PS6/25 – International firms: Updates to SS5/21 and branch reporting

1: Overview

1.1 This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses received to consultation paper (CP)11/24 – International firms: Updates to SS5/21 and branch reporting. This PS also contains the PRA’s final rules and policy with respect to PRA’s approach to branch and subsidiary supervision, and related final policy materials and supervisory guidance materials, as follows:

• PRA Rulebook: Regulatory Reporting (Appendix 1);
• Supervisory statement (SS) 5/21 – International banks: The PRA’s approach to branch and subsidiary supervision (Appendix 2);
• Branch Return Form (Appendix 3);
• Reporting guidance for the Branch Return (Appendix 4);
• SS34/15 – Guidelines for completing regulatory reports (Appendix 5); and
• [Deleted in its entirety] SS 1/17 – Supervising international banks: the PRA’s approach to branch supervision – liquidity reporting (Appendix 6);

1.2 This PS is relevant to existing or prospective PRA authorised banks and designated investment firms that are headquartered outside of the UK or are part of a group based outside of the UK. In addition, parts of Chapter 3 of this PS (relating to the PRA’s expectations regarding booking models) are also relevant to banks and designated investment firms that are headquartered in the UK or are part of a group based in the UK, with investment banking and/or sales or trading activities in both the UK and overseas.

Background

1.3 Many overseas banks or banking groups operating in the UK are significant providers of financial services to the UK economy. The PRA is making targeted changes to its expectations of international and UK trading banks in line with its continued approach of responsible openness.

1.4 As stated in SS5/21 and reiterated in CP11/24, the PRA remains open to international banks wishing to operate in the UK and recognises the benefits that this brings. This is also in line with the PRA's secondary objective to facilitate the international competitiveness and growth of the UK economy. The PRA remains open to highly integrated firms operating as branches or subsidiaries, provided that they meet the PRA’s expectations as set out in SS5/21. The PRA is open to a range of booking models provided that firms meet the appropriate standards for prudent risk management.

1.5 In CP 11/24, the PRA proposed updates to the PRA’s approach to international banks, including:

• the introduction of some additional indicative criteria that the PRA would consider when determining whether it would be appropriate for an international bank to operate in the UK as a branch rather than a subsidiary (branch risk appetite);
• clarifications to the expectations of firms’ booking arrangements and extending their formal application to a subset of UK banks (booking models);
• amendments to the PRA branch return designed to improve the collection of whole-firm liquidity data (liquidity reporting), and
• minor amendments to SS5/21 to clarify some of the PRA’s existing expectations and processes.

1.6 In determining its policy, the PRA considers representations received in response to consultation, publishing an account of them and the PRA’s response (feedback). Details of any significant changes are also published. In this PS, the ‘Summary of responses’ section below contains a general account of the representations made in response to the CP; Chapter 2 contains the PRA’s detailed feedback.

1.7 In carrying out its policy and rule making functions, the PRA is required to have regard to various matters. In CP11/24 the PRA explained how it had regard to the most relevant of these matters in relation to the proposed policy. This statement has been updated in this Chapter (Have regards section), taking into account policy changes and consultation responses where relevant.

Summary of responses

1.8 The PRA received four responses to CP11/24. All four consented to their names being published; their names are provided in Appendix 1. The PRA attended a number of industry workshops and meetings with trade bodies, both pre and post publication of CP11/24.

1.9 Respondents generally welcomed the proposals which reiterated the PRA’s approach of responsible openness to international banks operating in the UK. There was broad support for the PRA’s proposals to address developments since the publication of SS5/21, and to provide further detail and clarification on certain aspects of the PRA’s approach.

1.10 Respondents made a number of observations, in particular requesting changes and clarification on various aspects of the proposals, which Chapters 2-4 of this PS examine in detail. For example respondents questioned the calibration of existing and proposed indicative thresholds, highlighted certain challenges with regulatory reporting, sought clarification on definitions used, raised the possibility of conflict with other regulators’ expectations and sought clarification on implementation timelines.

Changes to draft policy and rules

1.11 This PS takes account of how the policy advances the PRA objectives and of significant matters that the decision maker had regard to (which is set out in CP11/24). The PRA has considered the responses to CP11/24, and made the following changes and clarifications in SS5/21, which are discussed in greater detail in Chapters 2-4.

1.12 Where the final rules differ from the draft versions as set out in CP11/24 in a way which is, in the opinion of the PRA, significant, the Financial Services and Markets Act 2000 (FSMA)^{footnote [1]} requires the PRA to publish:

• details of the differences together with an updated cost benefit analysis, and
• a statement setting out in the PRA’s opinion whether or not the impact of the final rules on mutuals is significantly different from: the impact that the draft rule would have had on mutuals; or the impact that the final rule will have on other PRA authorised firms.

1.13 Changes are detailed below. The PRA does not consider that the changes to draft rules are significant enough to require an amended CBA under FSMA. Nonetheless considerations around this are described below in paragraphs 1.17-1.20. The PRA also does not consider that the final rules will have a significantly different impact on mutuals relative to the impact that the draft rules would have had on mutuals, or relative to the impact that the final rules would have on other PRA authorised firms.

Branch Risk Appetite

1.14 There have been a number of changes to the final policy, with justification for the PRA’s final decision set out in Chapter 2. The PRA has made the following changes:

• Amended the calibration of two existing indicative thresholds: Both thresholds^{footnote [2]} have been increased by 30% to £130m and £650m respectively, to broadly mirror inflation since initial calibration.
• Amended the definition of one existing indicative threshold and the new additional indicative threshold proposed in CP11/24: The existing £100m threshold and new £300m threshold^{footnote [3]} no longer include references to transactional deposits.
• Amended the Branch Return Form such that it only requires data on instant access deposit balances and number of customers, and not the transactional breakdown: Please note that the PRA Rulebook has been updated to confirm that firms must be able, upon request by the PRA, to provide information on the number of customers with retail and smaller company deposits held in transactional accounts, and:
• Postponed the implementation of revised Branch Return reporting rules. See para 4.6 for further details on implementation.

Booking Models

1.15 The PRA has made the following changes to the final policy, with justification for the PRA’s final decision set out in Chapter 3. The PRA has:

• Clarified the scope of application, notably on branches and UK trading banks^{footnote [4]} and regarding Article 21c of CRD6; ^{footnote [5]}
• Modified booking responsibilities and trade capture language;^{footnote [6]} and
• Improved clarity of drafting across multiple areas, as detailed in Chapter 3.

Liquidity Reporting

1.16 The PRA has made the following changes to the final policy, with justification for the PRA’s final decision set out in Chapter 4.

• Provided flexibility on the reporting as at dates firms can use for the provision of liquidity information where there is a mismatch between the PRA’s Branch Return submission deadlines and the Home State Supervisor’s (HSS’) requirements.
• Postponed the implementation of revised Branch Return reporting rules.^{footnote [7]}
• Clarified reporting expectations in stress, the scope of whole-firm reporting, and certain reporting definitions.

