PRA Issues Policy Statement on Approach to Identifying O-SIIs

The UK’s Prudential Regulation Authority (“PRA“) has issued a policy statement on its approach to identifying other systemically important institutions (“O-SIIs“). The statement is relevant to all credit institutions, investment firms, EEA parent institutions, EEA parent financial holding companies and EEA parent mixed financial holdings companies within the domestic financial sector at their highest level of consolidation in the United Kingdom. The proposals contained in the consultation and the policy statement do not apply to branches operating in the UK.

The statement provides feedback to responses to a PRA consultation paper as to which firms can be identified as O-SIIs; application of discretion afforded within the European Banking Authority’s mandatory scoring methodology for O-SII identification; application of a supervisory overlay to  capture adequately systemic risk in the UK banking sector; proposals to use the methodology of the PRA’s existing potential impact framework to inform this assessment; and the timetable for O-SII identification and publications related to O-SII identification. The PRA has made no material changes to its policy as a result of the consultation.