CP16/25 – Disclosure: resolvability resources, capital distribution constraints and the basis for firm Pillar 3 disclosure

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Responses are requested by Friday 31 October 2025.

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Responses can be sent by email to: CP16_25@bankofengland.co.uk.

Alternatively, please address any comments or enquiries to:
Marina Keeley / Reporting, Disclosure and Data
Prudential Regulation Authority
20 Moorgate
London
EC2R 6DA

1: Overview

1.1 This consultation paper (CP) sets out proposals to enhance Pillar 3 disclosures by firms in three areas: the resources supporting resolvability, capital distribution constraints and the overall basis on which their Pillar 3 disclosure is prepared. Pillar 3 disclosures are public reports by PRA-authorised UK banks, building societies, UK PRA-designated investment firms and CRR consolidation entities (firms) to external stakeholders. Much of the content and approach to Pillar 3 disclosure is agreed upon at an international level and set out by the Basel Committee on Banking Supervision (BCBS). The Bank of England and the PRA are responsible for UK implementation. The proposals form part of a broader package of announcements on resolution-related policy by the Bank and the PRA. In particular, this CP should be read in conjunction with the Bank’s policy statement and revised statement of policy on its approach to setting MREL.

1.2 Pillar 3 disclosures help market participants, customers and other stakeholders to monitor firms’ exposure to risk and assess the overall capital adequacy of firms in which they invest, advise upon and transact with. The disclosure is typically made in a prescribed format of fixed templates to support efficient information processing by users, and to foster consistency and comparability across UK firms, and with peers in other jurisdictions. The PRA considers that Pillar 3 disclosure supports the stability and growth of the UK financial system and effective competition through the provision of consistent information which market participants deem important in capital allocation decisions. That in turn facilitates firm access to capital markets supporting the PRA’s secondary competitiveness and growth objective.

1.3 This CP proposes new disclosures on the resources supporting resolvability by firms subject to minimum requirements for own funds and eligible liabilities (MREL). For the purposes of this CP, MREL firms are those firms which are required to hold external and/or internal MREL above their minimum capital requirement (MCR). The PRA considers that the proposed disclosures would enhance the effectiveness of market discipline by increasing understanding of the Bank of England’s resolvability requirements and the resources available at firms, consequently building confidence in effective potential resolution actions. That in turn supports the safety and soundness of firms by minimising the adverse effect that the failure of a PRA-authorised person could be expected to have on the stability of the UK financial system.

1.4 This CP also proposes a new qualitative disclosure requirement for firms subject to capital distribution constraints (CDCs) to allow for more meaningful assessment by market participants of the likely impact of those capital distribution restrictions.

1.5 Finally, this CP proposes a new disclosure requirement to increase clarity about the basis upon which firms are required to produce Pillar 3 disclosures to improve user understanding. It also includes some minor amendments to disclosure and reporting related to HM Treasury’s intention (HMT) to revoke Article 92a of onshored Capital Requirements Regulation (CRR).

1.6 This CP is relevant to PRA-authorised banks and building societies, PRA-designated UK investment firms and CRR consolidation entities. The PRA considers that the proposals would be of particular interest to firms subject to the Disclosure (CRR) and Reporting (CRR) parts of the PRA Rulebook.

1.7 This CP includes the following chapters:

• Chapter 2: MREL Disclosure
• Chapter 3: Capital Distribution Constraints Disclosure
• Chapter 4: Basis of Disclosure
• Chapter 5: Consequential amendments to Disclosure (CRR) and Reporting (CRR) parts of the PRA Rulebook.
• Chapter 6: Cost Benefit Analysis (CBA)
• Chapter 7: Impact on Mutuals and equality and Diversity

1.8 The proposals set out in this CP would result in:

• changes to the Disclosure (CRR) and Reporting (CRR) parts of the PRA Rulebook (appendix 1);
• the introduction of four new disclosure templates and instruction files (appendix 4 and 5); and
• amendments to the existing CC1 disclosure templates and instructions (appendix 7 and 8).

1.9 The PRA has a statutory duty to consult when introducing new rules/changing rules (Financial Services and Markets Act (FSMA) section 138J) or introducing new standards instruments (FSMA section 138S). When not making rules, the PRA has a public law duty to consult widely where it would be fair to do so. 

1.10 In carrying out its policymaking functions, the PRA is required to comply with several legal obligations. The analysis in this CP explains how the PRA has had regard to the most significant matters, including an explanation of the ways in which having regard to these matters has affected the proposals.

1.11 Due to the low materiality and straightforward nature of the proposals, the statutory practitioner panels were not consulted by the PRA in developing this consultation paper.

Background

1.12 The PRA is making proposals in four areas.

1.13 First, with respect to resolution, the PRA considers it important for market participants to understand the resources available within a firm to support resolution. The PRA also considers that there is a need for clearer and more consistent information on the adequacy of a firm’s MREL resources^{footnote [1]} to better support external stakeholders in assessing and comparing firms’ MREL resources whilst ensuring closer alignment to international standards. Under the MREL SoP, firms that are set a preferred resolution strategy^{footnote [2]} of bail-in need to meet MREL, which is a requirement to maintain a minimum level of equity and eligible debt above minimum capital requirements (MCR) that can be ‘bailed in’ or otherwise exposed to losses in order to support a resolution should the firm fail. Having sufficient loss absorbing and recapitalisation capacity for an orderly resolution helps to minimise risks to financial stability, disruption to critical economic functions, and risks to public funds.

