CP13/26 would lift 128 PRA thresholds with GDP

Consultation paper CP13/26 would replace ad hoc updates to 128 Prudential Regulation Authority (PRA) thresholds with one nominal gross domestic product (GDP) formula. The first automatic change would take effect on July 1, 2031, and responses close on February 7, 2027.

The Bank of England news release of October 7, 2026 puts those 128 lines across banking, insurance and credit unions, moving with nominal UK GDP from the Office for National Statistics (ONS). The largest example is a £320 billion total-assets threshold for detailed capital reporting. The smallest is £7,500. CP13/26 sets the formula.

Key facts

• CP13/26 was published on October 7, 2026. Comments are due by February 7, 2027, to CP13_26@bankofengland.co.uk. The PRA will share responses with the Financial Conduct Authority (FCA).
• Table 1 splits the 128 into 31 perimeter or definition thresholds (24 percent), 52 reporting thresholds (41 percent), eight governance thresholds (6 percent), 25 methodology thresholds (20 percent) and 12 lending, funding and investment thresholds (9 percent).
• The formula uses a 2026 base year, UK nominal GDP, rounding to two significant figures, and a floor: the published figure cannot fall if nominal GDP falls.
• Table 3 sets the first effective date at July 1, 2031, for nominal GDP growth from January 1, 2027 to December 31, 2029, communicated before December 31, 2030 after an October 1, 2030 data cut-off. Later dates in the table are July 1, 2036 and July 1, 2041.
• Appendix 3 lists £320 billion against Regulatory Reporting 20.6(1) (Capital+ reports), total assets, and £7,500 against Credit Unions 1.2, the definition of “large exposure”, as a net liability.
• Section 4 is not part of the 128. It covers internal-ratings-based (IRB) modelling, some liquidity lines, and Senior Managers and remuneration thresholds that interact with the FCA.

Methodology and sources for this reading of CP13/26

The primary text is CP13/26, “Updating regulatory thresholds: An autopilot approach”, published on October 7, 2026, with that day’s news release and Appendix 3. The clock runs from October 7, 2026 to February 7, 2027, then to July 1, 2031. The comparisons CP13/26 itself invites are the Bank’s July 2025 minimum requirement for own funds and eligible liabilities (MREL) statement of policy and the Federal Deposit Insurance Corporation (FDIC) final rule cited in the cost-benefit text.

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Figures come from those documents. Appendix 4 is not re-checked row by row, and section 4 is not part of the 128. Enforcement figures are from the May 17, 2024 Final Notice and the May 22, 2024 news release. Paragraph 2.6 cites the October 17, 2024 Mansion House speech.

What the CP13/26 formula does to a fixed nominal threshold

Paragraph 1.1 defines a threshold as the quantitative test for when a prudential requirement applies. “Prudential drag” is the name it gives to a fixed sterling sum that bites harder as prices and the economy grow, without a new risk-appetite decision. Paragraph 2.2’s example is a fixed nominal amount such as “£50 billion total assets”, not a percentage or a headcount.

CP13/26’s indexation formula is a fixed-base calculation, not a rolling uplift from the last published number. The PRA proposes that the indexed value equals the base amount multiplied by UK nominal GDP in the reference year, divided by UK nominal GDP in the base year of 2026, using data published by the ONS. The final threshold is the higher of the previous threshold and that indexed value after rounding to two significant figures, so a fall in nominal GDP does not reduce the figure. CP13/26, published on October 7, 2026, would apply the formula to 128 thresholds in the PRA Rulebook and in PRA guidance. Table 3 uses 2029 as the first reference year, covering nominal GDP growth from January 1, 2027 to December 31, 2029, with the new values taking effect on July 1, 2031. The PRA would communicate each outcome before the preceding December 31.

A fixed base lets later ONS revisions into every round. Table 2’s hypothetical 12.2 percent rise would print £100 billion as £110 billion on two significant figures, against £112.2 billion unrounded. There is no backdating. Thresholds taking effect in 2027 or 2028, including PS1/26 on Basel 3.1, PS3/26 on the Capital Requirements Regulation (CRR) restatement and PS4/26 on small domestic deposit takers (SDDTs), use the effective-date value as the base.

After comparing two-year to seven-year paths on ONS series YBHA, the PRA proposes a three-year first step to July 1, 2031, then five years, with no mechanical override. Firms that outgrow the economy still cross. Fewer than 10 percent of the 128, including some UK Solvency II Standard Formula inputs, can raise a capital requirement when indexed.

Appendix 3 also lists £20 billion SDDT total-assets limbs at General Application 2.1(1)(a) and 2.1(1)(b), a £44 million trading-book limb, a £15 billion gross-written-premium prong of “relevant Solvency II firm” from March 18, 2027, and a £75 billion technical-provisions prong. The £7,500 news-release line is Credit Unions 1.2, “large exposure”, a net liability.

