This policy statement (PS) sets out the Prudential Regulation Authority's (PRA) responses to the feedback on Consultation Paper 1/15 'Assessing capital adequacy under Pillar 2' (the CP). It sets out changes to rules and supervisory statements and finalises a statement of policy: 'The PRA's methodologies for setting Pillar 2 capital'. The PS is relevant to banks, building societies and PRA-designated investment firms.

Background

The Pillar 2 capital framework for the banking sector is intended to ensure that firms have adequate capital to support the relevant risks in their business, and that they have appropriate processes to ensure compliance with CRD IV [The Capital Requirements Regulation (575/2013) (CRR) and Capital Requirements Directive (2013/36/EU) (CRD), jointly 'CRD IV'.].