BoE and PRA publish 2020 Annual Reports

On 18 June, the Bank of England (“BoE”) published its Annual Report and Accounts and its Asset Purchase Facility Fund Limited Annual Report for the period between March 2019 – February 2020. It also published its Climate-Related Financial Disclosure for 2020. 

In the Annual Report, BoE looks at the initiatives to upgrate the RTGS system, its actions to make the largest banks more resolvable, reform of benchmark rates, the need to manage operational risk, the timely collection of data and preparation for Brexit.

In terms of its 2020 Climate-Related Financial Disclosure, BoE recognises that climate change creates financial risks that will affect us all. These risks, it says, arise through two primary channels:

• the physical effects of climate change; and
• the impact of changes associated with the transition to a carbon-neutral economy.

In line with its expectations of financial firms, BoE says the report sets out its approach to managing the risks from climate change across its entire operations, including the steps it has taken to improve its understanding of these risks in future years. 

The report supplements the climate-related financial risk disclosure in BoE’s Annual Report and Accounts for 2020, and BoE says climate-related risk disclosure will be part of its annual reporting from now on.

In summary, the report covers:

• BoE’s approach to climate-related risk disclosure;
• The governance structures and processes BoE uses to manage climate-related financial risk; 
• BoE’s approach to setting climate strategy and managing its implementation; and 
• BoE’s approach to climate-related financial risk management, including its targets and the metrics it tracks.

PRA also published its annual report, which includes an overview of how PRA worked on its strategic goals of:

• robust prudential standards;
• adapting to changes in the external market;
• ensuring firms are adequately capitalised;
• supervision of operational resilience;
• credible plans for banks to recover from stresses;
• competition;
• Brexit; and
• operating efficiently .

PRA also published key reports on authorisations, disclosures of information, its list of ring-fenced bodies and its Practitioner Panel and Insurance Sub-Committee annual report.