On 27 July, the Prudential Regulation Authority (“PRA“) published its Policy Statement (“PS“) providing feedback to responses received in relation to Consultation Paper (“CP“) 24/19 ‘Asset encumbrance’. The PS is relevant to all PRA-regulated firms, except credit unions and insurance firms.
In summary, the PRA received two responses to the CP. The respondents generally welcomed the PRA’s proposals, and requested that the PRA clarifies its proposed expectations and concepts in the CP. These points are addressed in Chapter 2.
Having considered the responses received, the PRA has made the following changes to the draft policy in SS20/15:
- paragraph 4.163 to reflect that ‘market counterparties’ does not refer to central banks; and
- paragraph 4.91 to reflect that the PRA will expect that building societies have an ‘appropriate’ forward view of collateral available; not a ‘comprehensive’ one.
The PRA considers that these changes are not significant, and remove the potential for ambiguity.
The policy is effective from the date of publication, 27 July 2020.