1.14 Second, the PRA considers it necessary to enhance transparency around CDCs placed on firms. A capital distribution constraint (CDCs) is a regulatory constraint on the proportion of a firm’s profits that may be distributed, designed to ensure that firms retain sufficient earnings to strengthen their capital positions when necessary. The severity of the constraint increases as a firm’s capital position declines relative to its buffer requirements, with the permitted level of distributions expressed as a percentage that decreases in line with the firm’s position within the quartiles of its combined buffer requirement. The PRA considers that it is important for market participants to have effective information on any restrictions on firms’ distributable profits, so that they can make informed decisions in relation to a firm. Thus, the PRA is proposing to add a qualitative disclosure requirement to the existing UK CC1 ‘Composition of regulatory own funds’ template relating to CDCs.

1.15 Third, the PRA’s Pillar 3 disclosure regime provides for a large degree of variation in the volume and frequency of disclosures across different types of firms so that it can be proportionate to the size and listing status of firms. However, this variation can be challenging for Pillar 3 users to follow. Currently market participants have no way of identifying which disclosure category a firm falls into, and therefore which disclosures to expect and at what frequency. This CP proposes to improve users’ understanding of what firms are disclosing by requiring firms to disclose the basis of their Pillar 3 preparation.

1.16 Finally, HMT has stated its intention to revoke the remainder of assimilated law in the CRR^, including Article 92a (which sets out requirements for own funds and eligible liabilities for Globally Systemically Important Institutions (G-SIIs)). ^{footnote [3]} The PRA considers it prudent to replace references to Article 92a within the Disclosure (CRR) and Reporting (CRR) parts of the PRA Rulebook with equivalent language to ensure that the scope of existing requirements is maintained when Article 92a of the CRR is revoked.

Implementation

1.17 The proposed implementation date for all proposals set out in this CP is 1 January 2027, with a first reference date for the period ending 31 December 2026.^{footnote [4]} This aligns with the proposed implementation date for the changes set out in the PRA’s consultation on MREL reporting.

Responses and next steps

1.18 This consultation closes on Friday 31 October 2025. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to [CP16_25@bankofengland.co.uk].

1.19 When providing your response, please tell us whether you consent to the PRA publishing your name, and/or the name of your organisation, as a respondent to this CP.

1.20 Please also indicate in your response if you believe any of the proposals in this consultation paper are likely to impact persons who share protected characteristics under the Equality Act 2010, and if so, please explain which groups and what the impact on such groups might be.

1.21 References related to the UK’s membership of the EU in the proposed disclosure rules, templates and instructions set out in this CP have been updated to reflect the UK’s withdrawal from the EU. Unless otherwise stated, any remaining references to EU or assimilated legislation refer to the version of that legislation which forms part of assimilated EU law.

2: The PRA’s proposals on MREL disclosure

2.1 This chapter sets out the PRA’s proposed adjustments to MREL disclosure requirements in the Disclosure (CRR) Part of the PRA Rulebook. The PRA notes that Chapter 5 of this CP proposes to amend the reference to Article 92a in the PRA rulebook.^{footnote [5]}

2.2 The PRA considers that it is important for users of Pillar 3 disclosure to understand the resolvability of a firm by a firm being transparent over the adequacy of its MREL resources. This supports Fundamental Rule 8 of the PRA Rulebook, which requires firms to be prepared for resolution in a way that allows for an orderly process and minimises disruption to critical services. An increase to the transparency of own funds and eligible liabilities would foster market discipline and support market confidence in the prospect of the orderly resolution of these firms. This, in turn, contributes to a more resilient financial system, which is vital for maintaining long-term competitiveness, supporting sustainable economic growth, and safeguarding overall financial stability.

2.3 The PRA currently requires certain firms to disclose information on their eligible liabilities and own funds in a free format but does not prescribe the templates in which to make such disclosures. ^{footnote [6]} The proposals in this CP would replace the existing requirements with clearly specified and consistent templates on a firm’s MREL information. The proposals would also require an expanded population of firms to disclose information on MREL.

MREL disclosure sub-populations

2.4 The PRA is seeking to apply the proposed MREL disclosures in a proportionate manner via different requirements for disclosure templates across different types of firm. The proposed scope of application varies by size.

2.5 Specifically, the PRA proposes to utilise existing CRR disclosure size categories within the Disclosure (CRR) Part of the PRA Rulebook (such as large institutions and other institutions). Using existing disclosure populations ensures the level of application remains easy to understand and avoids introducing undue complexity to the regime.

