The U.K. agency in charge of prudential regulation and supervision this week released its roadmap to strengthen capital standards and comply with other changes triggered by the European Union’s Capital Requirements Directive.
The Prudential Regulatory Authority (PRA) said the changes will affect banks, building societies, and investment firms regulated by the PRA, but will not affect insurance firms. Borne out of the financial crisis, the Capital Requirements Directive (CRD IV) is a package of regulations implementing Basel III, the international regulatory framework for banks. The package includes stronger capital standards, both in amount and the quality of capital held by banks, greater risk coverage, expanded disclosure requirements, and reduced procyclicality. The package sets forth liquidity standards and new leverage disclosure requirements. EU member states are required to align their laws with the new regulations, most of which take effect in January.
