UK PRA policy statement on final simplified capital regime for SDDTs

The UK Prudential Regulation Authority (PRA) has published a final policy statement PS4/26, finalising the simplified capital regime and additional liquidity simplifications for small domestic deposit takers (SDDTs) and SDDT consolidation entities under the strong and simple framework. The regime for SDDTs, a layer of prudential regulation that will apply to the smallest banks and building societies, has been developed in two phases: Phase 1, which focused on liquidity and disclosure simplifications and was finalised in December 2023; and Phase 2, outlined in the 2025 near-final policy statement and which built on Phase 1 and incorporated feedback from the 2024 consultation.

In PS4/26, the PRA confirms its final policy on the simplified capital regime for SDDTs. The PRA states that it has not made substantive changes to the policy and rules set out in the 2025 near-final policy statement, although it has made: (i) minor amendments to the rules published as near-final, principally to reflect minor amendments made to PRA Rulebook: CRR Firms: (CRR) Instrument 2026 and PRA Rulebook: CRR Firms: (CRR No.2) Instrument 2026; (ii) minor amendments to the supervisory statements and statements of policy to enhance clarity and readability; and (iii) minor corrections and clarifications to the reporting templates and instructions.

The SDDT capital regime will take effect on 1 January 2027, other than the changes to SoP2/23 on the operation of the SDDT regime, and rules and expectations relating to the frequency of the Internal Capital Adequacy Assessment Process updates (including reverse stress-testing) and Internal Liquidity Adequacy Assessment Process updates which took effect on 20 January, the same date on which this final policy statement was published. The revocation of the existing rules relating to the definitions of an Interim Capital Regime (ICR) firm and an ICR consolidation entity, and the deletion of SoP3/23, also took effect on 20 January. The PRA has also updated materials to reflect the UK's post‑EU legislative position and will also shortly publish a final reporting taxonomy reflecting the final policy and rules set out in this policy statement.

Alongside this policy statement, the PRA also published final policy, rules and supervisory expectations relating to Basel 3.1 implementation, retiring the Pillar 2A refined methodology and the restatement of CRR requirements.

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