MREL Disclosure templates

2.6 Disclosure on total loss absorbing capacity (TLAC) is prescribed by the BCBS’s disclosure standards. In 2018, the BCBS introduced five disclosure templates on total loss absorbing capacity (TLAC),^{footnote [7]} applicable to G-SIB resolution entities and their material subgroup entities, effective January 2019. The templates require the disclosure of the composition of regulatory capital, the main features of regulatory capital instruments and of other TLAC-eligible instruments and, additionally for G-SIBs, the composition of TLAC and the creditor hierarchies of material subgroups and resolution entities.^{footnote [8]} Whilst the PRA implemented requirements for Article 92a firms and material subsidiaries of non-UK G-SII’s (formerly Article 92b firms) to make freeform disclosures on TLAC from 1 January 2022, ^{footnote [9]} it did not implement the majority of BCBS TLAC templates as regulatory requirements.

2.7 One exception was that the UK did implement the CCA template which covers the main features of regulatory own funds instruments and eligible liabilities instruments. The PRA notes that the requirement for completion of the UK CCA template is explicit for certain firms in order to meet their disclosure of the composition of their own funds and, as applicable, eligible liabilities instruments. However, for Article 92a firms and material subsidiaries of non-UK G-SIIs the requirement to disclose information on the composition of their eligible liabilities via the UK CCA template is less clear. To address this ambiguity, the PRA proposes to clarify the requirement for Article 92a firms, resolution entities that are O-SIIs, large institutions and other institutions that are MREL firms to use the UK CCA template to make disclosures in respect of eligible liabilities instruments (where applicable to them as MREL firms). The clarification recognises that many firms already fulfil this in substance by using the UK CCA template.

2.8 In terms of the new proposed MREL disclosure templates the PRA proposes to base the design on those published by the BCBS for TLAC. The PRA proposes that modifications to the BCBS templates are necessary to adapt to the specificities of the UK MREL regime. If implemented, the Bank of England may cease to make its current annual publication on firms’^{footnote [10]} external MREL, as the relevant information would be already disclosed by firms.

2.9 The PRA proposes to introduce the following new disclosure templates (See appendix 4 and 5):

• UK KM2: Key metrics on available external MREL resources of the resolution group in absolute terms relative to total risk exposure amount (RWAs)/Total exposure (LE) excluding claims on central banks;
• UK MREL1: External MREL composition of the resolution group, with breakdown by different classes of regulatory and non-regulatory capital elements;
• UK MREL2: Creditor ranking of different classes of liabilities of a material subsidiary, with a breakdown by residual maturity; and
• UK MREL3: Creditor ranking of different classes of liabilities of the resolution entity, with a breakdown by residual maturity.

2.10 The key modification proposed by the PRA to the BCBS KM2 template in UK KM2 is to include information on MCR, MREL requirements and buffers. These data are currently included in the Bank of England’s disclosure on external MREL.^{footnote [11]} The PRA considers that this information, when disclosed alongside firms’ MREL resources, provides transparency on firms’ compliance with MREL requirements. The PRA considers that these core metrics support building market confidence in the resolvability of MREL firms, promoting safety and soundness.

2.11 The proposed amendments to the BCBS published versions of the templates align with the latest Bank of England MREL framework set out in the revised MREL Statement of Policy published on 15 July 2025. Appendix 6 to this CP sets out the list of all amendments to the BCBS proposed templates.

Application across firms

2.12 The PRA proposes to require templates UK KM2, UK MREL 1, UK MREL 2 and UK MREL 3 (ie all proposed templates) be disclosed by the following MREL firms (with the frequency set out in Table 2):

• institutions identified as resolution entities that are a G-SII or part of a G-SII (i.e. Article 92a firms);
• O-SIIs and identified as resolution entities (ie O-SII MREL firms).

2.13 The proposed requirement to disclose all proposed templates will hereafter be referred to as ‘full MREL disclosures’.

Table 2: Summary of proposed MREL disclosure requirements:

• * institutions identified as resolution entities that are a G-SII or part of a G-SII
• ** This reflects the proposal below that UK material subsidiaries of non-UK G-SIIs do not need to disclose UK MREL1, UK MREL3 and UK KM2 as they do not hold external MREL.
• ‘Large’ and ‘Other’ institutions as set out under Article 433a of the Disclosure (CRR) part of the Rulebook.
• MREL firms means an institution that is required, pursuant to a direction by the Bank of England, to maintain or issue own funds and eligible liabilities in excess of its own funds requirements (as defined in section 3(1) of the Banking Act 2009).

2.14 Given the global and domestic importance of G-SII and O-SII institutions,^{footnote [12]} the PRA considers that applying the full MREL disclosures to such firms is necessary given the systemic importance of these firms and the greater market interest in these firms. This increases the importance of maintaining transparency on the resolvability of such firms and market confidence in the prospect of orderly resolution. The PRA proposes to introduce a new reference to such firms under the large institutions requirements within the Disclosure (CRR) Part of the PRA Rulebook.

2.15 The Disclosure (CRR) Part of the PRA Rulebook currently requires Article 92a firms to disclose information regarding their own funds and eligible liabilities without prescribing fixed templates.^{footnote [13]} Some firms have already been disclosing the Basel TLAC templates to meet this requirement on a voluntary basis.

