Capital adequacy meaning

This checklist outlines the regulatory obligations for financial services firms in relation to reverse stress testing. The requirements are located in chapter 7.5 of the Prudential sourcebook for MiFID Investment Firms (MIFIDPRU 7.5) within the Financial Conduct Authority (FCA) Handbook (where reverse stress testing constitutes part of the internal capital adequacy and risk assessment (ICARA) process) and in the Internal Capital Adequacy Assessment Part of the Prudential Regulation Authority (PRA) Rulebook... What is reverse stress testing? MiFIDPRU and the Internal Capital Adequacy Assessment Part provide comparable, though not matching, definitions of reverse stress testing...

EU financial services developments ECB announces geopolitical risk reverse stress test for 2026 The European Central Bank (ECB) has set out plans to run a geopolitical risk reverse stress test in 2026 across 110 banks under its direct supervision. In this reverse exercise, a fixed outcome, a reduction of at least 300 basis points in CET1, is imposed, with each institution required to specify the circumstances under which such a loss would emerge. Aggregate results to be communicated in summer 2026 According to the ECB, the work will complement the 2025 European Banking Authority stress test, which used a single scenario for all lenders and produced divergent capital drawdowns. The 2026 thematic assessment will have banks evaluate how geopolitical threats might influence their business model. The exercise is designed to gauge how far firms’ stress-testing frameworks incorporate geopolitical exposures, strengthening internal risk management and the capacity to craft appropriate, prudent capital and recovery plans. To limit costs, it will be embedded within banks’ 2026 internal capital...

Original news Source: Hansard HoL: Pension Schemes Bill Volume 851: debated on Thursday 18 December 2025. News summary The Pension Schemes Bill reached the HoL as a sweeping structural overhaul designed to modernise the UK pensions landscape. It was presented as a cornerstone reform effort. Ministers said the legislation seeks to deliver better outcomes for savers by bringing together dispersed schemes, tightening governance, boosting value for money and unlocking pension capital to back UK economic growth, while tackling a series of matters affecting defined benefit (DB) and defined contribution (DC) arrangements, the Local Government Pension Scheme (LGPS) and the Pension Protection Fund (PPF). The government further underlined to the HoL that the Bill targets market design and efficiency rather than pension adequacy, a question they have parked with the newly re-established Pensions Commission. Although peers largely endorsed the Bill’s aims, the Second Reading laid bare significant and widespread anxieties. Numerous speakers condemned the lack of proposals on adequacy, contending that low saving rates, coverage gaps for the self-employed...

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Banking regulation—Luxembourg—Q&A guide This Practice Note provides a jurisdiction-specific Q&A on banking regulation in Luxembourg, published in the Lexology Getting the Deal Through series by Law Business Research (law stated as at 7 February 2023). Authors: Loyens & Loeff—Adrien Pierre; Vanesa Gomez Pena. 1. What are the principal governmental and regulatory policies that govern the banking sector? Luxembourg is a leading financial centre, so nurturing the financial industry is a core policy aim. The Ministry of Finance partners with Luxembourg for Finance (the agency for the development of the financial centre) to promote, expand and diversify the Luxembourg financial centre, while identifying new opportunities. Digitalisation. Anti-money laundering and countering the financing of terrorism (AML/CFT). Sustainable finance. Financial education. Policies are being adapted as needed to respond to the covid-19 pandemic, to which the sector has shown strong resilience. 2. What are the defining characteristics of a bank to be caught by the banking laws and regulations? Is...

Banking regulation—Israel—Q&A guide This Practice Note presents a jurisdiction-specific Q&A on banking regulation in Israel, published within the Lexology Getting the Deal Through series by Law Business Research (Law stated at: 6 March 2023). Authors: Arnon, Tadmor-Levy—Aviad Lachmanovitch; Guy Fuchs 1. What are the principal governmental and regulatory policies that govern the banking sector? Israel’s banking rules have taken shape over many years. They originated with the Banking Ordinance 1941, from the British Mandate era, which empowered the governor of the Bank of Israel to appoint a Supervisor of Banks. That ordinance was largely supplanted by the Banking (Licensing) Law 1981. The Bank of Israel Law 1954 established the state’s central bank, and this statute was later wholly replaced by the Bank of Israel Law 2010. Any banking corporation—whether a bank, foreign bank, mortgage bank or investment finance bank—seeking to operate in Israel must hold a licence issued by the governor of the Bank of Israel...

Banking regulation—Singapore—Q&A guide This Practice Note provides a jurisdiction-specific Q&A guide to banking regulation in Singapore, published as part of the Lexology Getting the Deal Through series by Law Business Research (Law stated at: 17 January 2023). Authors: WongPartnership LLP—Elaine Chan; Chan Jia Hui 1. What are the principal governmental and regulatory policies that govern the banking sector? Robust local banks remain central to Singapore’s banking landscape, and the policy of preserving domestic banks’ share of total resident deposits at not less than 50% continues unchanged. In view of their systemic significance to the Singapore economy and financial system, local banks must meet capital adequacy standards that exceed Basel III requirements. Alongside this, the government has progressively liberalised the industry to encourage greater participation by foreign banks in wholesale and retail banking, fostering dynamism and innovation. This phased liberalisation has resulted in the award of qualifying full bank (QFB) licences to 10 foreign banks, enabling them to carry out retail banking. ...