PS20/25 – The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers (SDDTs) – near-final

Key dates

2026 (specific date TBD)

– PRA to make final rules and policy covering the entire Basel 3.1 package once HM Treasury makes commencement regulations to revoke relevant CRR provisions

31 March 2026 Deadline

– Deadline for firms wishing to enter the SDDT regime to notify the PRA and benefit from the simplified framework at implementation

1 January 2027

– Implementation date for the simplified capital regime for SDDTs; the Interim Capital Regime will no longer apply

2027 (specific date TBD)

– PRA to implement restatement of CRR requirements (PS19/25)

Suggested considerations

• *For SDDTs Currently Operating or Considering Entry:
• *Notification Decision – Determine whether to enter the SDDT regime and submit notification to the PRA by 31 March 2026 if seeking to benefit from simplified rules.
• *Policy Review – Conduct comprehensive review of PS20/25, related policy statements (PS18/25, PS19/25, PS8/25, PS14/25), and supporting methodologies (SoP5/25, SS4/25, amendments to SoP2/23).
• *Capital Calculation Transition – Prepare systems and processes to transition from current capital calculation methodologies to Basel 3.1 standardised approaches with SDDT simplifications, including:
• Removal of CCR and CVA calculations for derivatives
• Simplified market risk framework implementation

What changed

• The simplified capital regime introduces structural changes across all three pillars of capital requirements: Pillar 1 (Risk-Weighted Assets)
• SDDTs must apply Basel 3.1 standardised approaches for credit risk and operational risk, with specific simplifications.
• Due diligence requirements in the standardised approach to credit risk are disapplied for SDDTs.
• Counterparty credit risk (CCR) for derivatives and credit valuation adjustment (CVA) risk are disapplied (with minor exceptions).
• Market risk framework is simplified, with SDDTs applying the credit risk approach to trading book positions and removal of foreign-exchange and commodity risk capital requirements.
• The Interim Capital Regime (ICR) will be removed upon implementation. Pillar 2 (Supervisory Review)

Who is affected

• *Primary Stakeholders:
• Small Domestic Deposit Takers (SDDTs)
• taking.
• Firms considering SDDT status
• *Secondary Stakeholders:
• Parent companies and holding companies
• Compliance and risk management teams
• Auditors and external advisors

Related regulations

• *Related PRA Publications
• PS4/26
• PS15/23
• PS18/25
• final), addressing supervisory methodology changes.2
• PS19/25