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 (Expand. Source: http://www.bankofengland.co.uk/publications/Pages/news/2015/061.aspx) |
||
| Line 7: | Line 7: | ||
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). | ||
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. | |||
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. | |||
| Line 17: | Line 23: | ||
* [[Buffer]] | * [[Buffer]] | ||
* [[Capital adequacy]] | * [[Capital adequacy]] | ||
* [[CRD IV]] | |||
* [[Governance]] | |||
* [[Idiosyncratic stress]] | * [[Idiosyncratic stress]] | ||
* [[Individual Capital Guidance]] | * [[Individual Capital Guidance]] | ||
| Line 22: | Line 30: | ||
* [[Prudential Regulation Authority]] | * [[Prudential Regulation Authority]] | ||
* [[Reverse stress test]] | * [[Reverse stress test]] | ||
* [[Risk management]] | |||
* [[Scenario analysis]] | * [[Scenario analysis]] | ||
* [[Shock]] | * [[Shock]] | ||
* [[Stress]] | * [[Stress]] | ||
Revision as of 15:21, 29 October 2016
Capital adequacy - UK.
The PRA buffer is an amount of capital which UK-regulated banks are required to hold, determined following stress testing.
The amount is determined by the UK regulator, the Prudential Regulation Authority (PRA), following consultation with the regulated bank.
Any PRA buffer which the regulator may set is additional to Individual Capital Guidance (ICG).
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.
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'.