Cost Benefit Analysis

1.17 A cost benefit analysis (CBA) was conducted and published in CP 11/24, to assess the changes proposed then. Where the final rules differ from the draft in the CP in a way which is significant, FSMA 2000 requires the PRA to publish details of the differences, together with an updated CBA.

1.18 The PRA considers that none of the changes to the draft rules are significant, so a CBA is not required by statute. However, the PRA has considered the costs and benefits of the changes to the policy materials on branch risk appetite, as well as the minor changes to reporting in the PRA Rulebook, as part of finalising the policies in this statement and provides its view below.

1.19 Regarding the increase in the existing deposit thresholds, the PRA considers that the main benefit is an increase in the scope that branches have for deposit growth whilst still operating within the PRA’s branch risk appetite. Updating the thresholds to avoid them becoming more restrictive over time due to inflation maintains the PRA’s approach of responsible openness in relation to hosting international banks, and ensures that the UK continues to provide a competitive environment for financial services. There are potential costs in the form of a nominal increase in total potential liability to the FSCS. However, given these costs only arise in the event of firm failure, and SS5/21 limits the amount of such deposits a firm can have, these costs are not anticipated to be significant.

1.20 Regarding the changes to reporting, overall the PRA considers that this has resulted in streamlined branch reporting requirements. It is expected that the benefits of not being required to routinely report transactional deposit data will result in modest financial and operational savings for firms. Any transition costs are expected to be minor and outweighed by the benefits of establishing a more streamlined Branch Return Form and clarified Reporting guidance for the Branch Return. Changes to liquidity reporting in the final policy post consultation are not significant and do not warrant an updated cost benefit analysis.

Have Regards

1.21 In CP11/24 the PRA published its explanation of why the rules and policy material proposed by the CP were compatible with its objectives and with its duty to have regard to the regulatory principles.^{footnote [8]} The explanations provided in the CP of how the PRA’s proposals were compatible with its objectives, and of how they have been affected by matters to which the PRA has been required to have regard, apply also to the final policy and rules. The following further points are also relevant to how the PRA’s obligations in relation to its objectives and duties to have regard to matters have affected the final policy and rules.

1.22 In developing the policies in this chapter, 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 considerations of the following ‘have regards’ have changed in light of the responses to the CP:

• The principle that a burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits which are expected to result from the imposition of that burden or restriction (FSMA regulatory principle): The PRA has increased two of its indicative thresholds by 30% to recognise the increase in inflation since they were first implemented. The PRA considers this change to be proportionate, as it is easing these indicative thresholds to ensure that it is not inadvertently tightening its branch risk appetite.
• Contribution to growth and international competitiveness (2024 HMT recommendation letter to PRC; PRA secondary objective): As explained in paragraph 1.19, the changes set out in this Policy Statement would be expected to have some positive impact on competition and international competitiveness. The increase in deposit thresholds would facilitate growth and should have a marginal positive effect on economic output in the medium to long term.

1.23 The PRA would note that, other than as set out above, none of the aspects of the Government’s economic policy set out in the HM Treasury (HMT) recommendation letter of 14 November 2024, and to which the PRA has had regard, were considered significant.

Implementation

1.24 The new policy updating SS5/21 will take effect immediately on publication of this PS on Tuesday 20 May 2025.

• With respect to changes to branch reporting, the new policy updating SS34/15, reporting guidance for the Branch Return Form, and updated branch reporting rules take effect from 1 March 2026. Firms are required to use the revised version of the Branch Return Form for the first time for their data as at 30 June 2026 (unless otherwise stated in the Branch Return Form), which has a due date of 30 business days after 30 June 2026.
• With respect to booking arrangements, the relevant firms should undertake a self-assessment against the revised expectations to a timeline that they agree with their PRA supervisory contact. As with the original SS5/21, in doing so firms should provide their PRA supervisory contact with a clear explanation of any gaps that they need to address and their proposed timeframe for doing so.

2: Feedback to responses on branch risk appetite

2.1 Before making any proposed rules, the PRA is required by FSMA to have regard to any representations made to it in response to the consultation, and to publish an account, in general terms, of those representations and its feedback to them.^{footnote [9]}

2.2 The PRA has considered the representations received in response to CP11/24. Chapters 2-4 of this PS set out the PRA’s feedback to those responses, and its final decisions.

2.3 Feedback on booking models and liquidity reporting are covered in chapters 3 and 4 of this PS respectively. This chapter provides the PRA’s response to points raised on branch risk appetite, and is structured as follows:

• Level of thresholds
• Reporting changes
• Deposits in scope of thresholds
• Definition of instant access deposits
• Interaction with Resolution framework

Level of thresholds

2.4 Prior to CP11/24, there were three existing indicative thresholds with respect to deposit balances and number of deposit customers set out in SS5/21. If an international bank operating in the UK through a branch were to exceed these thresholds, the PRA would generally expect it to operate via a subsidiary instead:

• Branches should have less than £100m in FSCS-covered retail and small company deposits in transactional and instant access accounts.
• Branches should have less than £500m in total FSCS-covered deposits.
• Branches should have less than 5,000 retail and small company customers with transactional accounts.

2.5 CP11/24 proposed the introduction of a new threshold. As set out in the CP, the failure of Silicon Valley Bank UK in 2023 demonstrated a key benefit of subsidiarisation in that it offers the UK financial authorities greater information and tools to ensure a smooth resolution. However, it also highlighted a potential gap in the framework. As the two existing deposit thresholds related only to FSCS-covered deposits, there was a potential gap in SS5/21 for banks (like SVB UK) where most deposits were uncovered. Therefore, CP11/24 proposed a new threshold:

• Branches should have less than £300m in retail and small company deposits in transactional and instant access accounts, regardless of FSCS coverage.

2.6 All four respondents commented on the calibration of the existing FSCS-linked deposit thresholds, noting that any changes to the FSCS limit would have impacts on the position of firms against the thresholds. Two respondents challenged the level of the new £300m threshold, suggesting that this should be calibrated higher.

2.7 The PRA has considered the responses on thresholds. In light of the PRA’s secondary objective on facilitating competitiveness and growth, the PRA considers that there is a case for uplifting the existing thresholds based on FSCS-covered deposits. This is to reflect the time that has elapsed since the thresholds were introduced and the resulting growth in deposits due to inflation. The PRA considers that doing so would advance the PRA’s secondary objective around facilitating competitiveness and growth in the UK economy, by giving branches more room for deposit growth, and making the UK a more attractive place to establish and expand banking operations.

2.8 The £100m threshold was introduced in 2014, and the £500m threshold was introduced in 2018. Since then, cumulative CPI inflation has been approximately 30% in both instances. To account for this inflation, the PRA has decided to uplift the two existing FSCS-linked deposit thresholds by 30% each, to £130m and £650m respectively. The PRA considers that this uplift would broadly maintain its existing branch risk appetite by accounting for cumulative inflation since the thresholds were introduced. The PRA considers that the possible increase in FSCS-covered deposits in branches does not pose undue risks to its primary objective of safety and soundness.

