PRA Rulebook Guide

PRA Rulebook Guide

The Prudential Regulation Authority (PRA) is responsible for the prudential regulation of banks, building societies, credit unions, insurers and major investment firms.

PRA Objectives

General Objective

Promote the safety and soundness of PRA-authorised firms.

Insurance Objective

Contribute to policyholder protection.

Secondary Objective

Facilitate effective competition (subject to primary objectives).

Rulebook Structure

Fundamental Rules

1. Conduct business with integrity
2. Conduct business with due skill, care and diligence
3. Act in a prudent manner
4. Maintain adequate financial resources
5. Have effective risk strategies and risk management systems
6. Organise and control affairs responsibly
7. Deal with regulators openly and cooperatively
8. Prepare for resolution (if required)

Key Parts for Banks

Capital Requirements

• CRR Firms - Capital buffers and requirements
• Internal Capital Adequacy Assessment (ICAAP)
• Pillar 2A and 2B requirements
• Leverage ratio

Liquidity

• Liquidity Coverage Ratio (LCR)
• Net Stable Funding Ratio (NSFR)
• Internal Liquidity Adequacy Assessment (ILAAP)

Large Exposures

• Concentration risk limits
• Connected counterparty rules

Key Parts for Insurers

Solvency II

• Solvency Capital Requirement (SCR)
• Minimum Capital Requirement (MCR)
• Own Funds requirements
• Technical Provisions

ORSA

• Own Risk and Solvency Assessment
• Annual requirement
• Board approval

Supervisory Statements (SS)

Important guidance documents:

• SS1/23: Model risk management
• SS3/21: Operational resilience
• SS2/21: Outsourcing and third party risk
• SS5/21: Climate-related financial risks

Regulatory Reporting

Common Reporting (COREP)

• Capital adequacy
• Large exposures
• Leverage ratio

Financial Reporting (FINREP)

• Balance sheet
• P&L
• Asset quality

Pillar 3 Disclosures

• Public disclosure requirements
• Risk management information