Strong and Simple

What is Strong and Simple?

In 2021, the PRA published ‘A strong and simple prudential framework for non-systemic banks and building societies’ that set out a vision to simplify prudential requirements for smaller, domestic-focused banks and building societies, while maintaining those firms’ resilience. 

To build the Strong and Simple framework, we have introduced simpler but equally resilient prudential requirements for Small Domestic Deposit Takers (SDDTs).

Eligible firms

PRA-regulated banks and building societies must meet a set of criteria to be eligible to become SDDTs. A high-level summary of these criteria is shown below. For a complete description of the SDDT criteria and the SDDT consolidation criteria, please refer to SDDT Regime – General Application in the PRA Rulebook.

Criteria	Description	PRA rule reference
Size	Total assets on average over the past three years of no more than £20 billion.	SDDT Regime – General Application 2.1(1), 2.3
Domestic activity	The share of credit exposures located in the UK is at least 75% at all times and at least 85% on average over the past three years.	SDDT Regime – General Application 2.1(2), 2.4
Limited trading activity	Trading book business was equal to or less than both £44 million and 5% of total assets in recent months. The criterion is not met if a firm has been above one or both of these thresholds in each of the preceding three months or in more than half of months in the past year.	SDDT Regime – General Application 2.1(3), 2.7
	Overall net foreign exchange position was equal to or less than 2% of own funds in recent months. The criterion is not met if a firm has been above the threshold in each of the preceding three months or in more than half of months in the past year. Overall net foreign exchange position must not exceed a ceiling of 3.5% of own funds.	SDDT Regime – General Application 2.1(4), 2.7, 2.8
	No positions in commodities or commodity derivatives.	SDDT Regime – General Application 2.1(5)
No Internal Ratings Based (IRB) approach	Does not use an IRB model for credit risk to calculate risk weighted assets.	SDDT Regime – General Application 2.1(6)
Clearing, settlement, and custody services, and payment systems	Does not provide clearing, transaction settlement, custody or correspondent banking services to other banks and building societies unless they are members of the firm’s immediate group. Does not operate a payment system.	SDDT Regime – General Application 2.1(7)-(8)
UK bank or building society with no non-UK parent	Does not have a non-UK parent.	SDDT Regime – General Application 2.1(9)

SDDT policies

The PRA has introduced simplifications to liquidity and disclosure requirements for SDDTs. The implementation date for the simplifications was 1 January 2024 for the disclosure simplifications and 1 July 2024 for the liquidity simplifications. See PS15/23 for details. 

The PRA published a Consultation Paper (CP) 7/24 on 12 September 2024 setting out its proposed simplified capital regime for SDDTs, with a closing date for responses to the CP of Thursday 12 December 2024. The CP proposes that the simplified capital regime for SDDTs would come into effect on 1 January 2027. Following the publication of the CP, the PRA hosted a webinar covering key content on the CP proposals and next steps for the PRA and firms. The presentation slides and recording of the webinar are available on the Strong and Simple webinar event page. 

On 20 September 2024, David Bailey (Executive Director, Prudential Policy) gave a speech on the CP7/24 publication at the Building Society Association. The speech outlines the benefits of the Strong and Simple package, which includes targeted and proportionate changes to simplify the capital regime, and explains why this will be good for competition, competitiveness and growth. 

On 28 October, the PRA published a near-final Policy Statement (PS) 20/25, which sets out the near-final policy for the simplified capital regime for SDDTs and addresses the consultation responses to the CP7/24 publication. The near-final PS confirms that the simplified capital regime for SDDTs will come into effect on 1 January 2027 and that the Interim Capital Regime will no longer be implemented. The near-final PS also confirms the PRA’s plans to conduct a firm data collection exercise to inform an off-cycle review of firm-specific Pillar 2 capital requirements for SDDTs so that they can be updated in time for the implementation of the simplified capital regime for SDDTs. See the section titled ‘SDDT data collection exercise for off-cycle review of firm-specific Pillar 2 capital requirements’ below for further details.

See the Regulatory Initiatives Grid for more information about Strong and Simple initiatives and timings.

How to become an SDDT

Eligible banks and building societies become SDDTs by taking up the PRA’s offer of a modification by consent (similarly for CRR consolidation entities). Eligible firms have been able to do so any time from 1 January 2024 onwards. See waivers and modifications page. The PRA requests that consents to modifications be submitted by email only to PRA-Waivers@bankofengland.co.uk, and not sent by post. You may also send any queries on the modifications through to this mailbox.

