PRA has issued a statement clarifying its approach to adjustments to firms’ PRA buffers as the fourth Capital Requirements Directive (CRD4) combined buffer takes effect up to 2019. It sets out the timing of changes to firms’ PRA buffers following FPC’s announcement to increase the UK countercyclical capital buffer rate to 0.5% (see above). PRA intends to reduce the effect of this increased rate in situations where the existing PRA supervisory buffers already reflect risks captured by a 0.5% UK countercyclical capital buffer rate. Overall its aim is to ensure the transition to the new capital framework avoids double counting in capital buffers to cover the same risks. It also wants to give all firms sufficient time to transition to the capital buffers that they will need by the end of 2019. It says firms which currently have no or low PRA buffers can build up capital over time. (Source: PRA seeks to balance buffers)