Shearman & Sterling LLP | FinReg | HM Treasury Provides Guidance on Application of EU CRR Quick Fix Package During Brexit Transitional Period
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  • HM Treasury Provides Guidance on Application of EU CRR Quick Fix Package During Brexit Transitional Period

    HM Treasury has published a statement on the application of the EU CRR Quick Fix package during the Brexit transitional period. The EU CRR Quick Fix package consists of a Regulation amending the Capital Requirements Regulation (and also amending the Regulation amending the CRR, known as CRR2) and it was published in the Official Journal of the European Union on June 26, 2020. The Regulation forms part of the EU's response to the coronavirus pandemic.

    HM Treasury confirms that those provisions of the EU CRR Quick Fix package that became applicable on June 27, 2020 will be onshored as part of its Brexit preparations. The Brexit transitional period expires on December 31, 2020 and any EU laws that are directly applicable during that time will be retained EU law under the EU Withdrawal Act 2018. The following provisions will not be onshored:
    1. provisions setting out the basis on which central bank exposures may be excluded from the calculation of the leverage ratio; and
    2. the requirements applicable to global systemically important institutions, which will apply from January 1, 2023.

    On June 30, 2020, the U.K. Prudential Regulation Authority issued a statement confirming that U.K.-regulated banks already applying the CRR transitional arrangements for IFRS 9 must implement the revised calculations as a result of the Quick Fix package, which extended by two years the transitional measures for the implementation of IFRS 9. In addition, a bank contemplating ceasing to apply the IFRS 9 transitional measures must first obtain PRA approval to do so. The PRA also stated that it will be considering whether any of its Pillar 2 policy needs to be updated to take into account other changes made by EU CRR Quick Fix.

    View HM Treasury's statement.

    View details of the EU CRR Quick Fix package.

    View details of the PRA's statement.

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