UK Finance response to CP 17-23 Structural FX

UK Finance has responded to the PRA’s CP 17/23 on the capitalisation of Structural Foreign Exchange positions.

We agreed that the proposed new rules remove of some ambiguity in the existing Capital Requirements Regulation but raised some questions in relation to the hedging of items held at historic cost -  for instance buildings – and the treatment of Additional Tier 1 capital instruments, as we are concerned the proposed rule changes could result in double counting of risk, leading to unnecessary extra capital being held by banks.

PRA’s CP 17/23