Key Themes From New PRA Supervisory Letters

This article is a report detailing the key themes outlined in two supervisory letters published by the U.K.'s Prudential Regulation Authority (PRA) on January 21, 2025. The letters identify the PRA's priorities for international banks and U.K. deposit takers, focusing on risk, operational, and financial resilience amid economic uncertainty and advancements in technology. The report discusses the importance of strengthening risk culture and control frameworks, emphasizing the need for boards to oversee risk management effectively. It also addresses credit risk management, particularly concerning nonbank financial institutions, and highlights the significance of data management and AI governance. Liquidity resilience and operational resilience are noted as critical areas of focus, with specific expectations for banks to ensure compliance with upcoming regulatory changes. The article concludes with practical takeaways for legal professionals assisting banks in navigating these regulatory priorities, including the implications of the Basel 3.1 delay and the importance of operational resilience by the March deadline.