2.16 The PRA proposes to require Large and Other institutions that are MREL firms and identified as resolution entities, but are not O-SIIs, to disclose a more limited set of information on a less regular basis. This reduced disclosure will include information on key external MREL resource metrics as well as MCR, MREL requirements and buffers. The PRA proposes that these disclosures will be made using the UK KM2 template on an annual basis.

2.17 The PRA considers these firms to have less complex business profiles than their counterparts which are G-SIIs or O-SIIs. The proposed streamlined disclosures are proportionate, whilst maintaining a baseline level of transparency and comparability between all UK MREL firms. Whilst the proposed templates will be new, the PRA anticipates that firms are already monitoring these metrics as part of capital management, and that the data may be readily accessible.

2.18 Separately, for UK material subsidiaries of international G-SIIs, the PRA proposes to only require template UK MREL 2 to be disclosed. These firms are already required to disclose information on own funds and eligible liabilities in a free format. By prescribing UK MREL2, the PRA seeks to improve the standardisation of the content of these firms’ disclosures and enhance comparability between UK firms, and internationally. External MREL disclosure standards (for content corresponding to BCBS templates KM2, TLAC1 and TLAC3) are applicable to the non-UK resolution entities of these international G-SIIs and should be set by the home resolution authority and are therefore not proposed to be implemented in the UK under this proposed regime.

2.19 The MREL disclosures above are proposed to apply to firms within the MREL scope that have a binding requirement to hold an external and/or internal MREL higher than the MCR. Firms not subject to a binding requirement at the proposed implementation date should start making MREL disclosures only when the external and/or internal MREL requirement in excess of the MCR becomes binding. This is typically the second or third year in the overall 6-year MREL transition.

PRA objectives analysis Primary Objectives

2.20 The PRA’s proposed MREL disclosures are designed to advance its primary objective to promote safety and soundness by enhancing the market understanding of a firms’ resolvability and the capital and other resources that MREL firms have available to support resolution. By requiring firms to disclose this information, the PRA is addressing an existing disclosure gap and reducing public uncertainty around the resources of MREL firms. Fundamental Rule 8 states: A firm must prepare for resolution so, if the need arises, it can be resolved in an orderly manner with a minimum disruption of critical services. Transparency around the amount of loss absorbing capacity available for use in resolution also helps to promote confidence in UK resolution arrangements and financial stability, which supports safety and soundness.

2.21 Increasing transparency on MREL can help market participants make informed capital allocation decisions regarding MREL firms. By reducing uncertainty, clearer disclosures can also improve MREL firms’ access to capital markets, thereby strengthening their financial resilience, contributing to overall market stability, thus promoting safety and soundness.

Secondary Objectives

2.22 The proposed introduction of a specific format for MREL disclosure would help market participants evaluate firms against their competitors in a more efficient way. Enhancing the comparability of firms’ disclosures in this way can support the PRA’s secondary competition objective.

2.23 For those less complex MREL firms with a simpler business model, the PRA proposes to only require the disclosure of ‘core’ information. By limiting the volume of disclosure, the PRA can maintain a strong baseline for resolvability transparency, whilst reducing the cost and administrative burden on smaller, less systemically important firms, again helping support effective competition.

2.24 By adopting the design of the BCBS templates, the PRA also seeks to maintain the international comparability of the proposed MREL disclosures, which allows efficient comparison of the resolvability of UK firms to their international peers. This comparability supports transparency and demonstrates the robustness of the UK’s resolution framework, which can enhance the reputation and attractiveness of UK firms in global markets. In turn, this may support the international competitiveness of UK firms, thereby contributing to the PRA’s secondary objective to facilitate international competitiveness and growth.

‘Have regards’ analysis

2.25 In developing these proposals, the PRA has had regard to the FSMA regulatory principles, and the aspects of the Government’s economic policy set out in the HMT recommendation letter from November 2024. The following are factors that the PRA considers most material to the proposals:

The principle that a burden or restriction which is imposed on a person should be proportionate to the benefits which are expected to result from the imposition of that burden (FSMA regulatory principles): The variation in the application and frequency of the proposed disclosures across firms reflects the PRA’s consideration of proportionality with respect to the varying complexity of firms’ business models and size. The PRA considers its proposals are commensurate with varying capacity of different MREL firms to cause significant financial disruption, and the potential different user interest in these disclosures. Less complex firms, for example, would only be required to disclose KM2 and at a lower frequency, compared to the four templates that more systemically significant firms would disclose.

Recognition of difference between businesses (FSMA regulatory principles): The recommended approach for all proposals recognises the difference in firms’ size and complexity and their relationship with the market and the potential benefit of the additional information requirement to market discipline. Tailoring the requirements of the templates and the frequency to those firms’ systemic importance as designated by the stated G-SII, O-SII framework reflects the difference in those firms’ business models. The proposals exclude Small Domestic Deposit Takers (SDDT) firms and other institutions that do not have an MREL requirement that is greater than their MCR from the scope of MREL disclosure.