2.9 Two respondents questioned whether £300m was an appropriate level to calibrate the new additional indicative threshold, suggesting that it appeared conservative compared with the relevant deposit base that SVB had at the time of its failure. Having considered the responses, the PRA has decided that the £300m threshold is appropriately calibrated and will be incorporated into SS5/21.This calibration has taken into consideration the new provisions regarding High Net Worth Individuals (HNWIs) and resolvability that may accept international banks to operate through branches while exceeding one or more of the thresholds in certain circumstances. The £300m threshold was set in expectation that it would not materially impact the existing population of branches; respondents did not argue that it would, or provide evidence relating to potential costs to firms.

Reporting changes

2.10 In CP11/24, the PRA proposed that changes to the material relating to Branch Return reporting, including relating to the reporting of deposits and whole-firm liquidity, would be implemented on 31 December 2025 (ie such that H2 2025 would be the first period firms would need to report per the revised reporting rules). The PRA has decided to postpone implementation to H1 2026 to allow firms more time to prepare and ensure that higher quality data is reported upon implementation. Firms are required to use the revised version of the Branch Return form for the first time for their data as at 30 June 2026, which has a due date of 30 business days from the date to which the information relates.

2.11 In CP11/24, the PRA proposed some minor changes to the Branch Return Form. This included adding several new reporting fields to collect data on the instant access breakdown of deposits from Large Companies (Non-financial corporations), and turning on several reporting fields to collect data on the total balances of retail and small company deposits held in transactional or instant access accounts.

2.12 Several respondents fed back on the cost burden imposed by branch reporting. In particular highlighting costs involved with the process of identifying transactional deposit balances and customers every reporting cycle, which requires checking whether accounts meet the transactional definition of 9 or more withdrawals within a three month period.

2.13 Respondents suggested that in cases where firms can demonstrate that their retail deposits are primarily from HNWIs, they should be exempt from reporting transactional data. As set out in CP11/24, HNWI accounts are less likely to be used for day to day transactional banking and HNWI customers are more likely to have access to alternative transactional banking arrangements. A branch that breaches thresholds primarily on the basis of serving HNWI customers therefore poses more limited risk to the PRA objectives than a branch which primarily serves retail depositors, and is therefore more likely to operate within the PRA’s branch risk appetite. Some respondents suggested that the PRA could approve waivers exempting such firms from reporting transactional deposit data. Having considered the responses, the PRA agrees that the requirement for all firms to report a breakdown of transactional deposits may be disproportionate. In addition the PRA considers that there is an opportunity to deliver some cost savings to firms beyond just those operating a HNWI focused business model, and to implement this in a more efficient way than via waivers, through changes to the threshold definitions and Branch Return Form.

2.14 First, the PRA has decided to simplify the wording of the £100m (now £130m) and the new £300m thresholds by removing references to transactional deposits. Previously, these thresholds referred to instant access or transactional deposits, which were collectively referred to as demand deposits in CP11/24. On reflection the PRA considers that the reference to transactional deposits for these thresholds is redundant, as transactional deposits are broadly, in practice, a subset of instant access deposits.^{footnote [10]} The PRA considers that changing the wording of these thresholds to refer solely to instant access deposits makes them simpler to interpret and enables the reporting change described below.

2.15 Second, the PRA has decided to reduce firms’ reporting burden by amending the Branch Return Form such that it will only require data on instant access deposit balances and number of customers. The PRA will no longer require branches to routinely report transactional deposit data. The reporting fields relating to transactional deposit balances and number of customers are no longer mandatory. This is expected to deliver cost savings to firms.

2.16 However it should be noted that the existing indicative threshold of 5,000 customers with transactional accounts is being maintained. This refers more narrowly only to transactional customers and amending it to refer to instant access customers instead would represent a material tightening of the PRA’s branch risk appetite and potentially constrain branches’ deposit-taking activity. The PRA is removing the mandatory reporting requirement of all transactional data in recognition that continuing to require firms to report the number of transactional customers would prevent realisation of the cost savings associated with removing reporting on transactional balances.

2.17 The PRA will instead monitor the number of instant access customers reported in the Branch Return Form as an indicator that may trigger closer supervisory investigation (ie the PRA may request information from firms where the number of customers with instant access accounts approaches or exceeds 5,000). Firms will be required to have the capability to identify transactional accounts if requested by the PRA. Firms may still choose to voluntarily report transactional deposit data in the absence of any PRA request. The PRA’s revised approach has been reflected in both the PRA Rulebook (the Branch Return Form) and the PRA’s supervisory guidance (Reporting guidance for the Branch Return).

Deposits in scope of the thresholds

2.18 In CP11/24, the PRA proposed that, if a firm were to exceed the £100m (now £130m) threshold and new £300m indicative threshold, where this is caused by deposits from HNWIs, the PRA may consider it appropriate to allow an international bank to continue to operate through a branch. The rationale behind this approach is that the PRA considers that HNWI customers are less likely to use their accounts for day to day banking purposes and are more likely to have access to alternative transactional banking arrangements.

2.19 The PRA did not propose to redefine its thresholds to reflect this approach, as it would be likely to be relevant to only a small number of banks. Instead, firms in this position that wish to remain as a branch would be expected to provide relevant evidence that their customer profiles meet the definition of HNWIs. In CP11/24, the PRA proposed that a HNWI be defined as an individual that had financial assets in the last financial year of over £250,000. Examples of relevant evidence include onboarding requirements, target market guidelines, ongoing due diligence criteria, account functionality or balances by account type.

2.20 One respondent suggested that the PRA should provide greater clarity regarding the potential situation of a firm exceeding one or more of the PRA’s indicative thresholds primarily on the basis of accepting deposits from HNWI customers. The respondent asked for examples of what might cause material concerns for the purposes of the PRA’s branch risk appetite, as this would help provide greater certainty to firms with their business planning. One respondent asked if firms’ existing due diligence and KYC/AML checks on customers would be sufficient for the PRA to assess and determine its view on branch risk appetite.

2.21 Having considered these responses, the PRA has decided to maintain the proposals as set out in CP11/24. The PRA’s decision is based on the following considerations. The PRA will endeavour to assess the small number of relevant branches using a case-by-case, flexible, and proportionate approach. In CP11/24, the PRA clearly stated several examples within a wide range of relevant quantitative and qualitative evidence that could be appropriate for branches to share with the PRA to demonstrate the nature of their customer profiles and demonstrate that their business model is focused on serving HNWIs. Relevant branches may choose to share various pieces of evidence in conjunction to present a more holistic picture. The PRA will, however, have regard to the scale and nature of HNWI deposits, and consider the level of HNWI deposits as a proportion of total deposits (ie mix of HNWI and non-HNWI deposits), when determining whether a branch is operating within its branch risk appetite. The PRA’s expectations have been reflected in SS5/21.

