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Banking and finance regulatory news, June 2021 | Hogan Lovells


Contents:

  • Resolution assessments: PRA PS10/21 on amendments to reporting and disclosure dates
  • OCIR: PRA PS9/21
  • OCIR: BoE updates SoPs on resolvability assessment framework
  • NPL securitisations: PRA CP10/21 on implementation of Basel standards
  • UK bank ring-fencing legislation: FMLC working group
  • CRD: EBA updates ITS for 2022 benchmarking of internal approaches
  • CRR: EBA consults on institutions’ Pillar 3 disclosure of interest rate risk exposures
  • EBA 2020 annual report
  • Resolution framework public interest assessment: SRB revises approach

Following a short break, the next update will be published on 21 June 2021.

Resolution assessments: PRA PS10/21 on amendments to reporting and disclosure dates

Following its consultation in CP19/20, the UK Prudential Regulation Authority (PRA) has published a policy statement, PS10/21, on amendments to reporting and disclosure dates for resolution assessments. PS10/21 is relevant to UK banks and building societies with £50 billion or more in retail deposits on an individual or consolidated basis, as at the date of their most recent annual accounts.

Following CP19/20, the PRA has amended paragraph 2.11 in its supervisory statement, SS4/19: Resolution assessment and publication disclosure by firms, to remove the proposed expectation that firms’ assessment in 2021 should also include the progress made towards, and outstanding steps needed, for meeting the revised operational continuity in resolution (OCIR) policy. This change confirms that for their first report in October 2021, firms should assess their compliance against the OCIR policy that came into force on 1 January 2019.

Appendixes to PS10.21 contain:

The PRA advises firms to also refer to its policy statement, PS9/21, on revisions to its policy on OCIR and the Bank of England’s (BoE) statement of policy (SoP) on its approach to assessing resolvability (see below).

OCIR: PRA PS9/21

Following its consultation in CP20/20, the PRA has published a policy statement, PS9/21, on revisions to its policy on OCIR.

In response to feedback, the PRA has amended the definition of “critical services”. The term will now refer to both critical functions and core business lines and the proposed term “essential services” will not be introduced. The PRA has also decided to delay implementing the revised OCIR policy to 1 January 2023, 12 months after the application date of 1 January 2022 proposed in CP20/20.

The Appendices to PS9/21 set out the final versions of:

The amendments and SS4/21 come into force on 1 January 2023. The PRA emphasises that the current Operational Continuity Part and SS9/16 will remain in place until that date and that, consequently, firms will continue to be responsible for ensuring that they continue to meet existing OCIR policy while they are working to implement the revised policy.

The BoE has amended some of its statements of policy on the resolution assessment framework to reflect the PRA’s revised OCIR policy (see below).

OCIR: BoE updates SoPs on resolvability assessment framework

The BoE has published on its website updated versions of the following SoPs:

The BoE has revised the SoPs to reflect the publication of PRA PS9/21 on updates to its policy on OCIR (see above). The BoE has proceeded with the changes it consulted on in October 2020, as well as making revisions to reflect changes in the PRA’s approach to OCIR as set out in PS9/21.

The BoE states that its assessment of firms’ resolvability during 2021 and 2022 will focus on the PRA OCIR policy that came into force on 1 January 2019, taking into account the 1 January 2023 effective date for the PRA’s revised OCIR policy.

NPL securitisations: PRA CP10/21 on implementation of Basel standards

The PRA has published a consultation paper, CP10/21, setting out its proposed rules relating to the implementation of prudential standards agreed by the Basel Committee on Banking Supervision (BCBS) for non-performing loan (NPL) securitisations. It sets out how the PRA proposes to define non-performing exposure (NPE) securitisations and proposes changes to the associated capital treatment.

The proposals would result in the addition of a new Non-Performing Exposure Securitisation Part of the PRA Rulebook and amendments to SS10/18: Securitisation: General requirements and capital framework.

The consultation closes on 26 July 2021. The PRA proposes that changes resulting from CP10/21 would be implemented on 1 January 2022. It states that the changes would take effect in conjunction with any consequential amendment to the retained EU law version of the Capital Requirements Regulation by HM Treasury.

UK bank ring-fencing legislation: FMLC working group

The Financial Markets Law Committee (FMLC) has published a letter to Keith Skeoch,…



Read More: Banking and finance regulatory news, June 2021 | Hogan Lovells

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