On September 5, 2014, the Prudential Regulation Authority (“PRA”) published a Policy Statement and a Supervisory Statement on supervising international banks and the PRA’s approach to branch supervision. The Policy Statement includes final rules which, from September 5, 2014, will require a firm to ensure that its resolution plan provides adequately for the resolution of the UK branch. The PRA intends to introduce, at a later date, a rule for all EEA and non-EEA branches to submit a data return twice a year.
The PRA’s Supervisory Statement sets out its approach to supervising non-UK headquartered firms which the PRA states is unchanged from its proposed approach set out in its February 2014 consultation paper. Non-EEA branches will need to be authorized by the PRA which will involve an assessment by the PRA of: (i) the equivalent supervision and resolution requirements by the home state supervisor of the bank; (ii) the risks posed by the activities the branch intends to undertake; and (iii) the arrangements for resolution of the UK branch. The minimum requirements for authorization of a UK branch will apply to the whole firm, not just the branch. The PRA, in assessing the risk of the activities, states that non-EEA branches will be able to undertake retail activities but only at de minimis levels unless there are high levels of assurances over the resolution of the branch. The PRA expects non-EEA branches to focus on wholesale banking at a level that is not critical to the UK economy.
The PRA Supervisory Statement is available at:
and the PRA Policy Statement is available at: