The Prudential Regulation Authority (PRA) has written to chief executive officers of PRA-regulated UK banks and building societies setting out its 2026 supervisory priorities. The letter emphasises continued expectations on strategic risk management, operational and financial resilience, and data risk, while also signalling work to support innovation and adapt supervision in line with the PRA’s secondary objectives on competition, international competitiveness and growth. Key areas of focus include boards and senior managers proactively identifying and managing changing risks, including trade finance risk, private markets’ resilience, and growing exposures to non-bank financial institutions, with continued attention on counterparty credit risk aggregation and remediation of weaknesses in data and risk aggregation. The PRA highlights its updated Supervisory Statement 9/13 on significant risk transfer, effective 1 January 2026, and expects appropriate senior management engagement in transactions that reduce capital requirements, alongside continued follow-up on implementation of its model risk management expectations (effective May 2024). On innovation, the letter flags risks and controls around advanced technologies including artificial intelligence and around distributed ledger technology and tokenisation, and encourages participation in the digital securities sandbox. For operational resilience, firms are expected to strengthen testing following the 31 March 2025 deadline under Supervisory Statement 1/21, embed resilience into strategic decision-making, enhance cyber preparedness using lessons from the 2024 sector-wide cyber stress test and tools such as CBEST and STAR-FS, and address third-party concentration through tested contingency and exit planning. On financial resilience, the PRA reiterates expectations for forward-looking liquidity and capital stress testing and for firms to prepare for Basel 3.1 and, for Small Domestic Deposit Takers, the Strong and Simple Framework due to be implemented on 1 January 2027, noting that the Fundamental Review of the Trading Book elements are proposed for 1 January 2028. Next steps include a 2026 rebasing of variable Pillar 2 requirements, supported by republished data requests with a submission deadline of 31 March 2026, with boards expected to seek assurance over accurate risk-weighted asset calculation and reporting. The PRA also plans in 2026 to begin transitioning remaining firms from annual to two-year Periodic Summary Meeting cycles, to streamline supervisory processes, and will continue work to modernise reporting through the Future Banking Data programme and to accelerate timelines for Senior Manager applications, new firm authorisations and internal ratings-based model change pre-approval applications.
Prudential Regulation Authority 2026-01-15
Prudential Regulation Authority sets 2026 supervisory priorities for UK deposit takers and plans wider shift to two-year periodic summary meeting cycles
The Prudential Regulation Authority has written to CEOs of PRA-regulated UK banks and building societies setting out its 2026 supervisory priorities, emphasising strategic risk management, operational and financial resilience, data risk, and support for innovation aligned with its secondary objectives on competition, international competitiveness and growth. Key expectations include enhanced oversight of changing risk profiles, implementation of updated significant risk transfer and model risk management standards, strengthened operational resilience and cyber preparedness, and preparation for Basel 3.1 and the Strong and Simple Framework. The PRA will also rebase variable Pillar 2 requirements in 2026 and continue modernising reporting and authorisation processes.