UK Prudential Regulation Authority Publishes its 2018/19 Business Plan
04/09/2018The Prudential Regulation Authority has published its Business Plan for 2018/19 which sets out its strategic goals and workplan to deliver those goals. In summary, the PRA's strategic goals and workplan are:
- To have robust prudential standards in place. The PRA will be working to deliver the implementation of ring-fencing of core retail services from wholesale and investment banking. From January 1, 2019, U.K. banks with more than £25 billion of retail deposits must ring-fence their retail business from their investment banking business. The PRA will continue to work with the affected banks to ensure their timely compliance with the requirements and will begin to assess the effectiveness of the arrangements in place by examining firms' policies, governance and control arrangements.
- To adapt to changes in the external market and to hold firms and their management accountable for meeting the PRA's standards. The PRA will focus on (i) potential regulatory arbitrage; (ii) new firms seeking authorization to operate in the U.K.; (iii) firms seeking permission to undertake new business; (iv) changes to business structure as a result of regulation and Brexit; and (v) the challenges and opportunities presented by FinTech. The PRA will also finalize its policy on extending the Senior Managers & Certification Regime to insurers and will continue to evaluate firms' implementation of the regime.
- To ensure firms are properly capitalized and have sufficient liquidity. The PRA will assess the adequacy of capital and liquidity resources of banking firms and will finalize its groups policy, including the approach to double leverage. The PRA will also consider how and when the final Basel III requirements should be implemented in the U.K. in light of Brexit.
- To develop the supervision of operational resilience. The PRA will identify firms where an operational failure could have a significant impact on the real economy and consider the level of resilience that firms should be expected to demonstrate. In particular, the PRA will assess firms' cyber and operational resilience. The PRA will be publishing a paper on operational resilience to obtain feedback on their intended approach.
- To ensure that firms have credible recovery plans and take steps to improve firms' resolvability. The PRA will continue its work on implementing the EU minimum requirements for own funds and eligible liabilities (MREL) as well as its policy on operational continuity in resolution.
- To deliver its secondary competition objective. The PRA will continue its work to assess the competition implications of its policies and will implement an internal rating-based model applicable for smaller banks and refine the Pillar 2A capital framework.
- To deliver a smooth Brexit transition. The PRA intends to focus on how firms' legal structures might become more complex as a result of the U.K.'s withdrawal from the EU, in particular to ensure that it maintains appropriate visibility of overseas firms operating in the U.K. The PRA will also review its Rulebook to ensure that it remains operable for Brexit.
View the PRA's Business Plan.
View the consultation paper on fees and levies.
View the report.