On 13 June 2022, the PRA issued a statement on its website regarding the temporary adjustment to the PRA buffer that began in July 2020 during the COVID-19 pandemic. In July 2020 the PRA published Policy Statement 15/20 ‘Pillar 2A: Reconciling capital requirements and macroprudential buffers’ (PS15/20) in which it temporarily increased the PRA buffer for firms that receive a Pillar 2A (P2A) reduction.
The statement reports that, following PS15/20 the PRA has been setting firm-specific PRA-buffer adjustments, aligning these to 56.25% of the firm-specific total P2A reduction – i.e. the minimum amount of Common Equity Tier 1 the PRA requires for firms to meet P2A requirements.
The statement also reports that the regulatory measure in PS15/20 is no longer needed given that the uncertainty related to the COVID-19 pandemic has receded. Therefore, the measure will be removed with effect from end-December 2022. PRA supervisors will be contacting firms either through their Supervisory Review and Evaluation Process (SREP) (if planned for this year) or separately on the updated buffers. The PRA adds that where adjustment is immaterial, the change may be aligned with the next SREP to simplify.