First published on 29 July 2015
This Prudential Regulation Authority (PRA) supervisory statement (SS) is aimed at firms to which CRD applies and replaces PRA SS5/13 and PRA SS6/13. It provides further detail on the high-level expectations outlined in ‘The Prudential Regulation Authority’s approach to banking supervision’.
The SS has five chapters, including:
- Chapter 2: Expectations of firms undertaking an Internal Capital Adequacy Assessment Process (ICAAP). This sets out our expectations in relation to the ICAAP and the requirements set out in the ICAA part of the PRA Rulebook.
- Chapter 3: Stress testing, scenario analysis and capital planning. This sets out our expectations of firms in relation to stress testing, scenario analysis and capital planning, and the requirements set out in Chapter 12 of the Internal Capital Adequacy Assessment Part of the PRA Rulebook.
- Chapter 4: Reverse stress testing. This sets out our expectations of firms in relation to reverse stress testing, and the requirements set out in Chapter 15 of the Internal Capital Adequacy Assessment Part of the PRA Rulebook.
- Chapter 5: The Supervisory Review and Evaluation Process (SREP). This sets out the factors that we take into consideration to assess a firm’s ICAAP, including the setting of form-specific capital requirements and the PRA buffer.
This SS should be read in conjunction with the Statement of Policy ‘The PRA’s methodologies for setting Pillar 2 capital’. For ring-fenced bodies (RFBs), as defined in the Financial Services and Markets Act 2000 (FSMA), section 142A, and banking groups containing RFBs, this statement should be read alongside SS8/16 ‘Ring-fenced Bodies (RFBs)’.
Update on 20 January 2026: On 20 January 2026, the Prudential Regulation Authority (PRA) published policy statement (PS) 4/26 – The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers (SDDTs) – final.
PS4/26 confirms that from 20 January 2026, Small Domestic Deposit Takers (SDDTs) and SDDTs consolidation entities (‘hereafter ‘SDDTs’), other than SDDTs that are new and growing banks as defined in SS3/21 – Non-systemic UK banks: The Prudential Regulation Authority’s approach to new and growing banks, are expected to document and update their ICAAP in full at least every two years, or more frequently in the case of a material change in circumstance or if changes in the business, strategy, nature or scale of its activities or operational environment suggest that the current level of financial resources is no longer adequate. Consequently, the policy set out in paragraph 2.1 of SS31/15 does not apply to SDDTs from 20 January 2026. Firms should refer to PS4/26 paragraphs 1.15-1.16 for more details.