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’.