The Prudential Regulation Authority (PRA) has published a consultation proposing changes to the UK Pillar 3 disclosure regime for PRA-authorised banks and building societies, PRA-designated UK investment firms and CRR consolidation entities. The package would standardise and expand public disclosures on resources supporting resolvability for firms subject to minimum requirements for own funds and eligible liabilities (MREL) above their minimum capital requirement (MCR), add qualitative disclosure for firms subject to capital distribution constraints (CDCs), and require firms to explain the regulatory basis on which their Pillar 3 report is prepared. It also includes minor consequential amendments to the PRA Rulebook to maintain existing disclosure and reporting scope in light of HM Treasury’s stated intention to revoke Article 92a of the onshored Capital Requirements Regulation. On MREL, the PRA proposes four new disclosure templates aligned to Basel total loss absorbing capacity disclosure standards but adapted to the UK MREL framework: UK KM2 (key external MREL metrics, including MCR, MREL requirements and buffers), UK MREL1 (external MREL composition), UK MREL2 (creditor ranking for material subsidiaries) and UK MREL3 (creditor ranking for the resolution entity). Application would be proportionate: institutions identified as resolution entities that are a G-SII or part of a G-SII (currently “Article 92a firms”) and O-SII resolution entities would make “full” MREL disclosures (UK KM2 quarterly and UK MREL1/2/3 semi-annually); large and other institutions that are MREL firms and resolution entities but not O-SIIs would disclose UK KM2 annually; and UK material subsidiaries of non-UK G-SIIs would disclose UK MREL2 semi-annually. The PRA also proposes to clarify when in-scope firms must use the existing UK CCA template for eligible liabilities instruments. For CDCs, firms would add a narrative section to the UK CC1 template to describe imposed constraints and the relevant buffer quartile, and the PRA would remove the Systemic Risk Buffer content from CC1. Firms would also be required to state the category or categories (eg G-SII, O-SII, resolution entity, large/other institution, MREL firm, SDDT) underpinning their Pillar 3 disclosure obligations. The PRA estimates the total annualised industry cost of the MREL disclosure proposals at GBP 1,440,000 over 10 years, with the CDC and “basis of disclosure” changes expected to have negligible costs. Responses are requested by 31 October 2025. The PRA proposes an implementation date of 1 January 2027, with a first reference date for the period ending 31 December 2026, and notes that firms without a binding MREL requirement above MCR at implementation would begin MREL disclosures when that requirement becomes binding.
Prudential Regulation Authority 2025-07-15
Prudential Regulation Authority consults on enhanced Pillar 3 disclosures for MREL resources and capital distribution constraints
The Prudential Regulation Authority (PRA) has issued a consultation on revising the UK Pillar 3 disclosure regime for PRA-authorised banks, building societies, and investment firms. Proposed changes include standardising public disclosures on resources supporting resolvability, introducing new MREL disclosure templates, and adding qualitative disclosures for firms with capital distribution constraints. The PRA estimates the annualised industry cost of these proposals at GBP 1,440,000 over 10 years, with negligible costs for other changes.