This supervisory statement (SS) expands on the Prudential Regulation Authority’s (PRA’s) approach to banking supervision. It summarises the PRA’s approach to international banking supervision, and clarifies how the PRA will authorise and supervise internationally headquartered banking groups that branch into the UK, with a specific focus on branches undertaking wholesale banking activities in the UK.
This SS is relevant to all PRA-authorised banks and designated investment firms not incorporated in the UK which form part of a non-UK headquartered group (‘international banks’) and which are operating in the UK through a branch, as well as any such firm looking to apply for PRA authorisation in the future. This SS replaces SS10/14 ‘Supervising international banks: the Prudential Regulation Authority’s approach to branch supervision’.
This SS is structured as follows:
- Chapter 2 provides an overview of international banks in the UK and the distinction between their legal forms.
- Chapter 3 sets out the PRA’s general approach to branch authorisation and supervision, including how the PRA assesses the supervisability of international banks operating in the UK through branches.
- Chapter 4 sets out the PRA’s approach to authorising and supervising international bank branches that propose to accept significant retail and small-company Financial Services Compensation Scheme (FSCS) covered transactional deposits, or total covered deposits that could give rise to a material call on the FSCS.
- Chapter 5 sets out the PRA’s approach to authorising and supervising systemic wholesale branches, building on its general approach. This focuses on ensuring the PRA has an appropriate degree of influence and visibility over the supervisory outcomes for the firm as a whole and the wider group, so far as relevant to the safety and soundness of the firm and necessary to meet the PRA’s objectives. It also sets out examples of specific regulatory requirements the PRA may apply to a systemic wholesale branch on a case-by-case basis to enable it to achieve its supervisory objectives. Finally, it sets out the PRA’s expectations on booking arrangements.
The PRA will keep the policy under review to assess whether any changes will be required due to changes in the UK financial system or regulatory framework, including those arising once any new arrangements with the EU take effect.