A firm that has a non-UK parent which wishes to become an SDDT would need to apply for a modification to the scope criteria (and similarly for a CRR consolidation entity in a group with a non-UK parent). See the Statement of Policy ‘Operating the Small Domestic Deposit Takers (SDDTs) regime’ for details. An application for a modification of the scope criteria should be made using the waiver/modification application form. A supplementary form in support of an application of a modification of the criteria in the circumstances set out in paragraph 3.3 of the Statement of Policy is available at the waivers and modification webpage.

Firms intending to become an SDDT should engage with their supervisors early prior to taking up the SDDT modification by consent, to facilitate a smooth transition to the SDDT regime.

Small Domestic Deposit Takers (SDDT) data collection exercise for off-cycle review of firm-specific Pillar 2 capital requirements

This page provides information on the SDDT data collection exercise for the off-cycle review of firm-specific Pillar 2 capital requirements. The data collection exercise is relevant to eligible firms that opt-in to the Small Domestic Deposit Takers (SDDT) regime. On 25 September 2025, the PRA published information on a separate, but similar, data collection exercise for firms that will be subject to the rules implementing Basel 3.1 standards.

In policy statement (PS) 20/25 – The Strong and Simple Framework: The simplified capital regime for small domestic deposit takers (SDDTs), the Prudential Regulation Authority (PRA) confirmed that it will conduct an off-cycle review of firm-specific Pillar 2 capital requirements for SDDTs. Particularly, the PRA confirmed its intention to adjust a firm’s Pillar 2 requirements and buffers in accordance with the prudential framework the firm has chosen to move to once the Phase 2 measures have been implemented (ie the Basel 3.1 standards or the SDDT regime).

The PRA confirmed in PS20/25 that, as part of the off-cycle review for SDDTs, it also plans to apply firm-specific structural adjustments to Pillar 2A (the ‘SME lending adjustment’ and ‘infrastructure lending adjustment’) to ensure that overall capital requirements for SME and infrastructure lending do not increase as a result of the removal of the Pillar 1 support factors.

The PRA noted in PS20/25 that it will conduct a firm data collection exercise to inform the above adjustments.

This page, and the accompanying data templates and instructions, provide further information on that exercise. The data collected via this exercise will be used to inform the PRA’s off-cycle review of firm-specific Pillar 2 capital requirements, so that requirements are updated at the same time as the SDDT standards are implemented.

In PS20/25 the PRA has confirmed the implementation date of the simplified capital regime for SDDTs as 1 January 2027. The deadline for firms to submit the data for the collection exercise is 31 March 2026.

This data collection exercise is intended for SDDT-eligible firms that have consented to the SDDT Modification by Consent (MbC), or informed the PRA of their intention to do so, ahead of 31 March 2026. All other firms are subject to the Basel 3.1 data collection exercise. The PRA published information about this separate, but similar, off-cycle review and data collection exercise on 25 September 2025.

Data collection exercise

All firms taking part in the off-cycle review are expected to submit the:

Firms that wish to qualify for the SME lending adjustment and/or infrastructure lending adjustment are also expected to submit the template described below. Firms do not need to submit these data if they do not wish to qualify for the SME lending adjustment or infrastructure lending adjustment.

Submission templates, instructions, dates and process

The PRA expects firms to submit the data template(s) by 31 March 2026; earlier submission is encouraged where possible. In completing the data template(s) firms should use a reference date of 31 December 2025. The PRA recognises that firms will be in the process of implementing the SDDT capital regime, and therefore, these data submissions are expected to be on a best-efforts basis – however, firms should seek to ensure that the data is as accurate as possible, given the PRA intends to use the data for capital setting purposes.

Firms should submit the requested data using the available templates and referring to respective instructions:

• Off-cycle review of Pillar 2 capital requirements for SDDT capital regime implementation template (XLSX)
• Off-cycle review of Pillar 2 capital requirements for SDDT capital regime implementation template instructions (DOC)
• SME lending adjustment and infrastructure lending adjustment template for SDDTs (XLSX)
• SME lending adjustment and infrastructure lending adjustment template instructions for SDDTs (DOC)

Firms should submit the data template(s) to SDDTP2DataRequest@bankofengland.co.uk, copying in their line Supervisor. Firms should not make any changes to the structure or cell references of these templates and should not apply password encryption to their submission. Firms should only submit a single return per email to the submission inbox (for example, if a firm needs to submit returns on both an unconsolidated and a UK consolidation group basis, it should submit one return per email to the inbox).

Firms should note that these templates are for the purpose of this data collection exercise only, and are distinct from the final SDDT reporting templates that will be implemented on 1 January 2027.