The Prudential Regulation Authority has published its final policy and consultation feedback on amendments to the PRA Rulebook and related Pillar 2, ICAAP and SREP materials to accommodate HM Treasury’s Overseas Prudential Requirements Regime. The changes are designed to keep the prudential framework operating under the new legislative structure after the relevant CRR provisions are revoked, largely preserving existing requirements and supervisory treatment for overseas exposures while replacing CRR equivalence references with OPRR references. The package applies to PRA-authorised UK banks, building societies, PRA-designated UK investment firms and their qualifying parent undertakings, but not to credit unions or third-country branches. Most changes are clarificatory rather than substantive. In credit risk, the PRA renamed the new glossary term to "exposures to Article 119 institutions" and clarified that UK exchanges do not fall within that exposure class. It kept its proposed restriction on using credit assessments that incorporate implicit government support when assigning risk weights to exposures to credit institutions, regardless of jurisdiction, and designated investment firms. It also corrected one Internal Ratings Based Approach reference and clarified that the new drafting does not change whether firms may use an issue-specific or general issuer rating under the existing credit assessment rules. In large exposures, the PRA introduced a part-specific term, "relevant exposures to Article 119 institutions", to exclude exposures to exchanges from the affected provisions. On covered bonds, it did not change the draft policy, confirmed that later jurisdiction designations under OPRR will not require firms to recalculate historical Small Domestic Deposit Taker UK credit exposures ratios, and said its 15 July 2025 liquidity position on non-UK covered bonds remains in place pending a later consultation. The PRA also declined to confirm that firms can rely solely on the conditions in regulation 6(3) of OPRR for regional government or local authority treatment without further due diligence. The rules will take effect on 1 January 2027 alongside the PRA’s Basel 3.1 implementation, on the understanding that the statutory instrument implementing the OPRR is made and in force before that date. If the instrument is amended before being made, or is not made, the PRA said it would amend or revoke the final rules as necessary. It also intends to consult later on firms’ role in assessing the equivalence of non-UK covered bonds included in Level 2A high-quality liquid assets and to consider broader reporting and disclosure reference updates in due course.
Prudential Regulation Authority2026-07-14
Prudential Regulation Authority finalises rule changes for the Overseas Prudential Requirements Regime, effective 1 January 2027
The Prudential Regulation Authority has finalised rulebook and related policy changes to align the prudential framework with HM Treasury’s Overseas Prudential Requirements Regime, while largely preserving existing treatment of overseas exposures. The package includes mainly clarificatory changes to credit risk, large exposures and covered bond provisions, and confirms that the rules will take effect on 1 January 2027 if the implementing statutory instrument is in force.