PRA consults on O-SII approach

PRA is consulting on changes to its approach to identifying other systemically important institutions

It currently carries out its assessments following the EBA methodology but feels Brexit gives an opportunity to review the approach.  As a result, it proposes to remove the EBA scoring methodology and instead just use the scoring methodology currently carried out as part of supervisory overlay (which it will also update, specifically to increase certain risk weightings).  It feels the changes would advance its primary objective by ensuring it uses a clear approach to identifying O-SIIs which will enable it more easily to identify systemically important firms, while reducing costs for firms by removing the need for any ad hoc data requests.  It also feels the change would advance its secondary objective by enabling it to apply enhanced supervision to the firms whose failure gives rise to the greatest risk of systemic impact.

PRA proposes to implement these proposals in time for the December publication of the list of O-SIIs.  It asks for comments by 22 September.

Emma Radmore