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PRA: focus on financial reporting - deadlines can wait

6 April 2020: the Prudential Regulation Authority (PRA) has instructed banks to focus their resources on financial reporting, stating that regulatory deadlines will be eased to ensure high-quality information continues to be delivered to the market

In a statement on 2 April, the PRA allowed banks, building societies, designated investment firms and credit unions a one-month delay on harmonised reporting to the EBA/PRA and reporting solely made to the PRA. Annual reports and accounts can be delayed by two months where remittance deadlines fall on or before 31 May 2020.

Liquidity coverage ratio and other liquidity metrics reporting remittance dates will remain the same, as will liability structure, demonstrating the regulator’s key areas of interest in the current crisis. 

This will allow regulated firms to focus on quarter one reporting and the challenges currently accompanying that, given the proximity of quarter-end to the economic downturn, market volatility, the impact of the government support measures and other forbearance. 

It was also announced that HM Treasury and the PRA welcomed the delay of implementation of Basel 3.1 by one year, enabling banks and supervisors to “respond to the immediate financial stability priorities from the impact of COVID-19”. 

The moves follow the joint statement from the PRA, Financial Conduct Authority and Financial Reporting Council on 26 March 2020 which allowed listed companies an extra two months to publish their audited annual financial reports.

Whilst deferring regulatory deadlines is just one piece of the puzzle, the raft of recent announcements emphasise that banks should be focussed on helping households and businesses manage through what is now a health and economic crisis. In his speech on 1 April, Business Secretary Alok Sharma gave the banks a pertinent reminder that their priority is expected to be the advancing of funds to support business and play their part in helping individuals remain financially resilient. 

“Just as the taxpayer stepped in to help the banks back in 2008, we will work with the banks to do everything they can to repay that favour and support the businesses and people of the United Kingdom in their time of need,” commented Sharma.

Working with the banks will inevitably mean enabling them to prioritise the response to COVID-19, both in terms of deferring deadlines and perhaps in time other large time-intensive projects which may be increasingly difficult to manage with large swathes of the business working remotely. It remains to be seen if the FCA’s stance on LIBOR transition, for example, will further change.