PRA clarifies approach to international banks branch & subsidiary supervision and branch reporting: PS6/25 (updating SS5/21)

Having consulted on proposed updates to its supervisory statement (SS5/21) on its approach to international banks and subsidiary supervision in July 2024, the PRA has now issued its final policy statement (PS6/25) and an updated version of SS5/21.  The new policy is effective immediately, with the exception of the changes to the material relating to branch reporting which take effect from 1 March 2026.  

As the final changes do not exactly mirror the changes consulted up (see our earlier client note on the consultation here), International Banks will need to consider the final Supervisory Statement carefully to ensure compliance.  

On branch and subsidiary supervision, the PRA introduces additional indicative criteria that it will consider when determining whether it would be appropriate for an international bank to operate in the UK as a branch rather than a subsidiary.  This results in a more complex framework for determining when a branch must convert to a subsidiary – and the updated approach does gives the PRA significantly more discretion in doing so.  So with that in mind, banks should proactively factor the updated approach into their strategic plans for the future.

On booking models, the PRA has introduced more granularity to expectations, stemming from industry requests for clarification of the PRAs expectations, as well as developments in banks booking structures, and the increase in number of split desks.  As part of the changes, the PRA have explicitly extended the scope of the PRA’s expectations of booking arrangements to also apply to “UK trading banks” (i.e. PRA authorised banks and designated investment firms that are headquartered in the UK or are part of the group based in the UK, and have investment banking or sales and trading activities in both the UK and overseas), and such firms should take note of the expectations. In practice PRA supervisors of the relevant UK firms have used the expectations in SS5/21 as the basis for reviewing their booking arrangements, but firms will nevertheless need to get up to speed with the up-to-date expectations as amended in accordance with PS6/25.

With respect to booking arrangements, the policy statement directs firms to undertake a self-assessment against the revised expectations to a timeline agreed with their PRA supervisory contact. As with the original SS5/21, in doing so firms are required to provide their PRA supervisory contact with a clear explanation of any gaps that they need to address and their proposed timeframe for doing so.

The policy statement also makes amendments to the PRA branch return designed to improve the collection of whole-firm liquidity data (liquidity reporting), and makes other minor amendments to SS5/21 to clarify some of the PRA’s existing expectations and processes.

You can find our client note detailing the key changes made by PS6/25 here.