The PRA has published Consultation Paper 39/15: The PRA’s approach to identifying other systemically important institutions (O-SIIs) (CP39/15).
In CP39/15 the PRA sets out the criteria and scoring methodology it proposes to use to identify other systemically important institutions (O-SIIs). These criteria and methodology are derived from article 131(3) of the Capital Requirements Directive IV (CRDV IV) which requires O-SIIs to be determined and follow the European Banking Authority (EBA) guidelines on the criteria to determine the conditions of application of article 131(3) CRD in relation to the assessment of O-SIIs.
Under the UK government’s current implementation of the CRD IV, O-SIIs are not required to maintain additional capital buffers.
The PRA proposes to identify O-SIIs in the UK each year in accordance with the methodology set out in the EBA guidelines and will publish the outcome of the annual O-SII identification assessment, including a list of the firms identified as O-SIIs.
Given the proposed O-SII identification methodology, institutions designated as O-SIIs will be subject to enhanced supervision by the PRA, including recovery and resolution planning, in line with the current supervisory approach to ‘Category 1’ firms. Overall, the PRA therefore expects the O-SII framework to have limited impact on firms. The PRA may further enhance its supervisory approach towards O-SIIs in the future.
The deadline for comments to CP39/15 is 18 January 2016. The PRA intends to publish a statement of policy on the its approach to identifying O-SIIs, and the list of O-SIIs in Q1 2016.
View The PRA’s approach to identifying other systemically important institutions (O-SIIs) – CP39/15, 19 October 2015