PRA publishes solvent exit planning statement

PRA has published Policy Statement PS5/24 – Solvent exit planning for non-systemic banks and building societies providing feedback to consultation paper (CP) 10/23 – Solvent exit planning for non-systemic banks and building societies. It also contains the PRA’s final policy, as follows:

  • Chapter 7 of the Recovery Plans Part of the PRA Rulebook (Appendix 1);
  • supervisory statement (SS) 2/24 – Solvent exit planning for non-systemic banks and building societies (Appendix 2); and
  • updated SS3/21 – Non-systemic UK banks: The Prudential Regulation Authority’s approach to new and growing banks (Appendix 3).

The statement is relevant to UK banks and building societies to which Recovery Plans Chapter 7 applies. Specifically, this means every UK bank or building society that is not:

PRA received eight responses to CP10/23. Respondents generally supported PRA’s proposed solvent exit policy to minimise the risks of a disorderly cessation of PRA-regulated activities. Respondents generally supported the distinction between the level of preparations made by all firms during BAU in a ‘solvent exit analysis’ and by firms with a reasonable prospect of solvent exit in a solvent exit execution plan. Respondents generally welcomed the PRA’s position that solvent exit planning should be proportionate to the nature, scale, and complexity of a firm.

PRA has made changes to the final policy, a summary of which is set out below:

  • SS2/24 (paragraph 1.3): PRA provides further clarity and elaboration of a firm’s solvent exit planning for the transfer and/or repayment of all deposits; and the removal of a firm’s Part 4A PRA permission.
  • SS2/24 (paragraph 2.7): PRA clarifies that a firm’s solvent exit indicators are intended to inform a firm as to when it may need to initiate a solvent exit, but they are not automatic triggers for a solvent exit.
  • SS2/24 (paragraph 2.18 and Annex A): PRA adds examples of stakeholders in a firm’s solvent exit planning on communication.
  • SS2/24 (paragraph 2.25): PRA clarifies that a firm may perform assurance activities internally, or externally as the firm considers appropriate.
  • SS2/24 (paragraph 3.7): PRA provides further details on what a firm should consider regarding exit valuations.

PRA has also made some editorial amendments to SS2/24 and SS3/21 to enhance clarity and consistency.

Recovery Plans Chapter 7 will come into force on Wednesday 1 October 2025. Firms are also expected to meet the expectations in SS2/24 by Wednesday 1 October 2025.


Duncan Scott