News release
The PRA has today clarified its expectations around business conducted within branches of international banks operating in the UK, as well as its booking model expectations and liquidity reporting for such branches.
The approach is underpinned by the PRA’s continuing openness to hosting highly integrated international banking operations, recognising the efficiency benefits and growth that these can bring.
The PRA has increased the existing £100m and £500m thresholds around FSCS-covered deposits by 30%, reflecting inflationary developments since these were originally calibrated. This will give international firms additional room to expand activity in their UK branches, supporting investment and economic growth.
However, noting openness may increase the risk of contagion, the PRA has introduced a new indicative threshold of £300m of total retail and small business instant access deposits. Beyond this, international banks are generally expected to operate in the UK as subsidiaries rather than branches, which gives the PRA increased visibility of and influence over firms operating in the UK. This is in part a response to lessons learned from the failure of Silicon Valley Bank.
Sam Woods, Deputy Governor of Prudential Regulation and CEO of the PRA, said:
“These changes will maintain the UK’s very open approach to international banking, while filling a gap we identified in our regime and increasing some thresholds to support competitiveness and growth”.
The Policy Statement and Supervisory Statement are relevant to all international firms operating in the UK.
Note to editors
1. PS 6/25 - International Firms: Updates to SS5/21 and Branch reporting