How three threshold regimes index, and why the metrics diverge

Nominal GDP is preferred because prices miss real growth and real GDP misses prices. CP13/26 puts 2009-2024 cumulative nominal GDP growth at 85.4 percent, inside the central asset-growth range for 114 banks and 41 life insurers. That is not a 2027-2029 forecast. The Bank’s July 2025 MREL statement of policy already indexes resolution asset thresholds every three years. The first update is due in the first half of 2028. Other Systemically Important Institution (O-SII) buffers stay outside the 128. PS22/25 moved the leverage-ratio retail-deposits threshold from £50 billion to £75 billion.

A fixed-base nominal-GDP formula and a consumer-price index do not keep the same firms under a line. CP13/26 would multiply a 2026 base by UK nominal GDP in the reference year divided by UK nominal GDP in 2026, round to two significant figures, and hold a floor at the previous threshold, across 128 PRA thresholds, with the first change on July 1, 2031. The FDIC final rule RIN 3064-AG15, Federal Register December 4, 2025, effective January 1, 2026, uses the non-seasonally adjusted Consumer Price Index for Urban Wage Earners and Clerical Workers. It adjusts generally every two years, and also if that index rises by more than 8 percent in an intervening year. The FDIC records a 299 percent rise in US nominal GDP over three decades against 111 percent for that price index, and cites revisions and the cycle as reasons to refuse GDP. Part 363’s general audit threshold moves from $500 million to $1 billion, and internal control from $1 billion to $5 billion.

Sources: CP13/26; MREL statement of policy, July 2025; FDIC final rule, RIN 3064-AG15. Last updated: October 10, 2026.

A firm that only tracks UK nominal GDP can stay under a PRA line longer than under a frozen number. The FDIC rule can still catch real balance-sheet growth because it targets absolute size. Other gates are still amended by hand: BaFin’s Rundschreiben 14/2026 narrows a CRR ancillary-services test by circular, not by an index.

"Alongside all this we are taking actions to make the retail ring-fence work more efficiently without undermining it, will bring forward proposals to streamline some of the administrative aspects of the Senior Managers regime and are considering an approach to indexing thresholds in our regime in order to avoid ‘prudential drag’ in which fixed thresholds become more biting over time as the economy grows."

— Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA (title as given in the Bank’s May 22, 2024 news release), Annual City Banquet, Mansion House, October 17, 2024 (Bank of England)

The Citigroup notices show what being inside a regime still costs

Indexation changes who is inside a rule. It does not retire the rule. The Final Notice of May 17, 2024 imposed £33,880,000 on Citigroup Global Markets Limited (FRN 124384). Without the 30 percent settlement discount the penalty would have been £48,400,000. The period is April 1, 2018 to May 31, 2022. The breaches are Fundamental Rules 2, 5 and 6 and Algorithmic Trading Rules 2.1 and 2.2(2). Rule 2.1, as recited, requires trading thresholds and limits that block erroneous orders.

On May 2, 2022 the intended notional was US$58 million and US$1.4 billion of sells were executed. The notice calls that a trader error scaled by control failings. The May 22, 2024 news release says the FCA imposed £27,766,200. The PRA notice also records a November 2019 penalty of £43,890,000 on several Citi entities, including this firm, for a Fundamental Rule 6 breach from June 19, 2014 to December 31, 2018, and an FCA penalty in excess of £12.5 million in August 2022 under Principle 2 and Article 16(2) of the Market Abuse Regulation. The Dolfin Final Notice write-up is a separate FCA case.

The notice is not a case about GDP indexation. Of the 128 lines, 52 are reporting and eight are governance. A firm under the moving line avoids a template. Paragraph 3.49 says outgrowing the economy still crosses.

"Firms involved in trading must have effective controls in place in order to manage the risks involved. During the relevant period, CGML failed to meet the standards we expect in this area, resulting in today's fine."

— Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, May 22, 2024 (Bank of England)

What this means for banks, insurers, credit unions and compliance teams

Reporting is the largest bucket, 52 thresholds. Where a firm avoids an entire template, CP13/26 puts the saving near £80,000 a year. CP21/25 had estimated £43,000 a year for a small firm and £119,000 for a medium firm, plus £50,000 one-off. On historic 10-year nominal GDP growth, an average of 14 banking entities would cross frozen total-asset lines over 10 years. Table 4’s 10-year net present values, at a 3.5 percent discount, are £1.3 million, £12.7 million or £120.6 million.

PS15/23, as CP13/26 describes it, still requires an SDDT criteria review by the end of 2028, and DP1/26 still requires a data review. Paragraph 3.20 says indexation does not cancel either. CASS 7 segregation for a UK contracts-for-difference broker is not one of the 128.

Insurers hovering under a line are who the news release expects to benefit. Some Standard Formula inputs can raise the Solvency Capital Requirement when indexed. Two buy-to-let tests narrow high-net-worth treatment as the line rises. Paragraph 5.2 finds no different mutuals impact in kind, and cites a deferred Solvency and Financial Condition Report audit as one saving.

Two-significant-figure rounding is coarse at £7,500 in a way it is not at £320 billion. Paragraph 3.95 says a firm far from a size line need do nothing. Exposure-level thresholds are likelier to force a system change. A June 2026 Scale-up Unit roundtable supported the proposal. The PRA still wants cost evidence. The FCA’s move of equity-transparency rules into its Handbook is separate, but dual-regulated groups are why section 4 exists.

