Statement
The Financial Policy Committee (FPC) welcomes today’s publication by the Prudential Regulation Authority (PRA) of its Consultation Paper 7/24 – The Strong and Simple Framework: the simplified capital regime for Small Domestic Deposit Takers (SDDTs). The FPC supports the proposal to descope SDDTs from the Countercyclical Capital Buffer (CCyB) and Capital Conservation Buffer (CCoB) to allow the creation of the new Single Capital Buffer (SCB) for these firms.
The SCB will simplify the capital regime for SDDT firms, while maintaining the overall level of resilience by keeping capital requirements and buffers for this cohort broadly similar compared to outside the SDDT regime. The FPC judges that the UK CCyB will continue to be effective in protecting the supply of credit to the UK real economy, as it continues to apply to the vast majority of lending by the banking system to UK households and firms.
