PRA publishes updated supervision framework for international banks

On 20 May 2025, the Prudential Regulation Authority (PRA) published a Policy Statement (PS6/25) giving feedback on consultation paper CP11/24 published in July last year. PS6/25 contains the PRA’s final rules and policy on its approach to branch and subsidiary supervision.

Who should read PS6/25?

PS6/25 is relevant to PRA authorised banks and designated investment firms that are headquartered, or part of a group based, outside the UK (International Banks). Chapter 3 on booking arrangements is also relevant to banks and designated investment firms that are headquartered in the UK or are part of a group based in the UK with investment banking and/or sales or trading activities in both the UK and overseas (UK Trading Banks).

What was in CP 11/24?

In CP11/24, the PRA consulted on an updated approach to International Banks and branch and subsidiary supervision.  The changes were intended to reflect developments since Supervisory Statement 5/21 was originally published and to provide further detail and clarification on some aspects of the PRA’s existing approach, including its approach to risk management and remote booking. 

The consultation covered the following areas:

• Branch risk appetite: Introducing some additional indicative criteria that the PRA would consider when determining whether it would be appropriate for an International Bank to operate in the UK as a branch rather than a subsidiary;
• Booking models: Clarifying expectations on firms’ booking arrangements and extending their formal application to a subset of UK banks;
• Liquidity reporting: Amending the PRA Branch Return to improve the collection of whole-firm liquidity data; and
• Minor amendments to SS5/21, including clarifications in relation to deposit aggregators.

What changes has the PRA made in PS6/25 to the draft policy consulted on in CP11/24?

The final policy does not exactly match the draft policy consulted on and firms will need to consider the content of the final policy carefully.  To help with this, we have highlighted below the key areas where the final policy in PS6/25 differs from the draft policy in CP11/24. Where the policy consulted on in CP11/24 remains unchanged, we have not referred to it in this article. Please see our earlier article for more information on the consultation.

Branch Risk Appetite

• Indicative thresholds: The PRA is proceeding with the new indicative threshold it proposed in CP11/24 of £300m in retail and small company deposits in instant access accounts. Additionally, it has decided to increase the existing £100m and £500m FSCS-linked deposit thresholds by 30% to £130m and £650m respectively.
  
  The PRA says that this uplift will broadly maintain its existing branch risk appetite by accounting for cumulative inflation since the thresholds were introduced. The new £300m threshold was set in expectation it would not materially impact the existing population of branches. Firms should note that the other indicative threshold, that branches should have less than 5,000 retail and small company customers with transactional accounts, remains unchanged.
   
• Transactional deposits: References to ‘transactional deposits’ have been removed from the £100m (now £130m) and the new £300m indicative thresholds.
  
  The wording of the £100m (now £130m) threshold and the new £300m threshold both referred to instant access or transactional deposits (which were collectively referred to as demand deposits in CP11/24). On reflection, the PRA considers the reference to transactional deposits to be redundant and has decided to simplify the wording by removing references to ‘transactional deposits’ which are broadly, in practice, a subset of instant access deposits.  Changing the wording to refer solely to instant access deposits makes the thresholds simpler to interpret and enables the reporting change described below. 
   
• Change to Branch Return Form: The Branch Return Form has been amended so that it will only require data on instant access deposit balances and number of customers, and not the transactional breakdown.
  
  The PRA will no longer require branches to routinely report transactional deposit data. The reporting fields relating to transactional deposit balances and number of customers are no longer mandatory. Although, firms should note that the existing indicative threshold of 5,000 retail and small company customers with transactional accounts is being maintained. This refers more narrowly only to transactional customers. In the PRA’s view, amending it to refer to instant access customers instead would represent a material tightening of the PRA’s branch risk appetite and potentially constrain branches’ deposit-taking activity. The PRA will instead monitor the number of instant access customers reported in the Branch Return Form as an indicator that may trigger closer supervisory investigation (i.e. the PRA may request information from firms where the number of customers with instant access accounts approaches or exceeds 5,000). Firms will need to be capable of identifying transactional accounts if requested by the PRA. Firms may still choose to report transactional deposit data voluntarily in the absence of any PRA request. The PRA’s revised approach has been reflected in the PRA Rulebook (the Branch Return Form) and the PRA’s supervisory guidance (Reporting guidance for the Branch Return).
   
