Shearman & Sterling LLP | FinReg | UK Prudential Regulator Statement on EU CRR ‘Quick Fix’ Package
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  • UK Prudential Regulator Statement on EU CRR ‘Quick Fix’ Package

    The U.K. Prudential Regulation Authority has published a statement on the EU Capital Requirements Regulation ‘Quick Fix’ package, confirming that it applies directly to all PRA-regulated firms. The CRR Quick Fix package has applied across the EU since June 27, 2020. The CRR Quick Fix package is part of the EU’s response to the coronavirus pandemic.

    In its statement, the PRA confirms 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 is encouraging those banks to submit their requests by July 31, 2020, which requests must include a written explanation of the basis on which senior management has satisfied itself with the continuing adequacy of the bank’s financial resources.

    The PRA intends to analyze available data before deciding on whether a change is needed to its Pillar 2 supervisory approach as a result of the bringing forward of the implementation date of the software asset deduction exemption, the lowering of capital costs for retail loans and the revised small and medium-sized enterprises support factor and an infrastructure support factor. The software asset deduction exemption allows the deduction of certain software assets from CET1 capital. The EU Quick Fix Regulation makes it available from the date the related Technical Standards enter into force. The European Banking Authority is currently consulting on these Standards. The lower capital costs for retail loans was due to apply from June 2021 under CRR2 but has been brought forward to June 2020. It applies to loans granted by banks to pensioners or employees with a permanent contract against the unconditional transfer of part of the borrower’s pension or salary.

    View the PRA’s statement on the CRR Quick Fix package.

    View details of the CRR Quick Fix package.

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