On 12 February 2025, the Prudential Regulation Authority (PRA) issued Policy Statement 2/25: Streamlining firm-specific capital communications (PS2/25).
In PS2/25 the PRA provides feedback on the responses it received to its earlier consultation paper (CP9/24) and sets out its final policy and rules which are intended to streamline firm-specific capital communications, which simplify the content and process of firm-specific capital communications used to set Pillar 2A, the systemic buffers and the Additional Leverage Ratio Buffer (ALRB).
Final policy
The final policy and rules are set out in:
- PRA Rulebook: CRR Firms: Buffers Instrument 2025. The instrument makes changes to the following Parts of the PRA Rulebook: Glossary, Leverage Ratio – Capital Requirements and Buffers, Disclosure (CRR), Reporting (CRR), Capital Buffers, and Own Funds and Eligible Liabilities (CRR).
- Supervisory Statement (SS) 31/15 – The Internal Capital Adequacy Assessment Process and the Supervisory Review and Evaluation Process. This statement was amended to reflect changes to, and avoid confusion with, rule 4.1 of the Capital Buffers Part of the PRA Rulebook.
- SS45/15 – The UK Leverage Ratio Framework. The changes reflect that the PRA will no longer use its powers under section 55M or section 192C of the Financial Services and Markets Act 2000 to set the ALRB. The calculation of the ALRB and related requirements are now set out in the PRA Rulebook.
In response to feedback, the PRA has made one small change to paragraph 5.18 of SS31/15. This change has no meaningful effect on the policy. This is explained in chapter 2 of PS2/25.
Next steps
The changes have no impact on firms’ capital requirements.
The new policy and rules will take effect on 31 March 2025.
The PRA will reflect the changes in the capital communications at the time of the firm’s next Pillar 2A capital reset following 31 March 2025.
Further information on timing can be found in paragraphs 1.15 to 1.20 of PS2/25.