UK:
Prudential Regulation Authority Consultation On Capital Adequacy Under CRD IV
03 February 2015
Shearman & Sterling LLP
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On January 19, 2015, the Prudential Regulation Authority
("PRA") published a consultation paper on assessing
Pillar 2 capital adequacy under CRD IV. Pillar 2 aims to ensure
that firms have sufficient capital to cover potential risks not
sufficiently addressed in the prescriptive Pillar 1 requirements.
The consultation paper sets out proposed changes to the current
framework, rules and supervisory statements, focusing on: (i) new
proposed methodologies for determining Pillar 2A capital (which
aims to strengthen the relationship between an institution's
risk profile, risk management and risk mitigation systems); (ii)
the buffer and the form it would take; (iii) governance and risk
management; and (iv) disclosure. The consultation period closes on
April 17, 2015. The PRA plans to publish its policy statement and
final rules together with a supervisory statement in July 2015. It
is expected that the new rules would apply from January 1,
2016.
The consultation paper is available at: http://www.bankofengland.co.uk/pra/Pages/publications/cp/2015/cp115.aspx.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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