What is open from February 7, 2027 to July 1, 2031

Responses on the 128 and on section 4 both close on February 7, 2027. Paragraph 4.49 leaves any FCA rule change to the FCA. The Practitioner Panel was consulted. Paragraph 5.3 records regard to section 149 of the Equality Act 2010. Paragraph 5.4 cites the Treasury letter of November 2024. Names are published only with consent.

Section 4 does not index those lines now. It asks about internal-ratings-based thresholds, including Article 153(4) of the Credit Risk: Internal Ratings Based Approach (CRR) Part, and about keeping liquidity-coverage definitions aligned with credit risk. Issue-size tests in the discussion include £440 million, £220 million and £88 million. Table D’s FCA-linked lines include £250 million, £10 billion, £4 billion, £20 billion, £50 billion, €50 million and £660,000. The £660,000 figure replaced £500,000 in the 2025 remuneration reforms using consumer prices, to hold real value.

CP13/26 does not date the final policy statement. Firms can follow the ONS series YBHA, but the PRA would publish the rounded values. The first cut-off is October 1, 2030, with communication before December 31, 2030. The SDDT review runs to the end of 2028. MREL’s first indexation stays in the first half of 2028. CFTC Release 9306-26 extends US no-action relief on UK swaps on a swaps clock, not this GDP clock. CP13/26 does not forecast the July 1, 2031 uplift. The 12.2 percent column is a rounding illustration, and 85.4 percent is a 2009-2024 cumulative change.

TL;DR

CP13/26, published on October 7, 2026, proposes that 128 PRA thresholds across banking, insurance and credit unions rise with UK nominal GDP. Responses close on February 7, 2027. The 2026 base is rounded to two significant figures and cannot fall if nominal GDP falls. The first change takes effect on July 1, 2031, using growth from January 1, 2027 to December 31, 2029, communicated before December 31, 2030, then every five years. The news release’s largest example is the £320 billion capital-reporting line. The smallest is £7,500. Section 4, including FCA-linked thresholds, is outside the 128. Table 4’s 10-year reporting savings are £1.3 million, £12.7 million or £120.6 million if five, 50 or 500 template instances are avoided. Firms that outgrow the economy still cross.

FAQ

What is CP13/26?

CP13/26, “Updating regulatory thresholds: An autopilot approach”, was published on October 7, 2026. It proposes indexing 128 fixed nominal thresholds in the PRA Rulebook and in PRA guidance to UK nominal GDP. Those lines decide which requirements apply and what is reported. Section 4 discusses further thresholds, including some shared with the FCA, and does not put them in the 128. The Rulebook does not change on the publication date.

When would the first new values take effect?

Table 3 sets the first effective date at July 1, 2031, for UK nominal GDP growth from January 1, 2027 to December 31, 2029. The cut-off is October 1, 2030, and the PRA would communicate the result before December 31, 2030. Later dates shown are July 1, 2036 and July 1, 2041. The consultation closes on February 7, 2027. The formula does not backdate a threshold to the year it was first set.

Are Senior Managers and remuneration thresholds in the 128?

No. Table D in section 4 lists them for discussion because they interact with FCA rules. Amounts there include £250 million, £10 billion, £25 million, £4 billion, £20 billion, £50 billion, €50 million and £660,000. The October 7, 2026 news release says some excluded thresholds, including ones jointly owned with the FCA, are in that chapter for evidence before any later consultation. An FCA rule move would be the FCA’s decision.

Would a fall in nominal GDP cut the thresholds?

Not on this formula. Paragraph 3.34 says a fall in nominal GDP would not reduce a threshold. The final value is the higher of the previous threshold and the rounded indexed value, so the regime does not tighten automatically in a weak year. The PRA could still reset a line in an ordinary consultation if it no longer matched risk appetite. That would be separate from the automatic cycle.

How does this differ from the FDIC inflation rule?

FDIC final rule RIN 3064-AG15, effective January 1, 2026, indexes listed thresholds in parts 303, 335, 340, 347, 363 and 380 to the non-seasonally adjusted CPI-W, generally every two years, plus an extra move if that index rises more than 8 percent. The FDIC refused nominal GDP, citing 299 percent US nominal GDP growth over three decades against 111 percent for the price index. CP13/26 uses nominal GDP on 128 PRA thresholds, with the first change on July 1, 2031. The PRA’s cost-benefit text cites the FDIC rule as the narrower, price-based comparison.

Does CP13/26 create a new penalty?

CP13/26 publishes no new penalty schedule. It maintains selected numbers. A firm over a threshold remains subject to the underlying rule, and a breach can still draw a financial penalty. The Final Notice of May 17, 2024 imposed £33,880,000 on Citigroup Global Markets Limited, from £48,400,000 before a 30 percent settlement discount, for Fundamental Rules 2, 5 and 6 and Algorithmic Trading Rules 2.1 and 2.2(2). That case is about trading controls. It is not a decision on CP13/26.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.