Contribution of the financial services sector to overall economic growth and creating a regulatory environment which facilitates growth through supporting competition and innovation (HMT recommendation letter): The PRA considers that introducing new disclosure requirements on MREL will provide investors with relevant information on firms’ own funds and eligible liabilities. Improving market participants’ understanding of firms’ resources and capacity to be resolved in an orderly way, supports informed capital allocation decisions, whether these result in greater access of MREL firms to capital, or market discipline being applied to firms that are not in full compliance with their MREL requirements either by forcing firms to improve or pressuring them to leave the market. This transparency supports market confidence in the resolvability of UK MREL firms and may reduce potential negative outcomes arising from uncertainty about resolvability, which could impact the ability of banks to grow and compete.

2.26 The PRA has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’ for this proposal it is because the PRA considers that ‘have regard’ to not be a significant factor for this proposal.

3: Capital distribution constraints disclosure

CDCs disclosure requirements

3.1 Capital distribution constraints (CDCs) are triggered when a firm’s available CET1 capital is not sufficient to meet its combined buffer requirements. These requirements include the capital conservation buffer, the countercyclical capital buffer, the global systemically important institutions buffer (G-SII buffer) or the other systemically important institutions buffer (O-SII buffer) where applicable. CDCs function as a regulatory constraint on the amount of a firm’s profits that can be distributed to ensure that firms retain sufficient profit to strengthen their capital levels when required. The extent of the constraint increases as a firm’s capital decreases relative to its requirements, with constraints on distributions in percentage terms linked to where a firm’s capital sits in relation to the quartiles of its combined buffer requirements, as set out in the PRA Rulebook.

3.2 There is no existing requirement for firms subject to CDCs to disclose which buffer quartile they fall into. As a result, there is a risk that market participants may not fully understand why and how any CDCs are being applied to a firm. A lack of understanding by market participants regarding the constraints imposed on firms may result in outsized reactions – particularly if market participants think that constraints might be greater than they actually are – negatively impacting the stability of these firms, and potentially financial markets.

3.3 Therefore, the PRA is proposing to add a narrative section to include this information in the existing UK CC1 disclosure template which provides information on the composition of regulatory own funds (see appendix 8). The narrative section proposed for UK CC1 aligns with that set out in BCBS’s voluntary CDCs template. Firms, in a free form manner, would be required to describe what constraints have been imposed and provide a link to the PRA’s Rulebook website which sets out the PRA’s requirements and thus includes information that might be helpful for market participants. In addition, firms can explain how the PRA’s requirements apply to them and any optional information related to the CDCs. This would allow firms to provide better information to the market in a manner they consider proportionate to users’ information needs.

3.4 The PRA is not proposing any further changes to UK firms’ disclosures in relation to BCBS’ voluntary disclosure template on CDCs as it considers that the relevant content of the CDC template is largely met for UK firms via existing UK CC1 disclosures.^{footnote [14]} The PRA’s proposal to amend UK CC1 to include a narrative section is judged to close the gap with the information included in the BCBS’ CDC disclosure template in a way that avoids placing an unnecessary and disproportionate burden on firms.

Further update to UK CC1

3.5 The PRA also proposes to take the opportunity of amending the UK CC1 (see appendix 8) to remove the Systemic Risk Buffer (SRB) disclosure requirement from that template. The SRB was replaced in the UK by the O-SII buffer in December 2020. Therefore, the PRA proposes to remove the SRB content in both the template and instructions of UK CC1 to bring it up to date (see Appendix 7 and 8).

Primary objectives analysis

3.6 The PRA considers the proposal to add a narrative section to the UK CC1 could further its primary objective of promoting safety and soundness by improving the transparency of CDCs, by helping market participants to understand any constraints imposed on firms. Users of the Pillar 3 report would have access to information about how CDCs have been applied to allow for a meaningful assessment of the resulting impact on distributable profits. This adds clarity when CDCs are imposed on firms and could improve market understanding of the economic outcomes for firms. It should help mitigate the risk of an outsized reaction to the constraints imposed on firms, which could otherwise negatively impact the stability of these firms.

Secondary objectives analysis

3.7 The PRA considers that the proposal may facilitate effective competition in the market through enhanced market discipline. The PRA considers the enhanced disclosure would improve the clarity around CDCs and buffers for market participants, allowing investors to make more informed decisions about their capital resource allocation. Ensuring that market participants have relevant information about UK firms’ CDCs may also allow those firms to better access capital markets and attract investment.

‘Have regards’ analysis.

3.8 In developing these proposals, the PRA has had regard to the FSMA regulatory principles, and the aspects of the Government’s economic policy set out in the HMT recommendation letter from November 2024. The following factors that the PRA considers are most material to the proposals include:

Creating a regulatory environment which facilitates growth through supporting competition and innovation (HMT recommendation letter): The PRA considers that the proposal in this chapter would enhance market participants’ understanding of CDCs. Coupled with information about firms’ capital positions, this supports a regulatory environment which facilitates competition and growth by allowing market participants to conduct meaningful assessments and make informed decisions.

The principle that a burden or restriction which is imposed on a person should be proportionate to the benefits which are expected to result from the imposition of that burden (FSMA regulatory principles): In formulating this proposal, the PRA has considered whether the BCBS CDCs voluntary template should be implemented in full, as a separate disclosure. However, the PRA did not consider that it would provide enough benefit relative to the cost burden, given that the relevant information included in the BCBS template is already disclosed in UK CC1. Therefore, the PRA has proposed a more proportionate requirement to close the gap between the BCBS template and current UK CC1 template requirements to avoid duplicative disclosures.

