SS3/21 - Non-systemic UK banks: The Prudential Regulation Authority’s approach to new and growing banks

First published on 15 April 2021

This Supervisory Statement (SS) provides an overview of how the Prudential Regulation Authority’s (PRA)’s supervisory expectations of ‘new and growing’ non-systemic UK-incorporated banks (collectively referred to as ‘banks’), evolve as they grow from the point of authorisation to being regarded as fully established banks.

Chapter 2 provides background on progress to date with new bank authorisations; common issues of new and growing banks; and an overview of how the PRA’s supervisory approach evolves as banks grow and develop.
Chapter 3 provides further detail on supervisory expectations of new and growing banks with a focus on common issues including business model, governance, risk management and controls.
Chapter 4 sets out the PRA’s expectations for capital management in new and growing banks, and includes a revision and simplification of the PRA methodology for calibrating the PRA buffer for these banks.
Chapter 5 sets out the PRA’s and the Bank of England’s coordinated approach to ensuring new and growing banks can exit the market in an orderly manner.
Chapter 6 sets out the PRA’s supervisory approach once banks become established.

This SS is relevant to the following types of banks:

banks in their first few years of being authorised by the PRA as a deposit-taker (typically less than five years post-authorisation); and
prospective banks interested in and currently applying for authorisation as a deposit-taker (UK applicant banks).

This SS should be read in conjunction with:

the PRA’s approach to banking supervision;
the following joint Bank / Financial Services Authority (FSA) publications: ‘A review of requirements for banks entering into or expanding in the banking sector (the 2013 report)’; and ‘A review of requirements for banks entering into or banks expanding in the banking sector: one year on (the 2013 report plus one year)’;
SS31/15‘The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)’; and
the Pillar 2 Statement of Policy (SoP) ‘The PRA’s methodologies for setting Pillar 2 capital’.