Emma RadmorePRA is consulting on proposed changes to rules and policy that will require CRR firms and consolidation entities that are not classified as small domestic deposit takers to regularly assess their step-in risk – that is, the risk of a bank financially supporting a stressed unconsolidated entity. PRA proposes to require firms to assess their won step-in risk policies and procedures and report their assessment to their supervisor on a newly created template. The proposed rules and guidance are based on Basel Committee standards and guidelines.
Separately, PRA plans to transfer the EBA guidelines on limits on exposures to shadow banking entities and on connected clients into its rules and supervisory statements.
Consultation closes on 5 March 2024. PRA plans to implement the new requirements on step-in risk on 1 January 2026, but expects firms already to be complying with the EBA guidelines and that they will continue to comply with these principles when they transfer into the PRA Rules and guidance.