Bank of England Eases Big Bank Oversight to Biennial Cycle

PRA Shifts to Two-Year Supervisory Cycle

The Bank of England’s Prudential Regulation Authority PRA has announced a significant change in its supervisory approach, moving from an annual to a two-year cycle for major banks. The shift means formal reviews, known as Periodic Summary Meetings, will now occur biennially.

Deregulation and Economic Growth

This decision aligns with a broader push from UK authorities to reduce regulatory burdens and promote economic growth and competitiveness. According to BoE Deputy Governor Sam Woods, the change aims to make operations more efficient and streamline interactions for regulated firms. While officials state the decision was internal, it comes amid political pressure to cut red tape.

Impact on Financial Stability and Industry

The move is part of a global trend toward easing bank regulations. However, it has sparked debate, with some former BoE officials expressing concern that recent deregulation efforts, such as lowering capital requirements, could heighten risks to the financial sector. The PRA maintains this change supports growth without compromising its primary objective of financial stability.

Conclusion and Future Outlook

The transition to a biennial review cycle reflects the balancing act regulators face between fostering economic competitiveness and maintaining robust financial oversight. The long-term effects on the banking sector's stability will be closely monitored as this and other deregulation measures are implemented.

FAQ

Q: Why is the Bank of England changing its supervisory frequency?

A: To improve operational efficiency, streamline processes for banks, and support the UK's economic growth and competitiveness objectives.

Q: How often will the supervisory meetings happen now?

A: The formal Periodic Summary Meetings for large banks will now occur every two years instead of annually.

Source: Investing.com