UK Prudential Regulation Authority Publishes Policy Statement on Definition of an Interim Capital Regime Firm

The U.K. Prudential Regulation Authority has published its final policy statement and statement of policy relating to the definition of an Interim Capital Regime firm and an ICR consolidation entity. The policy statement explains the means by which ICR-eligible firms can join the ICR. Joining the ICR will enable eligible firms to preserve their current capital requirements from the implementation date (i.e., January 1, 2026) of the Basel 3.1 standards, until the implementation of the permanent Small Domestic Deposit Taker capital regime. The PRA is currently consulting on proposals to revoke the ICR when the SDDT capital regime is implemented.

The rules relating to the definition of an ICR firm, and the ability for eligible firms and consolidation entities to become ICR firms and ICR consolidation entities, along with PRA Rulebook Glossary changes, application rules and definitions took effect from November 29, 2024. The final rules for the reproduced Capital Requirements Regulation provisions and technical standards, and the disapplied Rulebook amendments, for ICR firms will be published separately alongside the final Basel 3.1 policy statement in 2025 Q1.

The PRA has also published information on the modifications by consent that ICR-eligible firms can submit to access the ICR. Firms that take up the PRA's offer of a modification by consent can become ICR firms (CRR consolidation entities can become ICR consolidation entities). Unless a firm or CRR consolidation entity has taken up the modification by consent, or contacted the PRA to indicate that it wishes to do so, by February 28, 2025, the PRA will assume that the entity has chosen to be subject to the Basel 3.1 standards from January 1, 2026.

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