2.22 All four respondents raised the issue of HNWIs placing their deposits via non individual accounts. The proposed definition of HNWI customers, drawn from ring-fencing legislation, refers to ‘eligible individuals’, which caused respondents to question whether the scope of customers regarded as HNWIs was limited to individual accounts only. Respondents asked the PRA to clarify or expand its definition of HNWI customers to include similar high net worth customers where their deposits are held via non-individuals (eg personal investment companies, trusts, SPVs or similar vehicles).

2.23 Having considered the responses, the PRA has decided to retain the quantitative threshold of £250,000 of net assets excluding primary residence and pension, drawn from Article 9 of the FSMA 2000 (Ring-fenced Bodies and Core Activities) Order 2014^{footnote [11]} in SS5/21. This provides a clear quantitative threshold for assessing potential HNWIs. However, the PRA has also decided, when assessing a firm against its branch risk appetite, to apply a ‘look-through’ approach to broaden the scope of what may be considered a HNWI deposit. The PRA considers that such deposits held by non-individuals where there is an underlying HNWI customer should, on the whole, be treated similarly as HNWI deposits.

2.24 In CP11/24, the PRA proposed that, in assessing whether it would be content for an international bank to operate through a branch, it would take account of significant instant access and transactional deposits from corporate customers undertaking UK economic activity that are likely to be dependent on that branch as their sole provider of transactional banking. The PRA did not propose to define such customers more precisely or set a quantitative threshold for such activity. The PRA proposed to introduce a new line to the Branch Return Form to collect information on the proportion of non-financial corporate deposits held in instant access accounts, which would not map directly to this activity but would assist in identifying any branches that could warrant further investigation by the PRA to better understand the nature of these customers and associated account balances.

2.25 Two respondents suggested that the PRA should provide greater clarity regarding the parameters that would be considered by the PRA when assessing the level of a firm’s corporate deposits. One respondent suggested that the PRA should provide greater clarity with respect to the PRA’s expectations for further information where corporate deposit customers may be dependent on a particular branch for banking services.

2.26 Having considered the responses, the PRA has decided to maintain the proposals as set out in CP11/24. Branches will not be required to identify or report customers which may be dependent on them for banking services, and the PRA will assess branches with high levels of instant access non-financial corporate deposits using a case by case, flexible, and proportionate approach. The PRA considers that specifying detailed parameters would be inappropriate, given the lack of common definitions that might allow corporate depositors to be broken down along the lines of size and sophistication. The PRA may request further information from firms on a case by case basis (eg where there is a large, fast growing, or concentrated corporate deposit customer base). Indicators of customer dependence may include, but are not limited to: whether the customer is multi-banked, the scale of the customer’s uncovered deposits, the nature of the customer’s deposit account contractual details, and the scale and/or nature of the customer’s transactional activity.

2.27 In the case of the PRA requesting further information, it would encourage firms to engage openly and proactively in dialogue with their PRA supervisory contact with the intention of enabling the PRA to gain a fuller understanding regarding the nature of these corporate deposit accounts and customers (including the extent of customers' dependence on the branch for banking services).

2.28 Two respondents questioned whether deposits from charities, charitable trusts, schools and colleges, religious establishments, and UK local authorities should count towards the new additional £300m threshold. Having considered responses, the PRA has made no change from the proposals set out in CP11/24. The Branch Return Form requires branches to report deposits as either ‘wholesale’, ‘small company’, or ‘retail’. Branches must continue to report accurately the source of their deposits following the reporting guidance, and any deposits which fall under retail or small company will count towards the relevant thresholds. However, as set out in CP11/24, the PRA’s branch risk appetite will account for whether a branch has significant instant access deposits from corporate customers that are likely to be dependent on that branch for banking services. The PRA may adopt the same approach where deposits are from charities, charitable trusts, educational and religious institutions, and UK local authorities.

2.29 One respondent questioned the definition of small companies used, which for the purposes of the thresholds set out in SS5/21 is based on the definition of small companies used in the Companies Act 2006. The PRA has decided to retain this definition, given it has been used previously and is a mainstream definition existing in legislation. A different definition would likely also incur costs on firms in terms of having to collect data relating to small company deposits in a different way and ultimately reporting these data to the PRA.

2.30 As outlined in CP11/24, and in the Dear CFO letter it referenced,^{footnote [12]} firms should manage their arrangements with deposit aggregators in a manner consistent with outsourcing and third-party risk management expectations. The PRA has reiterated this in paragraph 6.15 of SS 5/21.

Definition of instant access deposits

2.31 One respondent suggested that the definition of instant access accounts, which features in the thresholds and reporting requirements, was conceptually broad and that the PRA should provide further clarity. The term is currently defined in the ‘Reporting guidance for the Branch Return’ as: instant access accounts are those from which customers can withdraw money unconditionally, without providing notice or paying penalties. Having considered the response, the PRA has decided to also include this definition in SS5/21 for clarity and ease of reference.

2.32 One respondent suggested that accounts which are contractually instant access but behaviourally non transactional should not count towards the thresholds. The respondent suggested that there may be instances where a customer’s account is contractually instant access but that, due to the nature of the customer’s profile and account activity, they may be unlikely to be significantly impacted should access to their accounts be disrupted. The respondent also stated their assumption that such depositors would likely have access to alternative transactional banking arrangements.

2.33 Having considered the response, the PRA has decided not to apply a different treatment for accounts that are contractually instant access but behaviourally non transactional. For greater simplicity, the deposit thresholds^{footnote [13]} now refer only to instant access accounts, rather than transactional or instant access accounts. The PRA has calibrated the thresholds with the understanding that a relatively wide range of behaviours of account holders will be captured.

2.34 Whilst retail and small company depositors may choose not to use their instant access deposit accounts to transact regularly during certain periods, the contractual terms of such accounts mean that they can change their behaviour in terms of using their accounts at any time (eg during periods of uncertainty or stress). No evidence was provided to support the assumption that all or most instant access retail and small company depositors with such accounts have access to alternative transactional banking arrangements. For those depositors who do have access to such alternative arrangements, there remains the risk that a system wide stress could lead to significant disruption and adversely impact the continuity of access to deposits at accounts across multiple banks. The PRA also considers that requesting information from firms to distinguish between different types of instant access account would introduce unnecessary complexity and impose a disproportionate cost burden.

Interaction with Resolution framework

2.35 In CP11/24, the PRA proposed that, if a firm were to exceed the £100m (now £130m) threshold and new £300m indicative threshold, it would take account of the resolution arrangements in the home jurisdiction of the branch and may consider it appropriate for an international bank to operate through a branch. The PRA has decided to retain this proposal, and the PRA’s expectations have been reflected in SS5/21. This is because the PRA is generally content that adequate resolution arrangements, where backed by loss absorbing resources at group level, will mitigate the risks of discontinuity of banking services from a branch failing.

