On 15 April 2021, the PRA published Policy Statement 8/21 ‘The Prudential Regulation Authority’s approach to new and growing banks’ (PS8/21). PS8/21 follows Consultation Paper 9/20 ‘Non-systemic UK banks: the PRA’s approach to new and growing banks’ (CP9/20) that the PRA published last summer setting out the regulator’s proposed approach to supervising new and growing non-systemic UK banks (collectively referred to as banks). PS8/21 is relevant to the following types of banks: Banks in their…

On 15 April 2021, the European Banking Authority (EBA) published final draft regulatory technical standards (RTS) specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR). The draft RTS seek to ensure that the appropriate method of prudential consolidation is applied for the calculation of the CRR requirements on a consolidated basis. Compared to the draft RTS that were set out in the…

On 15 April 2021, the European Securities and Markets Authority (ESMA) published its final report on the European Markets Infrastructure Regulation (EMIR) and Securities Financing Transactions Regulation (SFTR) data quality. The report is the first review of data quality since the introduction of the EMIR and SFTR reporting regimes. It also reviews the quality of data reported by trade repositories and gives an overview of actions taken by both ESMA and Member State competent authorities…

The European Insurance and Occupational Pensions Authority (EIOPA) has launched a consultation on value for money risk in the European unit-linked insurance market. EIOPA has previously expressed concern that while unit-linked products can offer important benefits for policyholders, costs for some products remain too high. The low interest rate environment, in addition to market shocks and the risk that many households may have reduced incomes, means that unit-linked products must offer consumers real value. As…

Introduction On 14 April 2021, the FCA published a Dear CEO letter that highlights the risks associated with the increasing volumes of deposits that are placed with banks and building societies (firms) via deposit aggregators and how to mitigate them. The FCA also outlines some of the key responsibilities that firms will be held accountable for. Deposit aggregators are providers of intermediary services who sit between savings account providers and retail customers. Deposit aggregators operate…

On 14 April 2021, there was published in the Official Journal of the EU, Commission Delegated Regulation (EU) 2021/598 of 14 December 2020 supplementing the Capital Requirements Regulation (CRR) with regard to regulatory technical standards (RTS) for assigning risk weights to specialised lending exposures. The Delegated Regulation applies from 14 April 2022. The RTS specify how institutions should take into account the factors of financial strength, political and legal environment, transaction and/or asset characteristics, strength…

On 14 April 2021, the Basel Committee on Banking Supervision (Basel Committee) published a report ‘Climate-related risk drivers and their transmission channels’. The report explores how climate-related financial risks can arise and impact both banks and the banking system. By synthesising existing literature, it illustrates how physical and transition climate risk drivers affect banks’ financial risks via micro- and macroeconomic transmission channels. It also explores various factors that may determine the likelihood or size…