PRA buffer: Difference between revisions
imported>Doug Williamson (Expand. Source Bank of England http://www.bankofengland.co.uk/publications/Pages/news/2015/061.aspx) |
imported>Doug Williamson (Classify page.) |
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''Capital adequacy - UK''. | ''Capital adequacy - UK''. | ||
Banks' PRA capital buffers are designed to absorb potential losses under stress. | |||
The amount is determined by the | |||
The PRA buffer is designed to be adequate to absorb losses that may arise under a 'severe, but plausible' stress, in line with the CRD IV rules. | |||
The amount is determined by the regulator, the Prudential Regulation Authority (PRA), following stress testing and consultation with the regulated bank. | |||
Any PRA buffer which the regulator may set is additional to Individual Capital Guidance (ICG). | Any PRA buffer which the regulator may set is additional to Individual Capital Guidance (ICG). | ||
In addition, where the PRA assesses a firm’s risk management and governance to be significantly weak, it may also set the PRA buffer to cover the risk posed by those weaknesses until they are addressed. | |||
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== See also == | == See also == | ||
* [[Capital adequacy]] | * [[Capital adequacy]] | ||
* [[Capital buffer]] | |||
* [[CRD IV]] | |||
* [[Governance]] | |||
* [[Idiosyncratic stress]] | * [[Idiosyncratic stress]] | ||
* [[Individual Capital Guidance]] | * [[Individual Capital Guidance]] | ||
| Line 22: | Line 31: | ||
* [[Prudential Regulation Authority]] | * [[Prudential Regulation Authority]] | ||
* [[Reverse stress test]] | * [[Reverse stress test]] | ||
* [[Risk management]] | |||
* [[Scenario analysis]] | * [[Scenario analysis]] | ||
* [[Shock]] | * [[Shock]] | ||
* [[Stress]] | * [[Stress]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:The_business_context]] | |||
Latest revision as of 21:10, 1 July 2022
Capital adequacy - UK.
Banks' PRA capital buffers are designed to absorb potential losses under stress.
The PRA buffer is designed to be adequate to absorb losses that may arise under a 'severe, but plausible' stress, in line with the CRD IV rules.
The amount is determined by the regulator, the Prudential Regulation Authority (PRA), following stress testing and consultation with the regulated bank.
Any PRA buffer which the regulator may set is additional to Individual Capital Guidance (ICG).
In addition, where the PRA assesses a firm’s risk management and governance to be significantly weak, it may also set the PRA buffer to cover the risk posed by those weaknesses until they are addressed.
The PRA buffer is sometimes known as the 'Pillar 2B' buffer.
The PRA buffer replaced the former 'capital planning buffer'.
