Introduction

2.1 This chapter provides feedback to responses to Chapter 3 of consultation paper (CP) 16/22 - Implementation of the Basel 3.1 standards, which set out proposals to change the standardised approach (SA), for calculating risk-weighted assets (RWAs) for credit risk in the Capital Requirements Regulation (CRR) and the Prudential Regulation Authority's (PRA) expectations, in response to the Basel 3.1 standards. This chapter also sets out the PRA's near-final policy on the SA for credit risk following the consultation.

2.2 In CP16/22, the PRA proposed to introduce changes to enhance the risk sensitivity and robustness of the SA, including:

- the introduction of a more structured and granular exposure allocation and increased risk sensitivity of the treatment for real estate lending;

- a more risk-sensitive treatment for exposures to unrated corporates;

- changes to deliver a simpler, more risk-sensitive and prudent approach for risk-weighting infrastructure lending, including the introduction of specific treatments for 'specialised lending' and the removal of the infrastructure support factor;

- changes to deliver a simpler, more transparent and prudent mechanism for determining risk weights for lending to small and medium-sized enterprises (SMEs), including the removal of the SME support factor;