Consultation on changes to Pillar 2 and prudential reporting

1 Executive summary

1.1 Overview

1.1.1 We are seeking feedback on proposed updates to our requirements relating to pillar 2 and prudential reporting, as part of our wider Basel III implementation programme.

1.1.2 These proposals are intended to ensure that our supervisory approach and reporting framework are consistent with our revised prudential requirements. We have published near‑final drafts of those requirements on our Basel III webpage and intend to finalise them by the end of July 2026.

1.1.3  We are proposing revisions to our pillar 2 guidance and to how we use banks’ own assessments to set capital minima and buffers. The main changes reflect the revised prudential requirements, including transitional arrangements.

1.1.4 In the longer term, we intend to consider how our pillar 2 guidance and supervisory processes can be made more efficient and responsive across all Jersey incorporated banks (JIBs), to support a more efficient and consistent supervisory framework, enabling us to focus our resources on emerging risks and business developments.

1.1.5 We also propose changes to the prudential reporting template and guidance for JIBs. These changes largely reflect the revised prudential requirements, including the introduction of new reporting sections derived from PRA templates where we have aligned our rules.

1.1.6 In the near term, we outline potential revisions to the prudential reporting template for branches of overseas incorporated banks (Jersey branches). These are indicative only and would be subject to a future consultation.

1.1.7 In the longer term, we intend to consider opportunities to simplify prudential reporting requirements through the development of a consistent framework for all banks without compromising supervisory effectiveness. Any such changes would be subject to further development and, where appropriate future consultation.

1.1.8 The proposals in this consultation are based on a consistent baseline of prudential reporting requirements for all banks. We will retain the ability to require additional or more frequent reporting where necessary for supervisory purposes.

1.2 What is proposed and why?

Pillar 2 (Section 3)

1.2.1 We propose to revise our Pillar 2 in Jersey — Jersey Financial Services Commission (Pillar 2 guidance note) to reflect changes to our prudential requirements arising from the implementation of Basel III.

1.2.2 We will restructure the guidance to place all liquidity‑related elements into a separate section, incorporating liquidity management and contingency planning requirements currently set out in Liquidity Management and Reporting Jersey Incorporated Deposit Takers — Jersey Financial Services Commission. This will ensure that all relevant guidance is located in a single document.

1.2.3 We will also clarify the approach JIBs should take when assessing whether higher capital minima and/or Pillar 2 buffers are appropriate. We intend to use this information to streamline our supervisory processes.

1.2.4 In addition, we will provide guidance on transitional arrangements, including seeking information from banks on capital minima and buffers both before and after transition to Basel III. We intend to reflect these assessments in conditions of registration.

1.2.5 In the longer term, we intend to make the Pillar 2 process more risk‑based. This would include reviewing the frequency of ICAAP submissions and the scope and depth of our supervisory reviews to improve proportionality across firms, informed by our revised prudential risk model, which is currently under development.

Prudential reporting (Section 4)

1.2.6 We propose to make substantial revisions to prudential reporting in areas where our rules have changed significantly as part of our implementation of Basel III. In developing the revised templates, we have drawn on PRA reporting requirements, with simplifications appropriate to the Jersey framework.

1.2.7 In other areas, reporting requirements are largely unchanged, except where modest consequential amendments are necessary.

1.2.8 In the medium term, we intend to consider changes to branch reporting requirements, including the collection of data relevant to the Jersey Bank Depositors Compensation Scheme, now under the JRDCA, as outlined in Section 4.4.

1.2.9 In the longer term, we intend to reflect our revised supervisory risk-based approach including reviewing the frequency of prudential reporting and simplifying elements of the returns, as discussed in Section 4.4. This will be based on a consistent baseline applicable to all banks, with flexibility for us to request additional information where necessary.

1.3 Who would be affected?

1.3.1 The proposals set out in this consultation paper directly affect JIBs.

1.3.2 Sections 4.3 and 4.4, which relate to potential future changes to prudential reporting, are also relevant to Jersey branches.

1.3.3 The implementation of Basel III will indirectly affect customers of banks in Jersey, either through these proposals for JIBs or through home‑state implementation for Jersey branches.

1.4 Invitation to comment

1.4.1 We welcome views from stakeholders on the proposals set out in this consultation paper.

1.4.2 Please submit responses by 5:00pm on Friday 31 July 2026.

Read our full consultation on changes to Pillar 2 and prudential reporting here.