UK’s CYBG, the holding company of Clydesdale Bank and Yorkshire Bank, has received IRB accreditation. This is specifically for its mortgage and SME corporate portfolios.

The IRB accreditation, awarded by financial services regulatory body Prudential Regulation Authority (PRA), will enable the group to use its own internal risk models to determine credit Risk Weighted Assets (RWAs).

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The application of internal models is expected to reduce the RWAs held for the two portfolios.

CYBG accreditation

CYBG noted that the IRB accreditation will provide multiple benefits to the company. Moreover, it enables it to penetrate into specific segments of the lending market.

It will also result in lower MREL debt issuance requirement as well as an improved risk management framework.

CYBG CEO David Duffy said: “I am delighted the PRA has approved CYBG’s applications for IRB accreditation across our Mortgage and SME/Corporate portfolios in what is an incredibly important milestone for the Group.

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“It reinforces our capital efficiency as we cement our position as a true national banking competitor with a full-service offering to millions of retail and SME customers across the country.”

RWA changes, as well as other associated impacts, will reflect in the first quarter of the company’s 2019 financial year.

Accordingly, future regulatory capital requirements and target operating levels for key capital ratios will be based on IRB accreditation. In addition, the anticipated completion of the acquisition of Virgin Money Holdings will play a role.