15:

  • Paragraph 4.163 to reflect that ‘market counterparties’ does not refer to central banks.
  • Paragraph 4.91 to reflect that the PRA will expect that building societies have an ‘appropriate’ forward view of collateral available; not a ‘comprehensive’ one.

The PRA considers that these changes are not significant, and remove the potential for ambiguity.

The policy presented in PS18/20 becomes effective from 27 July 2020.