3.9 The PRA has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’ for this proposal it is because the PRA considers that ‘have regard’ to not be a significant factor for this proposal.

4: The PRA’s proposed requirement for basis of disclosure

4.1 Pillar 3 requirements vary across firms proportionate to the size and complexity of a firm, as represented by the CRR firm size categories (eg large, other, SDDT), as well as the listing status of any debt or equity. As a result, the Pillar 3 requirements vary significantly in terms of the number of required templates and disclosure frequency across firms. Apart from SDDTs which must apply for a modification, firms self-assess against the CRR size categories.

4.2 Currently, market participants may not be able to easily identify which PRA disclosure requirement a firm is disclosing under, and therefore which templates should be disclosed by a firm, and when these disclosures should be made. The PRA considers that it is helpful for the users of Pillar 3 disclosures to understand the disclosure requirements that apply to a firm and, in turn, the completeness of the Pillar 3 report.

4.3 The PRA proposes to introduce a requirement for firms to explain the basis under which they are preparing the Pillar 3 report with reference to the categories used in the Disclosure (CRR) Part of the PRA Rulebook, eg G-SIIs, material subsidiaries of non-UK G-SIIs, O-SIIs, resolution entity, large institution, other institution, MREL firm, large subsidiary, non-listed, SDDT or SDDT consolidation entity. This will allow users to better assess the completeness of the Pillar 3 report.

Primary objectives analysis

4.4 The PRA considers that improving the existing Pillar 3 report by requiring firms to specify the basis on which they produce their Pillar 3 advances the PRA’s primary objective of promoting safety and soundness of firms by improving the effectiveness of users’ engagement with the Pillar 3 report and supports the monitoring of compliance. Better monitoring of compliance may support disclosure completeness, enhancing overall market discipline which improves safety and soundness.

Secondary objectives analysis

4.5 The PRA considers that improving the effectiveness of the Pillar 3 report by improving market participants understanding of a firm’s compliance with their regulatory requirements facilitates efficient and effective comparisons between firms, allowing for more competition between those firms.

4.6 The PRA considers that the proposal may support the international growth and competitiveness of the UK economy by enhancing the transparency of the Pillar 3 report and comparability of UK firms internationally, supporting access to international capital markets.

‘Have regards’ analysis.

4.7 In developing these proposals, the PRA has had regard to the FSMA regulatory principles, and the aspects of the Government’s economic policy set out in the HMT recommendation letter from November 2024. The following factors that the PRA considers are most material to the proposals include:

Desirability of the PRA requiring persons to publish information as a means of contributing to the advancement of the PRA’s objectives (FSMA regulatory principles)

4.8 The PRA considers that this proposal supports its primary objective of safety and soundness by enhancing the clarity and usability of Pillar 3 disclosures. At present, market participants may find it difficult to determine which disclosure requirements apply to a particular firm, which can hinder their ability to assess the completeness and relevance of the information disclosed. By requiring firms to state the regulatory classification under which they prepare their Pillar 3 reports, the PRA is improving the transparency of the regulatory framework and the application of its rules. This measure enables users of Pillar 3 reports to better understand the scope of a firm’s disclosure obligations and assess compliance more effectively. In doing so, the proposal demonstrates the PRA’s commitment to openness and accountability in its supervisory approach and contributes to the broader objective of ensuring that regulatory activities are conducted in a transparent and accessible manner.

4.9 The PRA has had regard to other factors as required. Where analysis has not been provided against a ‘have regard’ for this proposal, it is because the PRA considers that ‘have regard’ not be a significant factor for this proposal.

5: Amendments as a Result of HMT’s intention to revoke Article 92a

5.1 This chapter is relevant to institutions that are currently subject to Article 92a of CRR (ie institutions identified as resolution entities that are a G-SII or part of a G-SII) (Article 92a firms). Article 92a lays out the own funds and eligible liabilities requirements for resolution entities that are a G-SII or part of a G-SII.

5.2 The chapter sets out the PRA’s proposals to amend the existing references to Article 92a of the UK CRR in the Disclosure (CRR) and Reporting (CRR) parts of the PRA’s Rulebook. HM Treasury (HMT) has expressed its intention to revoke the remainder of assimilated law in the CRR, including Article 92a of the UK CRR. That would mean the existing references to Article 92a in the Disclosure (CRR) and Reporting (CRR) Parts of the Rulebook would not operate as intended.

5.3 The PRA proposes to replace references to institutions that are subject to Article 92a in the Disclosure (CRR) and Reporting (CRR) parts of the PRA Rulebook with references to institutions that are identified as resolution entities and are G-SIIs or part of a G-SII. ^{footnote [15]}

5.4 The proposals in this chapter would result in changes in the following areas (See appendix 1):

• The Disclosure (CRR) Part of the PRA’s Rulebook specifically:
  • Articles 437, 437a and 447(h) which provide requirements for firms subject to Article 92a and;
  • Article 433a (3) which sets the frequency that Article 92a firms must disclose the information set out in Articles 437, 437a and 447(h).
• The Reporting (CRR) Part of the PRA’s Rulebook, specifically:
  • Article 430(1)(b)^{footnote [16]} of the Reporting (CRR) part of the PRA Rulebook requires G-SIIs to report their own funds and eligible liabilities to the PRA as laid down in Articles 92a.

