The Prudential Regulation Authority (PRA) published a policy statement finalising its package to restate key Capital Requirements Regulation (CRR) provisions on own funds into the PRA Rulebook, update mappings of external credit assessment institution (ECAI) ratings to credit quality steps, and amend supervisory expectations for securitisations. The final rules and revised supervisory material will take effect on 1 January 2026 and apply to PRA-authorised banks, building societies, PRA-designated investment firms and relevant holding companies, with the ECAI mapping changes also applying to UK Solvency II firms. On own funds, the PRA largely restates existing CRR requirements while making targeted adjustments to improve proportionality and transparency, including changes to the pre- and post-issuance notification regime, a shift from prior permissions to post-notification for including interim profits in Common Equity Tier 1 capital supported by new guidance in Supervisory Statement 7/13, and a new statement of policy on waivers and permissions under the Own Funds (CRR) Part. The final policy also clarifies aspects of reduction permissions, including guidance on when repurchases of Additional Tier 1 and Tier 2 instruments may be permitted in exceptional circumstances where they would materially enhance safety and soundness, and it clarifies that minority interests should be calculated using the subsidiary’s pre-consolidation Common Equity Tier 1 baseline. For ECAI mapping, the PRA restates and modestly updates mapping tables to reflect new rating scales and category changes, adds a mapping for the Banque de France’s Global ANACOT long-term issuer scale, and removes the mapping for Economist Intelligence Unit Limited’s sovereign rating band scale following its deregistration by the Financial Conduct Authority. The PRA also clarifies that a mapped rating scale applies to all credit ratings that use that scale and that firms can apply mappings to new types of ratings that use an existing mapped scale. On securitisation, amendments to Supervisory Statement 9/13 introduce expectations for the use of unfunded credit protection in synthetic significant risk transfer transactions and strengthen expectations on senior management oversight and attestations for significant risk transfer notifications, while clarifying that senior managers may rely on expert input and may delegate signing and submission consistent with existing delegation expectations. The policy statement only covers parts of the PRA’s wider CRR restatement programme, with remaining proposals from Consultation Paper 13/24 that depend on finalising Basel 3.1 to be addressed in a subsequent policy statement. The PRA also indicates it is minded to make further mapping-related changes alongside Basel 3.1 implementation, including an approach for certain new institution rating scales that remove assumptions of implicit government support, with related amendments to be published in due course.

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