On February 1, 2017, the UK Prudential Regulation Authority
published a Policy Statement, final rules and updates on several
Supervisory Statements on the reporting, prudential and recovery
and resolution requirements to implement the ring-fencing
requirements for banks. The PRA's policy and final rules are
relevant to all firms that are required to ringfence their core
banking activities before the implementation date of January 1,
2019. These firms are, broadly speaking, those with at least
£25 billion of "core" deposits (defined as deposits
from individuals and small businesses) and those that expect to
exceed the threshold by January 1, 2019. UK banking groups that
have more than £25 billion of core deposits will need to
ring-fence the entity or entities that accept core
deposits—called ring-fenced bodies—by transferring
other business lines to different legal vehicles or undertaking
other business separations.
The PRA consulted on the changes in the last half of 2016.
Having assessed the feedback received, the PRA has not made
significant changes to its original proposals. However, the PRA has
provided clarification on certain issues, which are mostly set out
in the updated Supervisory Statements. The final rules and policy
will, among other things, require an RFB to meet Pillar 3
disclosure requirements on a sub-consolidated basis. The PRA
clarifies that the reporting requirements will mean that where a
significant subsidiary satisfies the Pillar 3 disclosure
requirements on a subconsolidated basis due to being part of an RFB
sub-group, the subsidiary will not have to meet the requirements on
an individual basis as well.
In addition, RFBs will need to report on their use of the
exceptions available which will allow them to undertake certain
activities that are otherwise excluded and prohibited under the
ring-fencing laws and will need to submit data to show how they
have complied with the ring-fencing rules (to the extent that that
data is not already reported under other rules).
Furthermore, a bank will be required, if not in a group, to
notify the PRA within 30 days of it becoming aware, or having
information which reasonably suggests, that its total core deposits
have increased to over £25 billion or have decreased to less
than or equal to £25 billion. The same will apply if the bank
is in a group where the sum of core deposits of all relevant group
members have increased to over £25 billion or has decreased
to less than or equal to £25 billion.
A group that includes an RFB will need to include recovery
options for the RFB sub-group in its recovery plan. The PRA
clarifies that the indicator framework, design of scenarios and
governance arrangements in the group recovery plan should take into
account recovery planning for the RFB as well as the group as a
The implementation of the mandatory exchange of initial and
variation margin for non-cleared OTC derivative trades in the EU
commenced on 4 February for financial counterparties with the
largest derivatives portfolios.
On February 9, 2017, HM Treasury published a paper summarizing responses to its consultation on the transposition of the revised MiFID and three draft statutory instruments to facilitate transposition.
We consider below the circumstances in which a person may hold an "unpaid vendor lien", the effect of such a lien following the Supreme Court case of Menelaou v Bank of Cyprus UK Ltd  EWHC 2656...
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