• Implementation: The implementation date for revised branch reporting requirements has been extended to 1 March 2026.
  
  The PRA has decided to push back implementation to allow firms more time to prepare and ensure that high quality data is reported.  It originally consulted on an implementation date of 31 December 2025. Firms will need to use the revised version of the Branch Return form for the first time for their data as at 30 June 2026, which has a due date of 30 business days from the date to which the information relates.

Booking models

• Scope of application: The PRA has clarified the application of booking model expectations to UK Trading Banks, with additional paragraphs of SS5/21 now applying to UK Trading Banks.  The PRA has also clarified its expectations of firms where there is an intersection between the scope of SS5/21 and the scope of Article 21c of CRD6 which relates to core banking activities. As firms manage the implementation of Article 21c for their banking business, they should consider where the booking expectations are likely to be relevant and discuss with the PRA. Where activities sit outside the scope of SS5/21, to the extent that they involve material business model changes, firms should continue to comply with their obligations under the General Notification Rule 2.3.
• Language modification: The PRA has modified the language used on booking responsibilities and trade capture.
• Drafting clarification: The PRA has improved clarity of drafting across multiple areas which are detailed in Chapter 3 of the PS.

Appendix 8 of the PS sets out a summary of all of the changes made to SS5/21 on booking models giving paragraphs references for the PS and SS5/21.

Liquidity reporting

• Reporting timelines: The PRA has updated the Branch Return Form to address potential difficulties that might arise for firms where there is a mismatch between the PRA’s Branch Return submission deadlines and the Home State Supervisor’s requirements. To the extent data for the 30 June or 31 December reporting period end dates is not available within the PRA‘s Branch Return submission timelines, firms should provide the most recent data points available as submitted to the Home State Supervisor and indicate the reporting period end date used in rows 130 and 140.
• Implementation: The PRA has postponed the implementation of the revised Branch Return reporting rules until 1 March 2026 to allow firms more time to implement changes to their reporting systems and align these with the whole firm’s reporting processes.
• Reporting in stress: The PRA’s original proposal envisaged supervisors would have regard to the requirements of the Home State Supervisor when determining whether to request additional and/or more frequent whole-firm liquidity information. The PRA has further clarified its definition of stress in this context. The PRA, where possible, will align requests for whole-firm liquidity information under stress with the information provided to the Home State Supervisor.
• Reporting scope:  The PRA has clarified the scope of the whole firm reporting in the reporting guidance for the Branch Return by making clear that the whole firm is the entity the PRA has authorised to operate a branch in the UK.
• Reporting definitions: The PRA has clarified the definitions in the Branch Return to specify the rows are to include Liquidity Coverage Ratio inflows and outflows within the next 30 days and are not to be misinterpreted as inflows and outflows beyond 30 days.
• Reporting exceptions: The PRA has clarified in Chapter 5 of SS34/15 that firms should indicate in the Branch Return if there are intra-firm confidentiality restrictions in place and the PRA will work with the firm to determine suitable, alternative reporting arrangements on a case-by-case basis.  This might include branches: (i) providing information based on the Home State Supervisor’s own liquidity regime; (ii) providing whole-firm internal liquidity management information; or (iii) the PRA seeking whole-firm liquidity information directly from the whole firm or from the Home State Supervisor, where a memorandum of understanding has been agreed and is applicable.

When do the changes take effect?

The new policy updating SS5/21 took effect on 20 May 2025 upon publication of PS6/25.

For branch reporting, the new policy updating SS34/15 (reporting guidance for the Branch Return Form) and updated branch reporting rules take effect from 1 March 2026. Firms are required to use the revised version of the Branch Return Form for the first time for their data as at 30 June 2026 (unless otherwise stated in the Branch Return Form) with a due date of 30 business days after 30 June 2026.

On booking arrangements, relevant firms should carry out a self-assessment against the revised expectations to a timeline they agree with their PRA supervisory contact. As was the case under the original SS5/21, firms should provide their PRA supervisory contact with a clear explanation of any gaps that they need to address and their proposed timeframe for doing so.

If you have any questions about the changes and how they are likely to impact your firm, please get in touch with the key contacts listed here or your usual contacts at CMS.