Shearman & Sterling LLP | FinReg | UK Prudential Regulator Statement on Pillar 2A Capital Requirements
Financial Regulatory Developments Focus
This links to the home page
Blog
FILTERS
  • UK Prudential Regulator Statement on Pillar 2A Capital Requirements
    05/07/2020
    The U.K. Prudential Regulation Authority has published a statement announcing its decision to set all Pillar 2A requirements to a nominal amount for the purposes of the 2020 and 2021 Supervisory Review and Evaluation Processes, instead of their usual percentage of Risk Weighted Assets. The statement applies to all firms subject to the Capital Requirements Regulation and Capital Requirements Directive. The PRA has said that it is making the change as it does not consider that RWAs are a useful measure for the evolution of risks in the stressed situation that the pandemic represents. The outcome of the change is that banks are freed up to use their Pillar 2A capital to fund lending and other activities.

    Firms with an SREP in 2020 do not need to take any action. Firms that do not have a 2020 SREP but that wish to take advantage of the reduced Pillar 2A requirements should apply for conversion to the nominal amount using RWAs as of end-December 2019. The change is voluntary, subject to supervisory agreement and would apply until the firms’ next regularly-scheduled SREP.

    View the PRA's statement on the amendment to Pillar 2A capital requirements.

    Details of other regulatory responses to COVID-19 are available at our COVID-19 Research Center.

    Return to main website.