The Prudential Regulation Authority (PRA) has published a consultation paper proposing targeted amendments to the PRA Rulebook, plus a minor change to its statement of policy on Pillar 2 methodologies, to reflect HM Treasury’s intended Overseas Prudential Requirements Regime (OPRR). The package is intended to preserve the practical effect of existing CRR equivalence provisions while ensuring the Rulebook operates coherently once those legislative provisions are restated through the OPRR, with the PRA expecting minimal impact on firms and no material costs. The proposals would update multiple Rulebook Parts, including the Glossary and several CRR-derived credit risk, market risk, large exposures and reporting provisions. Key changes include clarifying how “exposures to institutions” work under the standardised approach by tying preferential treatment to UK entities and overseas entities in jurisdictions designated by HM Treasury under the OPRR, with exposures to credit institutions in non-designated jurisdictions typically treated as exposures to corporates. The PRA would also define italicised “exposures to institutions” in the Glossary to refer to exposures eligible for that treatment under the standardised approach, while maintaining a broader meaning of “institution” elsewhere. Further amendments cover consequential alignment for the internal ratings based approach and credit risk mitigation, including clarifications on eligible collateral and protection providers, and excluding debt securities issued by exchanges from the relevant collateral treatment. For covered bonds, the PRA proposes amendments to ensure its rules would accommodate any future HM Treasury designations by extending “eligible covered bond” treatment beyond the standardised approach to the foundation IRB and credit risk mitigation frameworks. The consultation also restates the existing 100% risk weight for exposures to public sector entities in non-designated jurisdictions, clarifies “funded and denominated” conditions relevant to sovereign-related preferential treatments in credit risk mitigation and project finance criteria, and aligns large exposures provisions with the revised “exposures to institutions” concept while excluding overseas exchanges from certain large exposure treatments. The consultation closes on Thursday 2 April 2026, and the PRA proposes that resulting rule changes would take effect alongside the Basel 3.1 package on Friday 1 January 2027. The PRA notes it has not yet set a timetable for updating affected reporting and disclosure cross-references, and it plans a separate consultation in due course on consequential liquidity rule changes, which it anticipates would also be implemented in January 2027.
Prudential Regulation Authority 2026-02-19
Prudential Regulation Authority launches consultation on Rulebook amendments to align with HM Treasury’s Overseas Prudential Requirements Regime
The Prudential Regulation Authority has published a consultation paper proposing targeted amendments to the PRA Rulebook and a minor change to its Pillar 2 methodologies statement of policy to reflect HM Treasury’s intended Overseas Prudential Requirements Regime, with minimal expected impact on firms. The proposals clarify the treatment of “exposures to institutions,” adjust eligibility of collateral and protection providers, extend “eligible covered bond” treatment, restate the 100% risk weight for certain public sector entities, and align large exposures provisions with the revised concepts.