PRA to supervise branches of international banks

The Prudential Regulatory Authority (PRA) has published a consultation paper "Supervising International Banks: the PRA's approach to branch supervision". This outlines how the PRA will supervise UK branches of banks based outside the EEA and explains in more detail the PRA's approach to EEA branches and subsidiaries.

The PRA's framework for the supervision of non-EEA branches will be based on whether:

• the home supervision of the firm is equivalent to that of the PRA;
• the PRA has received assurance from the home supervisor over the firm's resolution plan in a way that reduces the impact on financial stability in the UK; and
• the firm undertakes any critical economic functions in the UK.

The PRA will then make a judgement about whether it is content for the firm to operate as a branch in the UK. This judgement will impact both existing and new branches of non EEA banks.

The PRA proposes a number of rules in relation to the supervision of non-EEA branches, including:

• requiring all deposit taking and/or designated investment firms that operate through EEA and non-EEA branches to complete a new data collection return effective from 2015; and
• requiring non-EEA firms to have taken adequate steps to have in place resolution plans in relation to their UK branches.

The deadline for comments is 27 May 2014.

Related link:
http://www.bankofengland.co.uk/publications/Pages/news/2014/036.aspx