The UK's Prudential Regulation Authority (PRA) has published a policy statement finalising changes to streamline firm-specific capital communications used to set Pillar 2A, systemic buffers and the Additional Leverage Ratio Buffer (ALRB), alongside feedback on responses to Chapter 3 of CP9/24. The PRA states the changes simplify process and drafting and do not affect firms’ capital requirements. The final package amends the PRA Rulebook to reflect Pillar 2A requirements and systemic buffers in the Capital Buffers framework, so that when set they are captured in the rules governing capital conservation and Maximum Distributable Amount (MDA) restrictions. It also codifies ALRB requirements, including the calculation methodology and related disclosure and reporting provisions, in the Rulebook and updates Supervisory Statement 31/15 on ICAAP and SREP and Supervisory Statement 45/15 on the UK leverage ratio framework, including reflecting that the PRA will no longer set the ALRB using its section 55M or section 192C Financial Services and Markets Act powers. Consultation feedback on this chapter was supportive, and the PRA made one minor drafting change to SS31/15 to avoid confusion with Rulebook requirements. The new policy and rules take effect on 31 March 2025 and firms are not required to take specific implementation actions. For Pillar 2A and systemic buffers, the PRA will reflect the changes in firm communications at each firm’s next Pillar 2A capital reset after 31 March 2025, with existing Model Requirements, Model Directions and related Modifications by Consent continuing until then so firms are not subject to overlapping regimes. For the ALRB, the PRA will revoke existing ALRB capital communications for relevant firms through firm-specific letters when the new rules take effect, and it will consider responses to other chapters of CP9/24 at a later stage.
Prudential Regulation Authority 2025-02-12
UK Prudential Regulation Authority finalises streamlined capital communications for Pillar 2A systemic buffers and the Additional Leverage Ratio Buffer
The UK's Prudential Regulation Authority (PRA) has finalized changes to streamline firm-specific capital communications for Pillar 2A, systemic buffers, and the Additional Leverage Ratio Buffer (ALRB), without affecting firms' capital requirements. The amendments update the PRA Rulebook and Supervisory Statements, effective 31 March 2025, with no immediate actions required from firms. Existing ALRB communications will be revoked when the new rules take effect, and further responses to CP9/24 will be considered later.