Connected exposures are a bank’s exposures to its connected persons, for example, a bank’s owners or other entities in which the bank’s owners may have a substantial interest. Exposures can include loans, leases, deposits, investments or financial contracts with connected persons.
Director of Prudential Policy Kate Le Quesne says the Connected Exposures policy defines a connected person, sets out requirements to manage associated risks and provides a way to measure exposures to connected persons.
“The revised Connected Exposures policy aligns with our capital adequacy framework and supports financial stability by reducing the risk of a bank getting into trouble due to its exposure to a connected person or entity,” Ms Le Quesne says.
“The previous version of the connected exposure policy has been in place for more than ten years and was due for a review. We held our first consultation in November 2021 and our second one in January 2023.
“The feedback was supportive of the changes and included useful suggestions to make the policy easier for banks to implement, while still delivering the intended outcomes. We have incorporated almost all of the proposed changes and appreciate the time people took to share their views.”
We have now published the final policy document on our website, along with our responses to feedback received in the second round of consultation, and a regulatory impact assessment. We have also published the submissions that we received. We expect the revised policy to take effect from 1 October 2023 and will contact banks about required changes to their Conditions of Registration.
More information
Review of the Connected Exposures Policy for banks
Revised policy document, BS8: Connected Exposures (PDF 464KB)
Regulatory Impact Assessment (PDF 601KB)
Response to Draft Exposures Consultation Submissions (PDF 465KB)
January 2023 policy decisions media release
