CP3/26 – PRA rule changes to accommodate HM Treasury’s Overseas Prudential Requirements Regime
Executive Summary
The PRA's CP3/26 proposes rule amendments to align its Rulebook with HM Treasury's (HMT) Overseas Prudential Requirements Regime (OPRR), which restates and modifies existing CRR equivalence provisions for treating overseas entities' exposures as preferential "exposures to institutions." This matters for **PRA-authorised firms** as it clarifies capital treatment for cross-border exposures, reduces interpretive burdens, and ensures consistency post-Brexit, advancing the PRA's safety and soundness objective while facilitating HMT designations. #
What Changed
- Credit Risk Standardised Approach (SA): Exposures to overseas credit institutions, investment firms, or exchanges treated as "exposures to institutions" only if from UK or HMT-designated OPRR jurisdictions; deletes CRR Article 119(5) for investment firms under Part 9C rules. - IRB Approach: Preserves CRR Article 107(3) effect by aligning exposure class allocation with SA's updated "exposures to institutions" concept. - Large Exposures: Amends Rule 1.3 definition of "institution" to limit preferential treatment to UK or OPRR-designated overseas entities. - General Scope: Applies changes across PRA Rulebook for consistency; not relevant to credit unions or third-country branches. #
What You Need To Do
- Review and respond to consultation by 2 April 2026, indicating consent for name/organisation publication and any confidentiality claims
- Assess current exposures to overseas institutions/exchanges against proposed OPRR criteria; model impacts on capital requirements under SA, IRB, and large exposures rules
- Update internal policies on exposure classification once final rules published; monitor HMT OPRR designations for affected jurisdictions
- Indicate response as individual or organisational; personal data handled per Bank of England privacy notice
Key Dates
Compliance Impact
Urgency: High – Firms must engage promptly on consultation (deadline ~10 weeks from publication) to influence outcomes; changes clarify but could increase capital for non-designated overseas exposures, impacting safety/soundness and competitiveness. Failure to adapt risks non-compliance with updated Rulebook and higher prudential burdens.
Who is Affected
Summary
Consultation paper 3/26