On 17 July 2025, the Prudential Regulation Authority (PRA) published Policy Statement 14/25 – Amendments to the Large Exposures Framework – Part 1 (PS14/25).
Background
On 5 December 2023, the PRA published Consultation Paper 23/23 – Identification and management of step-in risk, shadow banking entities and groups of connected clients (CP23/23). In CP23/23, the PRA sets out proposed rules requiring Capital Requirements Regulation (CRR) firms that are not small domestic deposit takers (SDDTs) and CRR consolidation entities that are not SDDT consolidation entities to regularly assess their step-in risk. The consultation closed on 5 March 2024. On 22 April 2025, the PRA published Policy Statement PS5/25 – Identification and management of step-in risk.
On 18 October 2024, the PRA published Consultation Paper 14/24 – Large Exposures Framework (CP14/24) in which it set out proposals to implement the remaining Basel large exposures standards. The consultation closed on 17 January 2025.
Final policy
In PS14/25 the PRA provides feedback to responses it received on chapter 5 of CP14/24 which covered exceptions, exemptions and reciprocation. It also provides feedback on the responses received in relation to chapter 4 of CP23/23 covering the identification and management of step-in risk, shadow banking entities (SBEs) and groups of connected clients. In both cases the PRA also sets out its final policy.
The PRA’s final policy contains:
- Amendments to the Large Exposures (CRR) Part of the PRA Rulebook (Appendix 1).
- Amendments to Annex IX – Instructions for reporting on large exposures and concentration risk (Appendix 2).
- Supervisory Statement 3/25 – Identification of groups of connected clients for large exposures purposes (Appendix 3).
- Updated CRR provisions table (Appendix 4).
Next steps
The implementation date for the amended large exposures rules and accompanying policy material is 1 January 2026.
The PRA expects to finalise the remaining proposals in CP14/24 by 2026 which include:
- Chapter 2: Calculation of Exposure Values – Securities Financing Transactions.
- Chapter 3: Limits to Large Exposures – Trading Book Exposures.
- Chapter 4: Calculating the effect of the use of credit risk mitigation techniques.
The PRA also expects to finalise its proposals on SBEs that were contained in chapter 3 of CP23/23. In the meantime, the PRA states that firms are expected to make every effort to comply with the existing European Banking Authority guidelines on limits on exposures to SBEs.