The Capital Requirements Regulations 2013

[^key-ff48bc1bd5fa55c41e346df2f9074d46]: Words in reg. 43(4)(a) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(19)(b)

[^key-35eb81ca95a8fa5af7592c467319ebc6]: Words in reg. 43 substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(19)(c)

[^key-0a74b4006420e803822be3d6e3651fd0]: Word in reg. 41 substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 16(18)

[^key-2650cb67ca3bedaa53e4a3b4edef5d4e]: Words in reg. 34B(6) omitted (17.8.2022) by virtue of The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 (S.I. 2022/838), regs. 1(2), 9(a) (with regs. 24-26)

[^key-3f4c183c91c2ef8b97ad188423eabb2a]: Word in reg. 34B(6) omitted (17.8.2022) by virtue of The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 (S.I. 2022/838), regs. 1(2), 9(b) (with regs. 24-26)

[^M_F_b65beffb-e038-4bfa-a992-182376fcd943]: 2000 c. 8. Section 349(2) was amended by section 41 of, and paragraphs 19(1) and (2) of Schedule 12 to, the Financial Services Act 2012 (c. 21); paragraphs 14(1)(b), 17(c), 18 and 22 of Schedule 3 were amended by section 12 of, and paragraphs 1, 3, 7, 8 and 14 of Schedule 4 to, the Financial Services Act 2012; paragraph 14(1)(b) was also amended by S.I. 2003/1473 and S.I. 2003/2066.

[^key-bd138a66678f7ead797b90058bda4e76]: Word in reg. 2(3) substituted (27.2.2025) by The Retained EU Law (Revocation and Reform) Act 2023 (Consequential Amendments) Regulations 2025 (S.I. 2025/82), reg. 1(2), Sch. 9 para. 11(b)

[^key-5e836b91a74e7dbee8a3530998962a96]: Word in reg. 2(1) substituted (27.2.2025) by The Retained EU Law (Revocation and Reform) Act 2023 (Consequential Amendments) Regulations 2025 (S.I. 2025/82), reg. 1(2), Sch. 9 para. 11(a)

Interpretation: regulators' rules

2A

• (1) In these Regulations—

• (a) a reference to the PRA rulebook is to the rulebook published by the PRA containing rules made by that Authority under FSMA as the rulebook has effect on 1 January 2022;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) “Directive 2013/36/EU UK law” means the law of the United Kingdom which was relied on by the United Kingdom immediately before IP completion day to implement the capital requirements directive and its implementing measures—

• (i) as they have effect on 1 January 2022, in the case of rules made by the FCA or by the PRA under FSMA; and

• (ii) as amended from time to time, in all other cases.

• (2) By way of an exception to paragraph 1(c), for the purposes of regulations 21, 34, 34A, 35 and 35B, and the references to the capital requirements directive therein, “Directive 2013/36/EU UK law” shall mean the law of the United Kingdom or any part of it, which was relied on by the United Kingdom immediately before IP completion day to implement Directive 2013/36/EU and its implementing measures as amended from time to time.

Supervisory review and evaluation process

34A

• (1) The competent authority must review the arrangements, strategies, processes and mechanisms implemented by an institution to comply with Directive 2013/36/EU UK law, the capital requirements regulation and CRR rules and evaluate—

• (a) in the case of the PRA—

• (i) risks to which that institution is or might be exposed, and

• (ii) risks revealed by stress testing, taking account of the nature, scale and complexity of that institution’s activities;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) On the basis of the review and evaluation referred to in paragraph (1), the competent authority must determine whether the arrangements, strategies, processes and mechanisms implemented by an institution and the own funds and liquidity held by it ensures a sound management and coverage of its risks.

• (3) The competent authority must establish the frequency and intensity of the review and evaluation referred to in paragraph (1) having regard to the size, systemic importance, nature, scale and complexity of the activities of the institution concerned.

