Guidance

SoP – The PRA’s approach to the implementation of the O-SII buffer

Chapter

Introduction

Printed on: 06/11/2024

Rulebook at: 29/12/2020

1

Introduction

1.1

This Statement of Policy (SoP) sets out the Prudential Regulation Authority’s (PRA) approach to the implementation of the Other Systemically Important Institutions Buffer (O-SII buffer).

  • 29/12/2020

1.1A

The O-SII buffer replaces the previous buffer used to address the risk posed by systemically important institutions, the systemic risk buffer. The change resulted from the UK implementation of the Capital Requirements Directive (2019/878/EU) (CRD V).

  • 29/12/2020

1.2

UK legislation implementing the O-SII buffer requires the Financial Policy Committee (FPC) to establish a framework for an O-SII buffer that applies to large building societies and ring fenced bodies (RFBs). The O-SII buffer Regulations[1] require the PRA to apply the framework set out by the FPC on the O-SII buffer from Tuesday 29 December 2020.

  • 1. The Financial Holding Companies (Approval etc.) and Capital Requirements (Capital Buffers and Macro-prudential Measures) (Amendment) (EU Exit) Regulations 2020.
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1.3

The FPC published ‘The Financial Policy Committee’s framework for the O-SII buffer (‘FPC framework’) in December 2020.[2] This document, along with the FPC framework, forms the Bank of England’s broader framework for the O-SII buffer.

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1.4

The PRA will review this SoP at least every two years.

  • 29/12/2020