As set out in CP 5/22, PRA’s ‘strong and simple’ initiative seeks to simplify the prudential framework for small, domestic-focused banks and building societies, while maintaining their resilience. The PRA is now seeking views on Phase 2 of its plans for Small Domestic Deposit Takers (SDDTs), which proposes a simplified capital regime and additional liquidity simplifications for SDDTs.
The PRA proposes to:
- simplify all elements of the capital stack, including Pillars 1 and 2A, buffers, and the calculation of regulatory capital;
- revoke the Interim Capital Regime (ICR), a temporary and optional measure providing SDDT-eligible firms and consolidation entities with the option to remain subject to existing Capital Requirements Regulation capital provisions until the capital regime set out in its proposal is implemented.
The consultation was published alongside four further consultations, concerning restatement of CRR requirements, streamlining the Pillar 2A framework and capital communications process, updating the UK policy framework for capital buffers, and a second near-final policy statement on remainder of Basel 3.1 standards implementation.
The consultation closes on 12 December.