UK Prudential Regulator on Regulatory Treatment of UK Bounce Back Loan Scheme
05/04/2020The U.K. Prudential Regulation Authority has published a statement on credit risk mitigation eligibility and the leverage ratio treatment of loans made under HM Treasury's Bounce Back Loan Scheme and a separate modification by consent of the exclusion of loans under the BBLS from the calculation of the total exposure measure of the leverage ratio.
The PRA's statement on CRM eligibility confirms that the PRA considers that the terms of the government guarantees provided under the BBLS do not render the loans ineligible for recognition as unfunded credit risk protection. The guarantees therefore appear to be eligible for such treatment. The statement also states that the PRA is offering a modification by consent for banks subject to the Leverage Ratio Part of the PRA Rulebook, excluding BBLS loans from the leverage ratio total exposure measures. The modification by consent also permits firms to exclude loans made under other similar schemes which are 100% guaranteed by an EEA government or central bank, or the ECB, provided they do not exceed €60,000 per loan.
View the PRA's statement on CRM eligiblity and leverage ratio treatment of BBLS loans.
View the PRA's modification by consent of the total exposure measure calculation for BBLS loans.
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