2.36 Several respondents asked the PRA to clarify whether Global Systemically Important Banks (G-SIBs) with such resolution arrangements in place would therefore always be exempt from the PRA expecting them to subsidiarise regardless of whether they exceed the relevant thresholds. Having considered the responses, the PRA expects that it will generally be content for such firms to operate through branches in the UK should it have sufficient relevant evidence, but as with other elements of its branch risk appetite the PRA will approach this matter on a case-by-case basis. Therefore, the policy remains unchanged from that consulted upon in CP11/24.

3: Feedback to responses on booking expectations

3.1 Respondents generally welcomed the PRA’s proposals which continued its approach of responsible openness to international banks operating in the UK. There was support for the PRA’s proposals to address developments since the publication of SS5/21 and to provide detail and clarification on certain aspects of the PRA’s approach to booking. The PRA will continue with its proportionate and flexible approach to booking arrangements. ^{footnote [14]} The PRA has not further amended the text of SS5/21 in this regard.

3.2 The PRA’s priority with these expectations remains the protection of efficient prudential practices, including the use of centralised risk management and the judicious reliance on group resources. Respondents raised detailed comments across the full suite of proposed changes, typically seeking greater clarity. The table at Appendix 1 summarises the issues raised and where they are addressed in this PS and in the SS.

3.3 The PRA has considered the representations received in response to the CP. This chapter sets out the PRA’s feedback to those responses, and its final decisions. The sections below have been structured broadly along the same lines as the chapters of CP11/24, with some areas rearranged to better respond to related issues. The responses have been grouped as follows:

• Potential conflict with other regulators’ expectations
• Frequently asked questions
• Implementation and forward-looking application
• Clarity of expectations
• Scope of application
• Type of activity
• Article 21c CRD6
• Notification of material booking changes
• Split desks
• Single consolidated risk function
• Underlying currency of denomination
• Products and instruments
• Remote booking and back to back trading
• Intra-firm
• Metrics
• Trader controls
• Pre-existing control weaknesses
• FCA interaction
• Status of the annex

Potential conflict with other regulators’ expectations

3.4 All respondents noted that where the PRA’s expectations differed from those of other regulators, firms could face legal risk and/or be caught between two regulators who were seeking different outcomes.

3.5 Respondents noted the differences in expectations in: the approach to complex and non-linear risks, the measurement of business volume and materiality, the economic rationale for change, the assessment of pre-existing control weaknesses, the approach to single business heads, and the consolidated risk management of split desks. They also noted that there may be conflicts between the timelines of each regulator’s actions.

3.6 Respondents noted that it is normal both for regulators to have different expectations or requirements of firms, and for regulators to work through such differences, (citing the examples of Regulations K and W in the USA). But they expressed concern that in the booking context currently these differences are bespoke, they arise more frequently, and at a more granular level than differences regulators have previously been used to dealing with.

3.7 In order to address these concerns, respondents suggested that the PRA could establish mechanisms to resolve differences with other supervisors, such as joint meetings, arbitration mechanisms, or trilogues with the firm in question.

3.8 The PRA understands the concerns that firms have in this area. Regulators do not currently have a common set of expectations of firms’ booking arrangements. As recognised in the CP responses, this is not an issue unique to the booking expectations. As with other areas where regulators’ expectations differ, the PRA will work cooperatively and collaboratively with the home or other host regulator to address such differences and to agree mutually acceptable outcomes. This is in line with international supervisory commitments to cooperation and collaboration, as typically recognised in the Memoranda of Understanding that the PRA has in place with overseas regulators.

3.9 There are obligations on firms too in that they have an obligation to meet the requirements they face in different jurisdictions. In paragraph 4.24B the PRA recognises that international banks may face both home and host supervisory expectations in this area, and that the PRA may take into account the expectations of home state supervisors in deciding what should apply to the branch or subsidiary. The PRA generally expects firms to comply both with its expectations and with those of other regulators where possible. Firms should proactively engage with the PRA when they believe this will not be possible.

3.10 One of the drivers of proposing the revisions to SS5/21 was to make transparent to all firms the expectations that were developed during the Desk Mapping Review [DMR] process,^{footnote [15]} from the PRA’s perspective. In the DMR, mutually acceptable outcomes were agreed for individual desks. The PRA and the ECB will continue to work closely to review firms’ proposed booking model changes on a case by case basis, continuing the same bilateral arrangements as used in the DMR. The PRA does not see a need for a trilogue type mechanism, given the existence of ongoing discussions between firms, the PRA and overseas regulators, and does not consider an arbitration mechanism between regulators currently feasible under the current domestic and international framework. The PRA expects that, as in the DMR, it will be able to agree a mutually acceptable outcome that means that firms do not face conflicting directions.

Frequently asked questions

3.11 As noted above, the PRA published the proposed changes to its booking model expectations in order to be transparent about its engagement in the DMR process, and to provide clarity to all firms. In that spirit, where there are major developments in this area the PRA would expect to make any material developments known, as it does currently.

Implementation and forward-looking application

3.12 Several respondents raised concern over the date from which the expectations would apply. They noted that there could be systems and controls changes needed for example on trader controls, and also in respect of other sections of SS5/21.

3.13 In CP11/24, the PRA noted that it expected firms to meet the expectations set out within a reasonable timeframe, taking into account the firm’s current position and the scale of any change that might be required, and that these firms should provide their supervisors with a planned timeframe for doing so. The PRA will ask firms to undertake a self assessment against the final supervisory statement most likely to be used in the annual Periodic Summary Assessment.

3.14 A number of respondents sought assurance that the expectations would not be applied retrospectively, and that the PRA was not seeking to reopen structures agreed as part of the DMR.

3.15 As noted in CP11/24, the PRA published the expectations that it has used with firms in the past few years. The intention was to make these transparent for all firms.

3.16 The final expectations are consistent with the outcomes of the DMR and the PRA does not anticipate that firms will need to amend the structures that implement the outcomes of the DMR.

Clarity of expectations

3.17 Respondents made a number of requests for greater clarity in how some of the PRA’s expectations were expressed. The requests for more clarity were in a number of areas: the scope of application (of the booking model expectations) by type of firm and by geography; in the terminology; and type of activity. These areas are discussed separately below.

Scope of application

3.18 The PRA received no direct comments on the proposal to extend the formal application of the booking expectations to the relevant UK-headquartered banks (UK trading banks).

3.19 The PRA has clarified the application of particular paragraphs to UK trading banks, as compared to the position set out in CP11/24. In that CP, the PRA proposed that paragraphs 4.23A to 4.26A would apply to UK trading banks. However, a number of these paragraphs relate only to the PRA’s expectations of international banks. In the final statement, paragraphs 4.1(d), 4.20, 4.23-4.25Y,4AE, 5.14-5.16 and the Annex on Content and Definitions apply to UK trading banks.

