Regulatory reporting of financial statements, forecast capital data and IFRS 9 requirements

Consultation Paper 17/16
Published on 29 April 2016

Overview

This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposals on future reporting of balance sheet, statement of profit or loss (P&L) and forecast capital data (currently known as Capital+).

This CP is relevant to PRA-authorised banks, building societies and designated investment firms. The CP also contains a proposal on the future reporting of P&L data by non-EEA banks authorised to accept deposits through a branch in the United Kingdom.

PRA data strategy

As noted in the ‘PRA Annual Report and Accounts 2015’, the PRA has developed a data strategy for the collection of valid, accurate and meaningful information.  This strategy forms part of the Bank of England’s Strategic Plan for data, data architecture and analytics.  Chapter 2 of this consultation paper outlines the data strategy, which covers the entire lifecycle of data in the PRA.

A key element in the execution of this data strategy is a review of the PRA’s data requirements that are applicable to regulated firms, which is being undertaken in three stages. This consultation sets out the outcomes of the first stage, in the form of proposals in relation to the reporting of balance sheet, statement of profit or loss (P&L) and Capital+ by PRA-authorised banks, building societies and designated investment firms. The consultation also contains a proposal in relation to the reporting of P&L data by non-EEA banks authorised to accept deposits through a branch in the United Kingdom.

Feedback received on this consultation will also help to inform the next stages of the PRA’s review of reporting requirements in risk areas beyond the scope of this consultation. A second consultation is planned for late 2016 to set out proposed reporting changes for credit risk, in part resulting from International Financial Reporting Standard 9 (IFRS 9), for which a discussion section is included in this paper; and a third consultation will cover proposals for amended reporting requirements for other risk categories (see paragraph 2.14 for details).  

Implementation

The proposed implementation date for the Capital+ proposal in this CP is 1 July 2017; the other proposals in this consultation would be implemented from 1 January 2018.  The proposals arising from the second consultation are also likely to become effective from 1 January 2018, whereas proposed reporting requirements from the third consultation would become effective from a later date.

Summary of proposals

This CP covers the following areas:

  • Chapter 3: summarises the outcome of the balance sheet, P&L and capital reviews and the resulting proposals for future reporting in these areas.  Specifically, from 1 January 2018, to:
    • replace existing returns FSA001 (Balance Sheet) and FSA002 (Income Statement) with relevant Financial Reporting (FINREP) templates issued by the European Banking Authority (EBA);
    • continue the collection of the Memorandum items section of the current FSA001 return via a new return (PRA108); and
    • replace the existing return FSA014 (Forecast data from firms) with four new returns collecting forecast balance sheet (PRA104-PRA106) and P&L data (PRA107).
  • In addition, from 1 July 2017 to:
    • formalise the collection of the existing Capital+ (Forecast capital resources and requirements) return through the introduction of three new returns (PRA101-PRA103).
  • Chapter 4: sets out a preliminary discussion of the potential impact on reporting requirements of the introduction of IFRS 9, the new accounting rules for financial instruments. This chapter does not include specific proposals but seeks feedback on the PRA’s preliminary views which will feed into a consultation on any changes to regulatory reporting arising from IFRS 9, which is planned for later in 2016 (subject to endorsement of the standard by the European Union and finalisation of the EBA’s proposed changes to FINREP to incorporate IFRS 9).
  • Chapter 5: provides the cost-benefit and impact analyses as required under the PRA’s statutory obligations.
  • Chapter 6: summarises the questions to which the PRA would welcome specific feedback.

The appendices to this CP include:

  1. Selection of ongoing and recent one-off data sets reported to the PRA by CRR firms
  2. Draft Rulebook text
  3. Proposed revisions to Supervisory Statement 34/15 - Guidelines for completing regulatory reporting
  4. Capital+ returns (PRA101-103) and definitions
  5. Forecast Balance sheet returns (PRA104-PRA106) and definitions
  6. Forecast P&L return (PRA107) and definitions
  7. Memorandum items return (PRA108) and definitions

Responses and next steps

This consultation closed on Friday 29 July 2016.

Following consideration of the consultation responses, the PRA plans to publish a policy statement with feedback, finalised rules and supervisory statement.

PDFConsultation Paper 17/16

     Templates Guidelines
Appendix 4      Capital+ returns (PRA101-103) and definitions  PRA 101 (Capital+ actuals and forecasts)
PRA 102 (Capital+ forecast semi annual)
PRA 103 (Capital+ forecast annual)
Capital+ Instructions PRA 101
Capital+ Instructions PRA 102
Capital+ Instructions PRA 103
Appendix 5 Forecast Balance sheet returns (PRA104-PRA106) and definitions PRA 104 (Balance sheet forecast data)
PRA 105 (Balance sheet forecast (Liabilities))
PRA 106 (Balance sheet forecast data (equity))
Definitions for forecast balance sheet templates 
Appendix 6  Forecast P&L return (PRA107) and definitions PRA 107 (statement of profit or loss forecast data) Definitions for forecast profit or loss template
Appendix 7  Memorandum items return (PRA108) and definitions PRA 108 (Memorandum items) Definitions for memorandum items
 
 
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