UK Prudential Regulator Issues Further Consultation on Implementation of CRD V and CRR II

The U.K. Prudential Regulation Authority has published a further consultation on its proposed implementation of the fifth Capital Requirements Directive. CRD V came into force in July 2019. EU Member States are required to implement the majority of CRD V provisions by December 28, 2020. As this is prior to the end of the U.K.'s Brexit transition period, the U.K. is obliged to transpose those provisions of CRD V that are applicable befor the end of the transition period into U.K. law under the terms of the EU-U.K. Withdrawal Agreement.

The PRA published a consultation on the implementation of certain aspects of CRD V in July 2020. It is now consulting on the following further aspects:

(i) the process for supervisory approval of holding companies;

(ii) removal of the systemic risk buffer (which may be reintroduced in the future if necessary and appropriate) and implementation of capital buffers for other systemically important institutions that closely reflect the existing systemic risk buffer framework;

(iii) amendments to maximum distributable amount requirements to reflect the increased maximum amount permitted under CRD V; these amendments would apply from December 29, 2020 until the end of the transition period on December 31, 2020; after the end of the transition period, the PRA intends to make further changes to the definition of the MDA to improve firms' ability to use combined buffers when subject to a severe but plausible stress;

(iv) the amendment of Pillar 2A requirements to bring them in line with CRD V;

(v) governance requirements for approved holding companies and non-executive directors; and

(vi) interest rate risk in the banking book - the PRA does not intend to implement CRD V requirements relating to interest rate risk in the banking book, and will instead implement the Basel Committee on Banking Supervision's standards on this directly from the end of the transition period.

The consultation paper also addresses the PRA's proposed implementation of the following aspects of the revised Capital Requirements Regulation: (i) variable risk weights for real estate exposures; and (ii) methods of consolidation.

Responses to the consultation should be submitted by November 17, 2020.

View details of the PRA's further consultation on the implementation of CRD V.

View details of the PRA's July 2020 consultation on the implementation of CRD V.

View details of HM Treasury's consultation on the implementation of CRD V.

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