3.20 The responses raised a number of questions regarding the geographical scope of the expectations. It was noted that branches have to follow the PRA’s expectations as well as those set at the level of the firm by the home state supervisor. This would also be the case for subsidiaries in the UK, and mirror issues faced by UK trading banks in their overseas operations.

3.21 On the branch application question, the PRA has clarified in the SS that the expectations apply to regulated activities carried on in the UK by an international or UK trading bank (4.24B, 4.25P).

3.22 For UK trading banks, the expectations apply to the UK authorised firm. Given the close interactions firms may have with some affiliates in remote and back-to-back booking for example, the PRA has also added a comment to the effect that that it expects the authorised firm to work closely with its affiliates to ensure that the authorised firm meets the booking expectations (4.24B).

3.23 There were a number of comments that the language describing the firms to which the expectations applied were in places confusing. There were differences in the use of ‘firm’, ‘bank’ and ‘entity’. The PRA has revised the drafting and set out the terms it uses with some explanation in 4.24B. The term firm is used to refer to PRA authorised firm as per the PRA Glossary definition.^{footnote [16]} which includes international banks and UK trading banks. The PRA uses the latter two terms to distinguish where there are differences in application. Similarly, the PRA has used the terms branch and subsidiary to be more precise (SS 5/21, 4.24B).

Type of activity

3.24 The existing SS5/21 covers firms’ trading activities and in addressing edge or boundary issues, firms are asked to consider the degree to which some items housed in the banking book pose similar risks given their nature, and firms should consider whether and how their booking frameworks and controls should be extended to cover them. This expectation was retained in paragraph 4.24B of the consultative text. In extending the scope of the booking expectations to UK trading banks, the PRA described the scope as covering those firms with investment banking or sales and trading activities (in both the UK and overseas).^{footnote [17]} While investment banking is included here, the primary focus on trading activities, as set out in 4.24B, applies in the same way to these firms.

3.25 In 4.24B the PRA has sought to give more clarity on the type of activities that the PRA would see as likely to fall within scope. The PRA’s focus is on the prudential risks arising from complex risks and from complex booking structures. So, where banking book products exhibit similar characteristics, it is likely to be appropriate to apply the relevant sections of the booking expectations. Those banking book activities such as secured financing, leveraged finance and warehouse loans that have a close link to investment banking activities are likely to be in-scope of SS5/21. The PRA has expanded the range of examples given in 4.24B to make this clear.

3.26 The PRA also confirms in 4.24B that cash products are within the scope of the booking expectations, as well as derivatives.

Article 21c CRD6

3.27 One respondent raised the question of whether there was an intersection between the scope of SS 5/21 on the banking book and the scope of Article 21c of EU Directive (EU) 2024/1619 (CRD6), which relates to core banking activities.

3.28 The PRA expects firms to take into account the PRA’s booking expectations when implementing Article 21c, where activities are in scope of both; and considers that it will assist firms’ scoping exercises to better understand in advance which booking models are likely to be acceptable to the PRA. It considers that any burden this creates is limited by two factors. First, some business within scope of the booking expectations such as secured financing for corporate borrowers, and which may fall within the scope of Article 21c, has already been looked at within the DMR. Second, the application of the PRA’s booking expectations to banking book activities, which is set out in paragraph 4.24B of SS5/21 (as amended), does not extend to all core banking activities likely to be in scope of Article 21c implementation, in particular where they do not pose substantially similar booking risks to cash and derivative products in the trading book. For example, loans, deposits, or commitments and guarantees with simple booking models are unlikely to pose such risks, particularly when done in low volume or frequency.

3.29 As firms manage the implementation of Article 21c for their banking business, they should consider where the booking expectations are likely to be relevant and discuss with the PRA. For the avoidance of doubt, where activities sit outside the scope of SS5/21, to the extent that they involve material business model changes, firms should continue to comply with their obligations under the General Notification Rule 2.3.

3.30 The PRA will work with firms and with the ECB, and other EU National Competent Authorities as relevant, as the pattern of implementation evolves, in line with its existing approach. See SS5/21 paragraph 4.5 for example.

Notification of material booking changes

3.31 In CP11/24, the PRA proposed that firms should engage with supervisors early in the process when considering making material booking changes. A number of respondents asked if the PRA was really seeking to embody what is already good practice among firms, and whether the PRA was seeking a two way dialogue rather than a formal notification. The PRA confirms that the notification is intended to be part of the supervisory dialogue and that it plans to continue the existing approach of having such a dialogue.

3.32 No respondents suggested having numerical thresholds to define materiality here, but they did request more examples of how to assess materiality. The PRA now includes some examples in 4.25D(a) – in particular, to make clear that the PRA is likely to place some weight on the proportion of activity that is being relocated and not just an absolute measure. Where desks or staff numbers are small, the PRA recognises that splitting desks by proportions may not be efficient.

3.33 Respondents raised concerns about the potential conflict between the PRA and other regulators’ expectations as above. They also raised concerns that the PRA’s expectation that firms would not make material booking changes very frequently (4.25C), that may no longer be the case in practice as other regulators were seeking changes to booking models.

3.34 The PRA accepts the points made and has amended 4.25C to make clear that it would not expect frequent changes in the normal course of business. In addition, a comment has been added to note that cross border staffing moves that are in line with historic patterns would not be likely to warrant notification unless they met the additional criteria in 4.25D(a)-(h). The PRA also considers that the sooner it is informed of any potential booking changes being driven by other agencies, the sooner it can address any potential conflicts. The PRA has added to 4.25B in this regard, as noted above (paragraph 3.29).

Split desks

3.35 One respondent raised the point that the differences both in expectations of booking between regulators and in the metrics used is likely to result in more split desks, contrary to the PRA’s preferred outcomes.

3.36. The PRA believes there are drawbacks to the operation of split desks as set out in 4.25D, 4.25M-N. The use of split desks will be necessary in some cases, but the PRA would not expect this to be that frequent. In the PRA’s view, moving to split desks is a high threshold to cross. The PRA also recognises that firms’ businesses evolve over time so the case for a split desk, or the type of split, may change over time. It will of course be willing to consider such changes.

3.37 Respondents asked whether to the extent a firm operates split desks, the supervision of centralised risk management could be performed by the home state regulator and asked for an explicit statement to this effect. In the DMR, we collectively agreed on cases where centralised risk management was run from the EU and cases where it was run from the UK.

Single consolidated risk function

3.38 The responses included a number of comments regarding the single consolidated independent risk function (4.25N(d)).

3.39 One respondent specifically noted that it was not clear what function could in practice perform the role of a single consolidated risk function while also being independent.

