The UK Prudential Regulation Authority (PRA) published the Business Plan for 2025/26, a consultation paper on expectations for effective climate risk management by banks, the prudential expectations on significant risk transfer financing, and the final policy on identification and management of step-in risk. Along with the policy on step-in risk, PRA also set out the guidelines for completing templates for reporting the step-in risk assessment (SI0, SI1 and SI2). The supervisory statement SS1/25 on step-in risk will be effective from January 01, 2026.
Business plan for 2025/26
The Business Plan for 2025/26 sets out strategic priorities for the coming months. According to the plan, the PRA:
has delayed the implementation of Basel 3.1 standards to January 1, 2027, and intends to publish the final Basel 3.1 rules once Parliament has revoked the relevant parts of the Capital Requirements Regulation (CRR).
will finalize the simplified capital regime and additional liquidity simplifications, with the intention to publish a final policy statement on these in Q4 2025.
will run a Bank Capital Stress Test in 2025, in which the largest and most systemic UK banks will participate.
proposed, in 2024, CP8/24 – Definition of Capital: restatement of CRR requirements in the PRA Rulebook and CP13/24 – Remainder of CRR: Restatement of assimilated law. It intends to publish its final rules once Parliament has revoked the relevant parts of the CRR.
intends to consult in H2 2025 on further changes to the securitization rules to make the existing framework more proportionate.
intends to review the liquidity supervisory framework and consider changes, including regulatory reporting, with any proposals to be up for consultation in 2026.
will develop its proposed policy to implement the BCBS standard on crypto-asset exposures of banks.
will consult on proposals for the deletion of underused or duplicative whole reporting templates and develop a firm-facing portal to facilitate interactions with the PRA, focusing on improving firms’ experience with data collections.
published, in 2024, CP17/24 on operational incident and outsourcing and third-party reporting and aims to finalize this policy in 2025.
plans to consult in H2 2025 on expectations for the management of ICT and cyber resilience risks.
Prudential expectations on significant risk transfer financing activities
The PRA also published a letter setting out prudential expectations on significant risk transfer financing activities. The letter covers the PRA’s core prudential concerns and specific areas of focus arising from recent supervisory activities, along with the associated ongoing expectations of firms. It also addresses supervisory expectations for relevant near-final policy changes published as part of policy statement (PS) 9/24 – Implementation of the Basel 3.1 standards near-final part 2. Supervisors will contact relevant firms to request a response to this letter by June 11, 2025. As part of this, firms are expected to outline:
The policies and procedures in place to ensure compliance with Article 299(2)(c) UK CRR, which governs collateral eligibility for securities financing transactions (SFTs) in the trading book.
Any proposed enhancements to these policies and procedures in response to this letter, including any resulting changes to the regulatory capital approach for SFTs associated with specific collateral types and the impact of these changes.
The current regulatory capital approach applied to SFTs for specific collateral types. This should be sufficiently granular to capture details of the trading book/banking book boundary as currently applied.
Summary metrics (e.g., financing or collateral balances) showing the materiality of each specific collateral type. Highly liquid collateral can be excluded from this list.
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