UK Prudential Regulator's Rules for Small Banks Coming at Start of 2024

The U.K. Prudential Regulation Authority has published a policy statement and rules for implementing the Strong and Simple Framework. The framework is intended to simplify the prudential regulation of non-systemic banks and building societies that are not internationally active, reducing costs for firms, but maintaining their resilience. Up until now, the regulatory approach has broadly applied the same requirements to all banks and building societies, irrespective of their size and activities. Certain prudential rules are simplified for smaller banks and building societies, but to a lesser extent than in some other jurisdictions.

The policy statement sets out the scope criteria, liquidity and disclosure requirements, and confirms certain timings. The PRA has decided to rename Simpler-regime Firms to Small Domestic Deposit Takers (SDDTs), and Simpler-regime consolidation entities to SDDT consolidation entities. The rules providing for eligible firms to become SDDTs, definitions and disclosure requirements take effect on January 1, 2024. The other rules covered by the policy statement will apply from July 1, 2024. The PRA will consult in Q2 2024 on amending the Pillar 2 and buffer requirements for SDDTs.

Alongside the policy statement and new rules, the PRA has also published the following:

• Statement of policy – Operating the Small Domestic Deposit Taker regime.
• An updated supervisory statement (SS)24/15 – The PRA's approach to supervising liquidity and funding risk.
• An updated statement of policy – Liquidity and funding permissions.
• Update to statement of policy – Pillar 2 Liquidity.

In addition, the PRA and Financial Conduct Authority have published a policy statement describing how their remuneration requirements will be adapted to enhance proportionality for smaller firms.

Return to main website.