3.40 By consolidated independent risk management, the PRA is referring to consolidation in the first and second lines of defence separately. The PRA’s intention is that firms should preserve a level of control over split desks at a suitable level. The PRA is not proposing that one function can perform all relevant tasks and also be independent. It should be done at a level of the organisation that is appropriate for its risk profile or consistent with the broader functional organisation and oversight of that product or business division. For example, for an individual risk stripe such as market risk in the Europe Middle East and Asia (EMEA) region, someone should be overseeing that risk across desks for the region as a whole. The PRA has made minor wording changes to SS5/21 to clarify the issue.

3.41 One respondent noted that it was not clear at what level a single consolidated risk function might operate (eg a regional or global head for a particular business line).

3.42 In the PRA’s view, consolidated risk management should be set at a level that is commensurate with the structure of the relevant business division. As an example, if there are two senior business heads covering each of the split desks, and they both report directly to the global head, then the global head would be an appropriate consolidation level. But if they are two more junior business heads, the consolidation should occur at a lower level. The PRA has added comments to this effect in 4.25N(d).

3.43 A question was also raised of whether the PRA was mandating the use of collateral pooling across split desks.

3.44 The PRA is not mandating the use of collateral pooling. The PRA’s concern is more that this is a useful capability in the event of a crisis in particular. It is generally considered good practice to have a free flow of collateral between desks, and this is particularly helpful in a crisis so banks may be able to avoid unnecessarily hedging with the market where this brings extra cost or operational risk when compared with intra group hedging. This was the PRA’s clear experience during the 2008 crisis. The PRA has added a comment to this effect at 4.25N(d).

3.45 A number of responses asked how the PRA’s proposals here would be affected by or linked to the wider review of the Senior Manager and Certification Regime.

3.46 The PRA is not proposing any changes to Senior Manager Functions (SMFs) here. SS paragraph 4.25W is unchanged.

Underlying currency of denomination

3.47 One respondent raised a question on the impact to existing practices if the underlying currency of an instrument was not a sufficient rationale for a fragmentation of risk management.

3.48 The PRA understands this comment to cover existing examples such as global Foreign Exchange desks and local Treasury management operations where it may be necessary to have some flexibility due to eg time zone changes and maintaining global coverage. This is not in conflict with the PRA’s expectations. Firms should ensure that their booking model enables them to manage all relevant risks including liquidity.

3.49 The PRA has not amended the text of the SS in this area (4.25Dd)).

Products and instruments

3.50 All four responses asked about the PRA’s use of the terms ‘instrument’ and ‘product’ in this statement. One respondent suggested that the policy should refer to the latter, as identifying every single instrument is far more complex.

3.51 The PRA agrees that this should be changed. The term instrument is typically more granular than product and identifying specific instruments would be significantly more costly. That was not the PRA’s intention. The revised text now uses product consistently in paragraph 4.25B and in the Annex. Examples of the intended level of detail for a product would be Investment Grade Bonds, High Yield Bonds and Distressed Bonds.

Remote booking and back-to-back trading

3.52 In CP11/24, the PRA indicated that a remote booking structure with all traders remote from the risk hub is unlikely to be acceptable to the PRA. Respondents asked the PRA to clarify if a model where traders are remotely based (in a different geography or employment entity), but there is local ownership, accountability for and supervision of the books, would be acceptable.

3.53 The PRA routinely accepts booking arrangements where risk is remotely booked to the UK hub, such as from different time zones. But the PRA is unlikely to accept traders relocating to another jurisdiction where this is only to remotely manage that same risk back into the UK regardless of whether the resulting books are orphaned or have UK oversight.^{footnote [18]} Any existing arrangements where there is 100% remote booking into the UK, irrespective of whether they result from a relocation or not, should be subjected to greater scrutiny, and require high levels of evidence that they are appropriately controlled.

3.54 One respondent raised a question regarding back to back trading. The CP acknowledges the usefulness of back to back and hedge structures in a centralised booking model. They asked if the PRA could confirm that it continues to include cross location back to backs as part of the legitimate movement of risk within the bank. The PRA confirms that that is the case.

Intra-firm

3.55 Some respondents raised questions of whether remote booking as a term could be used to describe risk transfers within an entity (eg from branch to head office). It is clear that firms describe such risk transfers in a variety of ways. In the PRA’s view, the transfer of risk from a remote location, even intra-firm, raises some of the same issues as risk transfers between entities. Firms should therefore consider the risks posed in managing their booking models. See the Annex of SS5/21 for a description of the risks and practices.

3.56 In the course of the consultation, the PRA has identified that the wording of the branch return regarding remote booking could be clearer to ensure firms interpret it in line with the approach set out in SS5/21. Assets originated in the UK but booked overseas should be captured within the branch return reporting as remote booking, irrespective of where the risk is managed. The PRA has updated the guidance on the branch return to make this clear.^{footnote [19]}

Metrics

3.57 A number of responses sought greater clarity on the type of metrics the PRA will consider.

3.58 One respondent asked if by volume of activity the PRA meant notional value or the numbers of trades, whether the firm could decide this, and whether other metrics could also be used in addition.

3.59 One respondent asked a similar question on the PRA’s intended measurement approach and whether the measurement quantum could have an important impact on the assessment.

3.60 Questions were also raised concerning the definition of client location when measuring client activity. Generally, the PRA is seeking to understand the impact on all types of clients impacted by the booking model changes, which may sometimes include attribution to the underlying clients after, for instance, fund manager allocations. The PRA has made slight changes to the wording on this in 4.25D(c).

3.61 The PRA is not prescriptive on the precise metrics that firms might use. There is no perfect metric and all metrics have interpretive issues associated with them. Consequently, firms have some flexibility in terms of the metrics they present and, as the first respondent above suggested, should assess which is most material for their business.

Trader controls

3.62 The responses raised a number of questions regarding the proposed amendments on trader controls. For instance, there were requests for: clarity about what type of trading role would deem an individual responsible for ensuring correctness of bookings; clarity that non-trading staff in an administrative role could support for booking trades into the system, and clarity on how the proposals for an individual controlling the booking process are intended to fit with first and second line division of responsibilities.

3.63 The PRA notes that there is an important distinction between trade entry and the independent checking of the trade. This part of the supervisory statement was intended to cover only trade entry (the booking), and the constraints imposed on non trading personnel to perform this task. Respondents commented on how trade entry delegation worked in practice, including the role of administrative staff; and whether the functions of trade entry and trade checking were being combined in a way that might break the segregation of controls. In response, the PRA has removed the references to non trading personnel and simplified the wording of SS5/21paragraph 4.25J. Firms should ensure that independent trade checks are performed in line with segregation of duty controls, as set out in SS 21/15.^{footnote [20]} Trade entry should also be a distinct process carried out in accord with the firm’s segregation of duty controls.

3.64 Some respondents queried the change in terminology from ‘checks’ to ‘controls’ in 4.25L on pre and post trade controls, and whether this constituted a more onerous expectation on branches. That is not the PRA’s intention. The existing SS5/21 systems and controls expectations in this area already apply to branches. This was a drafting change in a section of the statement on the principle that ‘Firms should have adequate systems and controls in place to ensure that intended booking arrangements are followed in practice’. ^{footnote [21]} The PRA does not prescribe the mix of directive, preventative and detective controls that firms should choose. In the consultation, the PRA found some emerging resistance to the use of pre trade, hard technological preventative blocks. Overall, firms need to assess the appropriate mix of preventative and detective and ‘hard’ and ‘soft’ controls and explain their reasoning.

