Why the PRA prefers subsidiaries for retail businesses

Author: Ashley Lee | Published: 10 Nov 2014

The UK’s Prudential Regulatory Authority (PRA) has followed other regulators globally and encouraged the subsidarisation of branches catering to retail customers. But the regulator does not expect a material change in the number of branches in the UK.

Regulators and market participants globally have debated the value of international banks having subsidiaries or branches in their host jurisdictions. Some, like the US, have required international banks of a certain size or that are pursuing certain business to set up subsidiaries in the jurisdiction, while others are requiring branches to fulfill local liquidity requirements.

The UK has made its policy clear. The PRA, a regulator wholly owned...