Strong and Simple

We are creating a simpler but equally resilient prudential framework (the Strong and Simple framework) for smaller, domestic-focused, banks and building societies.

What is Strong and Simple?

In 2021, the PRA published ‘A strong and simple prudential framework for non-systemic banks and building societies’ that set out a vision to simplify prudential requirements for smaller, domestic-focused banks and building societies, while maintaining those firms’ resilience. 

To build the Strong and Simple framework, we have introduced simpler but equally resilient prudential requirements for Small Domestic Deposit Takers (SDDTs).

Eligible firms

PRA-regulated banks and building societies must meet a set of criteria to be eligible to become SDDTs. A high-level summary of these criteria is shown below. For a complete description of the SDDT criteria and the SDDT consolidation criteria, please refer to the rule instrument available as part of PS15/23

Criteria  Description  PRA rule reference 
 Size Total assets on average over the past three years of no more than £20 billion.  SDDT Regime – General Application 2.1(1), 2.3 
Domestic activity The share of credit exposures located in the UK is at least 75% at all times and at least 85% on average over the past three years.  SDDT Regime – General Application 2.1(2), 2.4 
Limited trading activity  Trading book business was equal to or less than both £44 million and 5% of total assets in recent months. The criterion is not met if a firm has been above one or both of these thresholds in each of the preceding three months or in more than half of months in the past year.   SDDT Regime – General Application 2.1(3), 2.7 
Overall net foreign exchange position was equal to or less than 2% of own funds in recent months. The criterion is not met if a firm has been above the threshold in each of the preceding three months or in more than half of months in the past year. Overall net foreign exchange position must not exceed a ceiling of 3.5% of own funds.  SDDT Regime – General Application 2.1(4), 2.7, 2.8 
No positions in commodities or commodity derivatives.  SDDT Regime – General Application 2.1(5) 
No Internal Ratings Based (IRB) approach  Does not use an IRB model for credit risk to calculate risk weighted assets.  SDDT Regime – General Application 2.1(6) 
Clearing, settlement, and custody services, and payment systems  Does not provide clearing, transaction settlement, custody or correspondent banking services to other banks and building societies unless they are members of the firm’s immediate group. Does not operate a payment system.  SDDT Regime – General Application 2.1(7)-(8) 
UK bank or building society with no non-UK parent  Does not have a non-UK parent.   SDDT Regime – General Application 2.1(9) 

SDDT policies

The PRA has introduced simplifications to liquidity and disclosure requirements for SDDTs. See PS15/23 for details. 

The PRA is intending to bring forward further simplifications to the prudential framework for SDDTs. See the Regulatory Initiatives Grid for more information about Strong and Simple timings. 

How to become an SDDT

Eligible banks and building societies become SDDTs by taking up the PRA’s offer of a modification by consent (similarly for CRR consolidation entities). They can do so any time from 1 January 2024 onwards. See waivers and modifications page. The PRA requests that consents to modifications be submitted by email only to, and not sent by post. You may also send any queries on the modifications through to this mailbox.

A firm that has a non-UK parent which wishes to become an SDDT would need to apply for a modification to the scope criteria (and similarly for a CRR consolidation entity in a group with a non-UK parent). See the Statement of Policy ‘Operating the Small Domestic Deposit Takers (SDDTs) regime’ for details. An application for a modification of the scope criteria should be made using the waiver/modification application form. A supplementary form in support of an application of a modification of the criteria in the circumstances set out in paragraph 3.3 of the Statement of Policy is available at the waivers and modification webpage.

The PRA encourages firms that are considering becoming an SDDT to engage with their supervisor. 
This page was last updated 21 December 2023