PRA announces withdrawal of the modification by consent for third country covered bonds in LCR

The UK Prudential Regulation Authority (PRA) has announced it is withdrawing the modification by consent (MbC) for third country covered bonds in the Liquidity Coverage Ratio (LCR) part of the PRA Rulebook, which it had previously offered on 8 April. The decision to pause the process and withdraw the MbC is due to the PRA receiving several technical comments and requests for clarification, which the PRA seeks to consider and address appropriately. Once the process is complete, the PRA will clarify its approach. The MbC was intended to modify Article 11 (1)(d)(ii) of the LCR part of the PRA Rulebook, to allow firms the inclusion of certain third country covered bonds in their Level 2A high-quality liquid assets (HQLA) up to a maximum value, determined at 31 January 2025 (the reporting date). During the pause in the process, firms do not need to amend their approach to recognising third country covered bonds under the Liquidity Coverage Ratio (CRR) and Liquidity (CRR) Parts of the PRA Rulebook.

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