The Prudential Regulation Authority (PRA) has written to chief executive officers of PRA-regulated international banks and designated investment firms active in the UK, setting out its 2025 supervisory priorities. The letter focuses on strengthening governance, risk management and controls, improving data quality, maintaining financial and liquidity resilience as market conditions and central bank operations evolve, and delivering operational resilience outcomes by March 2025. Supervisory work will continue to scrutinise counterparty credit risk management, particularly exposures to non-bank financial institutions, with expectations for holistic and timely remediation where control gaps are identified. Credit risk management remains under close review, including commercial real estate exposures, alongside continued assessment of data aggregation capabilities and the completeness, timeliness and accuracy of regulatory returns. On liquidity and funding, firms are asked to prepare for changes linked to Bank of England balance sheet normalisation and the planned transition to a demand-driven reserves framework, including being operationally ready to access Sterling Monetary Framework facilities regularly and at scale, with Indexed Long-Term Repo usage treated as routine participation in sterling markets. For operational resilience, firms must be able by March 2025 to remain within impact tolerances for all important business services through severe but plausible disruptions, with particular attention to cyber recovery capabilities and oversight of major outsourcing and third-party arrangements. The PRA reiterated its 17 January decision, made in consultation with HM Treasury, to delay UK implementation of Basel 3.1 by 12 months to 1 January 2027 while reducing transitional periods so full implementation remains 1 January 2030, and it has paused immediate Basel 3.1-related deadlines pending further communication. Firms are encouraged to respond to the Bank of England discussion paper on the repo-led operating framework by 31 January 2025, while planned follow-on work includes a PRA consultation on changes to the senior manager regime, finalising updates to its approach to branch and subsidiary supervision, and a joint PRA and Financial Conduct Authority consultation in the second half of 2025 on policy for managing ICT and cyber risks.
Prudential Regulation Authority 2025-01-21
UK's Prudential Regulation Authority sets 2025 supervision priorities for international banks and confirms Basel 3.1 delay to 1 January 2027
The Prudential Regulation Authority (PRA) outlined its 2025 supervisory priorities for international banks and investment firms in the UK, emphasizing governance, risk management, data quality, and operational resilience. Key areas include counterparty credit risk, commercial real estate exposures, and preparation for Bank of England balance sheet changes. The PRA delayed UK Basel 3.1 implementation to 2027 and plans consultations on the senior manager regime and ICT and cyber risk management.