The PRA is planning to introduce special capital rules for smaller banks, which it has dubbed the “Strong and Simple” framework.
The name has echoes of Theresa May’s 2017 general election promise of “strong and stable” government. Hopefully for all concerned the PRA will be better able to live up to its word.
It is relevant to securitization for many reasons, not least that for a good while there has been much talk of UK challenger banks exploding on to the significant risk transfer scene. Allica Bank led the way back in summer 2024, but uptake has been limited since with delays to the full implantation of Basel rules partly to blame for the lack of action.
An easing of the rules for smaller institutions perhaps risks further reluctance to issue SRTs. Market sources, however, reckon it is just a bit of further breathing space that means maybe more time to think, but not necessarily less need to act.
Tom Hall has the details here. On the subject, it’s also worth highlighting this opinion piece from covered bond editor Frank Jackman on the state of play in international Basel manoeuvrings.
Elsewhere, action continued late into July in ABS, CMBS and CLOs, while George Smith looked into an increased appetite from banks to take down forward flows.
And finally, a challenge for the listener: what do Padron peppers and credit investing have in common?