Pre-existing control weaknesses

3.65 Respondents raised a number of questions regarding the PRA’s proposal that when it assesses firms’ proposals to change their booking model it would consider ‘Whether any relevant preexisting systems and control weaknesses in the relevant areas impacted by the booking changes have been remediated’ (4.25De)).

3.66 One respondent asked whether the PRA would expect firms to confirm formally that there were no pre-existing control weaknesses, perhaps using Internal Audit reviews. The PRA confirms that it does not expect to receive such attestations. The PRA would expect to have been made aware of any such pre-existing material control weaknesses already.

3.67 One respondent asked for clarification that when assessing existing control weaknesses, these should be material. The PRA confirms that it is only material control weaknesses that would be relevant as part of this process, in line with the PRA’s proportionate approach. ‘Material’ could mean either a major single issue or a group of smaller issues that affect the relevant area and when taken together could imply a material weakness.

3.68 One respondent noted that this criterion of pre-existing control weakness could come into conflict with the timelines either of the firm’s commercial needs to make changes or with the expectations of change from another regulator. The PRA would consider any such conflicts on a case by case basis and work cooperatively with the firm and its other regulators.

3.69 The PRA has amended the relevant sentence to include ‘material’ (4.25De)).

FCA interaction

3.70 One response questioned whether there was a conflict between the PRA’s approach to centralised booking and the FCA’s ‘preference that firms should service UK customers from a UK firm’.

3.71 The FCA makes a case by case assessment of firms’ booking proposals, and the FCA and the PRA work very closely together on dual regulated banks and designated investment firms. While the FCA notes that where it seeks to mitigate potential harms it may, for example, invite the firm to consider providing some or all of these services from the UK branch.^{footnote [22]} This is consistent with the PRA’s approach, which is focused more on how risk is managed.

Status of the Annex

3.72 One respondent asked about the extent to which firms are expected to align taxonomies with those in the Annex.

3.73 The Annex is provided to set out illustrations of the types of risks and practices firms should consider: back to back, centralised hubs, split desks, remote booking. This is not an exhaustive list and there is no agreed use of such terminology across firms or regulators, so the PRA is not proposing specific definitions. However, the proposals indicate the key characteristics relating to these terms and indicate firms should use their own definitions.

4: Liquidity Reporting

Overview

4.1 The PRA proposed changes to reporting requirements for third-country branches in PRA rules and Supervisory Statements to improve the collection of whole firm liquidity data. Specifically, the PRA proposed to collect summary information on whole firm Liquidity Coverage Ratios (LCR) and Net Stable Funding Ratios (NSFR) as reported to the home state supervisor through the PRA Branch Return Form.

4.2 The objective of this proposal was to reduce the amount of whole-firm liquidity data the PRA collects from all third country firms and to systematise the collection of summary metrics. Collecting summary metrics through the Branch Return Form would reduce the manual nature of the current data collection set out in SS1/17 (now deleted), which will lead to a simpler submission process for third country firms. The PRA envisaged this change would also make it easier and more efficient for supervisors of third country firms to review the data submitted and make it consistent with wider PRA regulatory reporting.

4.3 Respondents generally welcomed the PRA’s proposals to streamline the whole firm liquidity data it collects from firms and reduce the manual nature of the current data collection. However respondents requested further clarity and flexibility on some aspects of the proposals, discussed below.

Reporting timelines

4.4 All respondents raised the potential difficulties that might arise for firms where there is a mismatch between the PRA’s Branch Return submission deadlines and the HSS’s requirements. Respondents requested flexibility from the PRA on the reporting period end dates used by firms and noted that firms should not be expected to report such data until after it had been submitted to the HSS.

4.5 The PRA acknowledges that in some cases the reporting period end dates in the Branch Return and the PRA’s submission timelines may not align with the HSS’s timeframes. The PRA has updated the Branch Return Form to note that to the extent data for the 30 June or 31 December reporting period end dates is not available within the PRA's Branch Return submission timelines, firms should provide the most recent data points available as submitted to the Home State Supervisor and indicate the reporting period end date used in rows 130 and 140 respectively.

Implementation timeline

4.6 Two respondents requested the PRA provide sufficient time for firms to implement the changes to the Branch Return, of which one respondent requested the new reporting requirements come into force at least one year after the final policy published. The PRA recognises that it may take some time for firms to implement these changes into their reporting systems and processes and align these with the whole firm’s reporting processes. As a result, the PRA has extended the implementation date to 1 March 2026.

Reporting in stress

4.7 The PRA proposed updated expectations in SS34/15 Guidelines for completing regulatory reports that the PRA expects some third country firms to submit additional and/ or more frequent whole-firm liquidity information via email to their usual supervisory contact, including daily in a stress. The proposals set out the factors the PRA may have regard to in making such requests.

4.8 Two respondents requested further clarity on the criteria that would constitute a stress and therefore trigger daily reporting. They recommended the PRA clarify that it would not request more frequent reporting of whole-firm liquidity data where the HSS had not required it.

4.9 The PRA’s original proposal envisaged supervisors would have regard to the information available pursuant to the requirements of the HSS when determining whether to request additional and/ or more frequent whole-firm liquidity information. The PRA has further clarified its definition of stress in this context and that the PRA, where possible, will align requests for whole firm liquidity information under stress with the information provided to the HSS.

Reporting scope

4.10 Two respondents noted it would be helpful for the PRA to provide clarity over the scope of the whole firm reporting. The PRA has clarified in the reporting guidance for the Branch Return that the whole firm is the entity the PRA has authorised to operate a branch in the UK.

Reporting definitions

4.11 Two respondents proposed clarificatory changes to the definitions used in the Branch Return to specify the rows are to include LCR inflows and outflows within the next 30 days and not to be misinterpreted as inflows and outflows beyond 30 days. The PRA has clarified this in the Branch Return.

Reporting exceptions

4.12 One respondent raised a potential challenge in providing the PRA with whole-firm liquidity data where there might be intra-firm confidentiality restrictions in place. This respondent suggested the PRA consider receiving this information directly from the HSS where there is an applicable memorandum of understanding in place.

4.13 The PRA expects such cases to be rare but has clarified in Chapter 5 of SS34/15 that firms should indicate this in the Branch Return and the PRA will work with the firm to determine suitable, alternative reporting arrangements on a case by case basis. Suitable arrangements may include branches providing information based on the HSS’s own liquidity regime or whole-firm internal liquidity management information or the PRA seeking whole-firm liquidity information directly from the whole firm or from the HSS, where a memorandum of understanding has been agreed and is applicable.