Shearman & Sterling LLP | FinReg | UK Prudential Regulator Publishes Policy Statement and Near-Final Rules on Implementation of CRD V
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  • UK Prudential Regulator Publishes Policy Statement and Near-Final Rules on Implementation of CRD V

    The U.K. Prudential Regulation Authority has published a policy statement setting out responses to its consultations on the U.K. implementation of CRD V, as well as its near-final policy material. The final rule instruments will be published in time for the December 28, 2020 deadline for implementation of CRD V. The policy statement is relevant to U.K. banks, building societies, PRA-designated investment firms and U.K. financial holding companies and mixed financial holding companies.

    The PRA consulted on its proposed rules in two consultation papers published in July and October 2020. Changes to the draft rules (as set out in the consultation papers) include:
    • Certain clarifications to the application of the Pillar 2B buffer;
    • Amendments to the remuneration policy provisions, meaning material risk takers who are entitled to significant remuneration (in accordance with provisions set out in the Remuneration chapter of the PRA Rulebook) would be subject to a minimum length of deferral of compensation of four years (as opposed to the five years originally proposed);
    • An updated approach to the requirement for third-country branches to submit their group recovery plans to the PRA; where a home state resolution authority does not require a recovery plan covering the third-country branch, the branch should confirm this to the PRA annually and would not be required to produce one; in addition, where the home state resolution authority requires the recovery plan to be kept confidential, certain information should be provided to the PRA in place of the plan itself; and
    • A change to the period in which the PRA would expect holding companies to submit formal applications for approval or exemption from May 3-31 to June 1-28, 2021 and a delay to the application of the proposed approach to IRRBB from December 31, 2020 to December 31, 2021.

    The PRA has also made certain changes to the Additional Leverage Ratio Buffer Model Requirements to reflect certain changes that will come into effect at the end of the Brexit transitional period.

    View the PRA's policy statement.

    View details of the PRA's October 2020 consultation.

    View details of the PRA's July 2020 consultation.

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