PRA statement on freezing O-SII buffer rates

Overview

The PRA has decided, in line with its intention announced last year,^{footnote [1]} to continue to freeze firms’ O-SII buffer rates in 2022. O-SII buffer rates will thus be maintained at 2019 levels. The PRA will assess rates in 2023 based on the updated The Financial Policy Committee’s framework for the O-SII buffer, published in May 2022.

In October 2021, we announced our intention to maintain O-SII buffer rates for a further year at 2019 levels, with no new rates set until December 2023. This aimed to aid firms in their capital planning. At the same time, the FPC announced its intention to consult on a proposal to change the metric used to determine O-SII buffer rates from total assets to the UK leverage exposure measure. The FPC consulted on this change in November 2021 and finalised changes to its framework in May 2022.

The PRA has now decided to confirm the O-SII buffer rate freeze for 2022. The PRA will reassess O-SII buffer rates in 2023 based on the FPC’s updated framework and in line with the PRA’s statement of policy.^{footnote [2]} The decision on O-SII buffer rates taken in December 2023 will be based on end-2022 financial results and will take effect from January 2025 in line with our policy.

Scope

The decision is relevant only to ring-fenced bodies (RFBs) and large building societies that are subject to the O-SII buffer.