On 12 September 2024, PRA published CP10/24 – Updates to the UK policy framework for capital buffers
The goal was to lower the chances of these banks facing financial problems or collapsing. The PRA follows the same approach as the BCBS G-SIB framework and applies a capital buffer to UK G-SIIs (Globally Systemically Important Institutions) to account for their potential to negatively impact the stability of the global financial system if they face difficulties. In the UK, G-SII is the term used to refer to G-SIB. The proposed changes are made to reflect on the same.
Implementation date: The date the new SI comes into force, expected to be Q2 2025
Introduction:
After the financial crisis, the PRA (Prudential Regulation Authority) collaborated with regulators globally through the Basel Committee on Banking Supervision (BCBS) to create a system for identifying and regulating globally important banks called G-SIB framework.The goal was to lower the chances of these banks facing financial problems or collapsing. The PRA follows the same approach as the BCBS G-SIB framework and applies a capital buffer to UK G-SIIs (Globally Systemically Important Institutions) to account for their potential to negatively impact the stability of the global financial system if they face difficulties. In the UK, G-SII is the term used to refer to G-SIB. The proposed changes are made to reflect on the same.
Proposed changes:
- Revocation of the UK Technical Standards (UKTS) on the methodology for the identification of G-SIIs
- Introduction of a new SoP setting out the PRA’s approach to G-SII identification and buffers;
- minor amendments to the PRA’s existing SoPs on O-SII designation and O-SII buffer setting to reflect proposed amendments to the CBR; to PRA rules that refer directly to the current CBR
Implementation and next steps:
Consultation closes: Thursday 12 December 2024Implementation date: The date the new SI comes into force, expected to be Q2 2025
