The Financial Policy Committee (FPC) welcomes today’s publication by the Prudential Regulation Authority (PRA) of its policy statement 20/25 – The Strong and Simple Framework: the simplified capital regime for Small Domestic Deposit Takers (SDDTs) - near final.
The FPC supports the policy to create a new Single Capital Buffer (SCB) for SDDTs and to descope these firms from the Countercyclical Capital Buffer (CCyB) and Capital Conservation Buffer (CCoB). The SCB will simplify the capital regime for SDDT firms, making it easier and less costly to comply with, while maintaining the overall level of resilience by keeping capital requirements and buffers for this cohort broadly similar compared to what they would be outside the SDDT regime. As the UK CCyB will still apply to the vast majority of lending to UK households and businesses by the banking sector, the FPC judges that it will continue to be effective in supporting the continuous supply of credit to the UK real economy.
