First published on 12 March 2024
This supervisory statement (SS) sets out the Prudential Regulation Authority’s (PRA’s) expectations for non-systemic banks and building societies in the UK to prepare, as part of their business-as-usual (BAU) activities, for an orderly ‘solvent exit’; and if needed, to be able to execute one.
This SS is relevant to a firm which is subject to Chapter 7 of the Recovery Plans Part of the PRA Rulebook, which is defined as a UK bank or building society that is:
(a) not subject to the Operational Continuity Part of the PRA Rulebook, or
(b) not itself, or part of a group that is, a global systemically important institution (G-SII) or an other systemically important institution (O-SII).
The SS has three chapters:
- Chapter 1: introduction to the nature and purpose of solvent exit planning and how it furthers the PRA’s objectives. There are also references to other relevant policies which complement, and should be read in conjunction, with the SS.
- Chapter 2: expectations for how a firm should prepare for an orderly solvent exit as part of its BAU activities. A firm should produce a ‘solvent exit analysis’ to meet the expectations in this chapter.
- Chapter 3: expectations for a firm to produce a ‘solvent exit execution plan’ when solvent exit becomes a reasonable prospect for a firm. It also sets out the PRA’s expectations for how a firm should manage and monitor the execution of a solvent exit.