5.5 The PRA considers these proposed changes would maintain the scope of application of the reporting and disclosure requirements that Article 92a firms are currently required to comply with. The PRA considers that there is no substantive change in disclosure requirements (content, firms in scope or frequency) as a result of this proposal.

PRA objectives analysis

5.6 The PRA considers that its proposed approach ensures that the PRA’s Rulebook continues to reflect reporting and disclosure requirements, allowing firms to maintain existing reporting to the Bank and the PRA and disclosure to the market. The continued operation of reporting and disclosure requirements as intended in respect of Article 92a firms advances the PRA’s safety and soundness objective by providing clarity in firms obligations. This enables firms to maintain compliance and supports effective supervisory monitoring.

5.7 The proposals do not change the current reporting and disclosure requirements and the population of firms subject to the requirements compared to the pre-revocation position, and therefore are unlikely to have an impact on the PRA’s secondary competition or international competitiveness and growth objectives.

‘Have regards’ analysis

5.8 In developing these proposals, the PRA has had regard to the FSMA regulatory principles, and the aspects of the Government’s economic policy set out in the HMT recommendation letter from November 2024. The PRA does not consider that the ‘have regards’ are a significant factor for this set of proposals.

6: Cost Benefit Analysis

Cost Benefit Analysis

6.1 The Financial Services and Markets Act 2000 (FSMA), as amended, requires the PRA to publish a cost benefit analysis (CBA) of proposed rules. Specifically, section 138J requires the PRA to publish a CBA of proposed rules, defined as ‘an analysis of the costs, together with an analysis of the benefits that will arise if the proposed rules are made’.

6.2 FSMA 2000 requires regulators to provide an estimate of the costs and benefits of the proposals unless, in the opinion of the regulators, the costs and benefits cannot reasonably be estimated or it is not reasonably possible to do so. Where estimates cannot be ascribed a monetary value, other estimates of outcomes are provided.

6.3 The analysis has been conducted with regard to the PRA primary objectives, and the PRA’s secondary objectives of competition and competitiveness and growth.

6.4 The PRA has not consulted the CBA panel on the preparation of this CBA as it assessed that the cost of the proposals in aggregate fall below the materiality threshold for the CBA Panel’s consideration^{footnote [17]}.

6.5 The PRA’s estimate of the additional costs and benefits above the baseline of the current reporting and disclosure rules, reflect the incremental changes that firms would not otherwise have undertaken in the absence of the proposals in this CP.

6.6 The PRA estimates that there are no material costs that would be incurred by the PRA as a result of implementing these proposals.

MREL Disclosure

Cost to firms

6.7 The PRA’s proposal to introduce new MREL disclosure templates in a proportionate manner would result in implementation and ongoing preparation costs across the population of MREL firms. The PRA has estimated the potential costs across different cohorts of firms and aggregated these to form an overall industry cost estimate.

6.8 The PRA anticipates that the main implementation costs to firms of the MREL disclosure proposals arise from changes to their existing systems or disclosure processes to source the data required to comply with the new requirements, and one-off interpretation of the PRA requirements. The PRA expects that much of the core data set out in the proposed MREL disclosure templates is already accessible to firms given its relevance to core capital management. On an ongoing basis, firms may incur incremental costs associated with the routine production of the disclosure content and integration of the new disclosures into the existing Pillar 3 governance approach (ongoing compliance).

6.9 To gauge the overall cost of the proposal, the PRA estimated the hours per firm that would be needed to implement systems to comply with the requirements and the size of technology project that would be needed for implementation, as well as the ongoing hours required to comply with the proposal, related to the routine production of the disclosure.

6.10 When estimating these figures, the PRA considered that much of the baseline data is accessible to firms, and already required in other reporting and disclosure submissions including the existing MREL reporting set out in Supervisory Statement (SS) 19/13 – Resolution planning. The PRA estimates the total annualized cost for all MREL firms over 10 years to be £1,440,000. Individual firm impacts will vary based on the scope of the proposed disclosure requirement, and a firm’s internal processes around disclosure preparation.

Benefits

6.11 The benefits of the proposal are expected to arise through better informed decisions by market participants on the basis of enhanced information on firms’ MREL resources.

6.12 The PRA considers that the provision of more complete and accurate information to the market about firms’ MREL resources will result in market participants being more confident in orderly resolvability of those firms that are compliant with their MREL requirements. This has the potential to lead to better access to capital for those firms.

6.13 Greater disclosure on MREL should enable market participants to make more accurate, effective and efficient assessments of firms, and improve the market discipline that is placed on firms by market participants, improving the safety and soundness of the firms in question.

6.14 Finally, by implementing the international standards that have been required by BCBS, the proposals are ensuring that UK MREL firms meet the disclosure standards that their peers in other jurisdictions are subject to, and will enhance the international comparability of MREL firms to their overseas peers. Enhancing the comparability across jurisdictions of UK MREL firms should improve their access to international capital markets.