Ongoing review of the permission to use internal approaches

34B

• (1) The competent authority must review on a regular basis, and at least every 3 years, an institution's compliance with the requirements regarding internal approaches that require permission by the competent authorities before using such internal approaches for the calculation of own funds requirements in accordance with Part 3 of the capital requirements regulation and CRR rules.

• (2) In its review the competent authority must have particular regard to changes in an institution's business and to the implementation of those approaches to new products.

• (3) Where material deficiencies are identified in risk capture by an institution's internal approaches, the competent authority must ensure these are rectified, or take appropriate steps to mitigate their consequences, including by imposing higher multiplication factors, or imposing capital add-ons, or taking other appropriate and effective measures.

• (4) The competent authority must in particular review and assess whether the institution uses well developed and up-to-date techniques and practices for its internal approaches.

• (5) If for an internal market risk model numerous overshootings referred to in Article 366 of the capital requirements regulation indicate that the model is not or is no longer sufficiently accurate, the competent authority must revoke the permission for using the internal model or impose appropriate measures to ensure that the model is improved promptly.

• (6) If an institution has received permission to apply an approach that requires permission by the competent authority before using such an approach for the calculation of own funds requirements in accordance with Part 3 of the capital requirements regulation but no longer meets the requirements ... for applying that ... approach, the competent authority must require the institution either to satisfy the competent authority that the effect of non-compliance is immaterial where applicable in accordance with the capital requirements regulation or to present a plan for the timely restoration of compliance with the requirements and set a deadline for its implementation.

• (7) The competent authority must require improvements to that plan if it is unlikely to result in full compliance or if the deadline is inappropriate.

• (8) If the institution is unlikely to be able to restore compliance within an appropriate deadline and, where applicable, has not satisfactorily demonstrated that the effect of non-compliance is immaterial, the permission to use the internal approach must be revoked or limited to compliant areas or those where compliance can be achieved within an appropriate deadline.

Specific liquidity requirements

Application of supervisory measures to institutions with similar risk profiles

35A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supervisory powers

35B

For the purposes of a SREP, an internal model review, and in order to address a situation where an institution does not meet the requirements of the Capital Requirements Regulation , CRR rules or Directive 2013/36/EU UK law, or where the competent authority has evidence that an institution is likely to breach such requirements within the following twelve months, the competent authority may at least—

• (a) require the reinforcement of the arrangements, processes, mechanisms and strategies implemented in accordance with Directive 2013/36/EU UK law which implemented Articles 73 and 74;

• (b) require institutions to present a plan to restore compliance with supervisory requirements and set a deadline for its implementation, including improvements to that plan regarding scope and deadline;

• (c) require institutions to apply a specific provisioning policy or treatment of assets in terms of own funds requirements;

• (d) to restrict or limit the business, operations or network of institutions or to request the divestment of activities that pose excessive risks to the soundness of an institution;

• (e) require the reduction of the risk inherent in the activities, products and systems of institutions;

• (f) require institutions to limit variable remuneration as a percentage of net revenues where it is inconsistent with the maintenance of a sound capital base;

• (g) require institutions to use net profits to strengthen own funds;

• (h) restrict or prohibit distributions or interest payments by an institution to shareholders, members or holders of Additional Tier 1 instruments (which meets the requirements of Article 52 of the capital requirements regulation) where the prohibition does not constitute an event of default of the institution;

• (i) impose additional or more frequent reporting requirements, including reporting on capital and liquidity positions;

• (j) impose specific liquidity requirements, including restrictions on maturity mismatches between assets and liabilities;

• (k) require additional disclosures.

Specific publication requirements

35C

• (1) The competent authorities may require institutions to—

• (a) publish information referred to in the Disclosure (CRR) Part of the PRA Rulebook more than once per year, and to set deadlines for publication

• (b) use specific media and locations for publications other than the financial statements and

• (2) The competent authorities may require parent undertakings to publish annually, either in full or by way of references to equivalent information, a description of their legal structure and governance and organisational structure of the group of institutions.

Employee remuneration

Diversity practices

Consultation with EBA: supervisory benchmarking of internal approaches for calculation own funds requirements