In a ‘Dear CEO’ letter, PRA has updated international banks and designated investment firms on its 2024 priorities. As with the other letters published today, the general themes will complement firm-specific feedback PRA has given this diverse range of firms.
The priorities are:
- Risk management and control, particularly counterparty credit risk and secured financing risks with a focus on exposures to NBFI across all business lines;
- Financial resilience, with PRA expecting to see firms analysing a broad range of forward-looking liquidity and capital indicators, using stress testing to assess their financial resilience and to have realistic and effective contingency plans;
- Firms should be working towards meeting the Operational Resilience expectations – PRA reminds firms they have until March 2025 to meet the expectations set out in SS1/21. It sees the need for firms to focus on their “important business services” and their relationships with third party providers; and
- Data risk. PRA’s programme of skilled person reviews of regulatory reporting across a significant sample of firms identified the deficiencies in the controls over data, governance, systems and production controls related to regulatory reporting and firms should consider the feedback given by PRA and take remedial action if needed.