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On 28 October 2025, the Prudential Regulation Authority (PRA) released near-final policy statement PS19/25, setting out how Capital Requirements Regulation (CRR) rules will be restated for UK banks and building societies from 2027. Most CRR rules are being carried over with little change, but there are targeted updates—especially to securitisation, with a new formulaic p-factor for the standardised approach, new capital rules for certain mortgages, and clearer rules on unfunded credit protection in synthetic securitisations. The policy also updates criteria for Simple, Transparent and Standardised (STS) securitisations and risk weights to match Basel 3.1, and clarifies how External Credit Assessment Institution (ECAI) mapping works. Firms must review these changes now, prepare for a 1 January 2027 start, and watch for further consultation on issues like Internal Ratings Based (IRB) treatment of mortgage guarantees. Final rules will follow once HM Treasury gives the green light.
On 28 October 2025, the Prudential Regulation Authority (PRA) published its near-final policy statement (PS19/25) on the restatement of Capital Requirements Regulation (CRR) requirements, with implementation set for 1 January 2027. This development is a pivotal moment for UK banks, building societies, and investment firms, as it marks a significant step in the UK’s transition away from assimilated EU law with the PRA exercising its expanded rule-making powers.
Why this matters: Commercial implications for UK firms
The PRA’s restatement of CRR requirements is designed to ensure continuity and clarity for PRA-authorised firms as the UK begins to shape its own regulatory path post-Brexit. The majority of CRR provisions are being carried over with minimal substantive change, which should provide comfort and stability for firms’ ongoing operations. However, targeted amendments—particularly in the area of securitisation and capital treatment of certain mortgage loans—will require careful review and, in some cases, significant operational adjustments. Firms must ensure that their capital models, product offerings, and risk management frameworks are aligned with the new requirements by the 2027 deadline. Failure to do so could result in regulatory breaches, increased capital charges, or missed opportunities in the evolving UK financial market.
Key policy developments: What has changed?
Restatement with Targeted Amendments
The PRA’s approach is to restate the CRR requirements into UK law with minimal substantive change, except where UK-specific amendments are necessary. This approach is intended to provide regulatory certainty and avoid unnecessary disruption. However, the PRA has introduced targeted amendments in several key areas:
- Securitisation Rules - The most significant changes relate to the treatment of securitisations. The PRA is introducing a formulaic p-factor for the standardised approach, which will affect how firms calculate capital requirements for securitised exposures. There are also new capital treatments for certain mortgage loans and clarifications on the use of unfunded credit protection in synthetic securitisations. These changes are designed to align the UK regime more closely with international standards, particularly Basel 3.1, while addressing specific risks identified in the UK market.
- Simple, Transparent and Standardised (STS) Securitisations: The criteria for STS securitisations and associated risk weights are being updated to reflect Basel 3.1 standards. This will impact the capital treatment of securitised assets and may influence the structuring and pricing of future transactions.
- External Credit Assessment Institution (ECAI) Mapping: The policy statement clarifies the application of ECAI mapping and updates references following the expected revocation of Technical Standard 2016/1799. This is intended to ensure consistency and clarity in the use of external credit ratings for regulatory capital purposes.
- Consequential Amendments: The PRA is making a range of consequential amendments to ensure consistency across the PRA Rulebook. These changes are largely technical but will require firms to review their compliance frameworks to ensure all references and cross-references are up to date.
Stakeholder Engagement and Proportionate Adjustments
The PRA has responded to stakeholder feedback by making proportionate adjustments, particularly in the area of securitisation. For example, the PRA has committed to further consultation on unresolved issues, such as the Internal Ratings Based (IRB) treatment of mortgage guarantees. This ongoing engagement provides firms with an opportunity to shape the final rules and ensure that the UK regime remains both robust and proportionate.
Implementation timeline: What firms need to do now
Immediate Actions
With most changes scheduled to take effect from 1 January 2027, firms have a clear timeline for implementation. However, the scale and complexity of the changes—particularly in the areas of securitisation and capital treatment—mean that early action is essential. Firms should:
- Conduct a comprehensive gap analysis to identify areas where current policies, procedures, and systems will need to be updated.
- Engage with internal and external stakeholders, including legal, compliance, risk, and IT teams, to ensure a coordinated approach to implementation.
- Monitor ongoing PRA consultations, particularly in areas where the final policy is yet to be determined, such as the IRB treatment of mortgage guarantees.
The final rules and policy materials will be published once HM Treasury enacts the necessary commencement regulations. Firms should remain alert to further updates and be prepared to adjust their implementation plans as necessary. Early engagement with the PRA, including seeking clarification on areas of uncertainty, will be critical to ensuring a smooth transition.
Strategic considerations: Positioning for the future
The restatement of CRR requirements is intended to provide regulatory certainty and support the UK’s competitiveness as a global financial centre. By aligning key aspects of the UK regime with international standards, while retaining the flexibility to address UK-specific risks, the PRA is seeking to strike a balance between stability and innovation.
For firms, this presents an opportunity to review and refine their business models, capital strategies, and product offerings in light of the new regulatory framework. Those that are proactive in adapting to the changes will be well positioned to capitalise on new opportunities in the UK and international markets.
The targeted amendments to securitisation and capital treatment underscore the importance of robust risk management and governance frameworks. Firms should ensure that their boards and senior management are fully briefed on the changes and that appropriate oversight mechanisms are in place to monitor compliance and manage emerging risks.
Conclusion: A call to action for UK firms
The PRA’s near-final policy statement on the restatement of CRR requirements is a significant development for UK-regulated firms. While the majority of rules are being carried over with minimal change, the targeted amendments—particularly in securitisation and capital treatment—will require careful attention and prompt action. Firms should begin their implementation planning now, engage with the PRA on outstanding issues, and position themselves to thrive in the new regulatory environment from 2027 onwards. The commercial, operational, and strategic implications are significant, and early, coordinated action will be key to ensuring compliance and maintaining competitive advantage.