Capital Distribution Constraints Disclosure

Costs to firms

6.15 The PRA considers that the cost of this proposal to firms and the industry as a whole will be immaterial given the limited, free form narrative-based disclosure, which will only need to be completed when CDCs are triggered. Additionally, only a small subset of firms are likely to be subject to this disclosure proposal at a given time.

6.16 When firms are required to disclose the additional qualitative narrative on CDCs, it will be on the basis of existing rules and does not require the production of new data. The PRA considers that firms would already have internal processes that detail the relevant information, on CDCs and the management of capital. The PRA does not consider that firms will need to interpret any new requirements, in addition to the current regulatory baseline around the application of capital conservation measures, to implement this disclosure. The PRA acknowledges that some firms may perceive a potential cost in explicitly confirming to the market they are subject to CDCs. However, the PRA considers that this does not represent a material cost, as market participants are already able to infer the likelihood of CDCs from the quantitative disclosures in CC1.

6.17 Therefore, the PRA considers that the implementation and ongoing compliance costs for this proposal would be negligible. As a result, the PRA has not estimated the quantitative costs, in line with the FSMA requirement.

Benefits

6.18 Those firms that have to complete the narrative should benefit from a reduced risk of market participants misunderstanding the impact of CDCs. Increasing transparency on the nature of CDCs reduces the likelihood of outsized reactions towards those firms that have a CDC, which reduces the potential stability risks that can arise from those reactions. The PRA recognises the market is aware when a firm has been subjected to CDCs from the quantitative disclosures required; by requiring firms to explain where these have been applied, provides firms the opportunity to mitigate disproportionate and adverse reactions by market participants.

6.19 The accompanying narrative is intended to enhance this understanding by providing additional context on when such constraints are applied, offering greater transparency and allowing investors to make more effective capital resource allocation decisions and promote market discipline.

Basis of Disclosure

Costs to firms

6.20 The PRA is proposing a requirement for firms to add a line to their Pillar 3 reports detailing on what basis they complete their disclosure requirements. Firms must self-identify their category to complete the report.

6.21 The PRA considers the cost to firms of this proposal is negligible as it is based on their existing assessment and is a short, narrative focused disclosure. The PRA does not anticipate there will be any additional interpretation or governance effort required in addition to what firms should already be applying to comply with the PRA’s disclosure requirements, on both an implementation and ongoing basis. The PRA did not complete a quantitative cost assessment for this proposal given the immateriality of the likely cost.

Benefits

6.22 The PRA considers that this proposal improves the effectiveness of the Pillar 3 report by allowing users to assess compliance with the PRA’s disclosure requirements. Market participants being more easily able to evaluate and compare firms improves the market discipline applied to those firms which in turn enhances market transparency, supports more efficient capital allocation, and promotes a clearer understanding of firms’ regulatory positions.

Consequential amendments to Disclosure (CRR) and Reporting (CRR) parts of the PRA Rulebook

Costs to firms:

6.23 The PRA considers that there are no incremental costs to firms arising from this proposal. The proposed amendments to the PRA Rulebook do not alter the scope, content, or frequency of existing reporting and disclosure requirements. Furthermore, the population of firms subject to these requirements remains unchanged. As such, firms already complying with Article 92a obligations will not incur additional compliance burdens. 

Benefits:

6.24 The PRA considers that the proposed updates would benefit firms by maintaining clarity regarding their reporting and disclosure obligations. By replacing references to Article 92a of the UK CRR with equivalent terminology ahead of its anticipated revocation, the proposal ensures that the relevant provisions in the PRA Rulebook remain operational and aligned with existing requirements.

7: Impacts on mutuals and equality and diversity

7.1 The PRA considers the below analysis for impacts on mutuals and equality and diversity applies to all proposals within this CP:

Impact on mutuals

7.2 FSMA requires that the PRA assesses whether, in its opinion, the impact of its proposals on mutuals will be significantly different from the impact on other firms, and if so, to provide details of the difference. The proposals would apply equally to all in-scope CRR firms and CRR consolidation entities, including mutuals. The PRA recognises that the proposals distinguish between firms based on their significance, size and complexity. The majority of small mutuals would not be required to hold MREL above their minimum capital requirement; therefore, the proposed MREL disclosure regime may not be applicable. However, the proposed distinctions based on the significance, size and complexity of firms apply to all firms (whether mutuals or not) within scope of the proposals. The PRA, therefore, considers that the impact of the proposals on mutuals would not be significantly different from the impact on other firms. For all other proposals, the PRA considers that the impact of the proposed rule changes on mutuals is expected to be no different from the impact on other firms.

Equality and diversity

7.3 In developing its proposals, the PRA has had due regard to the equality objectives under s149 of the Equality Act 2010. In line with its responsibility under the Equality Act, the PRA has performed an assessment and considered the equality implications in formulating its proposals. The PRA considers that the proposals do not give rise to equality and diversity implications. The PRA will continue to consider the equality and diversity implications of the proposals during the consultation period, and in relation to further consultation concerning future operative proposals.