ITFA’s response to the Prudential Regulatory Authority (PRA)

Earlier this year the Prudential Regulatory Authority (PRA) of the United Kingdom published a consultation paper on the capital relief treatment of guarantees under the Basel rules as implemented in the EU. Trade credit insurance and inter-bank risk participations are analysed, for capital relief purposes, under these rules. The proposed interpretation of issues such as timeliness, legal opinions and incontrovertibility could have profound effects on the usefulness of both these products and, given the PRA’s status as an important regulator, have the potential to damage cross-border business. As a consequence, ITFA has written a response to the PRA explaining how these products work and urging a re-think of some of the positions taken in the consultation paper. A copy of our response is available to ITFA members by clicking here.