(Adds more detail, FCA)
LONDON, Jan 23 (Reuters) - The Bank of England said on Thursday it will ease its enhanced liquidity reporting requirements on banks, put in place in case Britain left the European Union without a transition deal.
Britain's parliament has approved a divorce settlement with the EU, which includes a business-as-usual transition deal covering the period after Brexit Day on Jan. 31 until the end of December.
The aim of the tougher monitoring of liquidity at banks was to ensure they had enough cash on hand to deal with any market volatility caused by a no-deal Brexit.
Banks were required to show they have enough liquidity for a "minimum survival period" and were required to report to the BoE on their liquidity holdings more frequently.
"The likelihood that the UK leaves the EU without a Withdrawal Agreement now appears very low," the BoE's Prudential Regulation Authority said in a letter to banks on Thursday. "Therefore, the PRA no longer considers the bespoke risk appetite to be required."
Nausicaa Delfas, head of international at the Financial Conduct Authority, told Reuters that the watchdog was also easing back some of the extra market monitoring it introduced in case of a no-deal Brexit.
The PRA said it expected firms to continue to manage their liquidity positions on an "individual currency basis prudently".
"In particular, we expect firms to remain mindful of the operational implications of withdrawal, ensuring they are able to maintain good governance and manage their post-Brexit operations appropriately." (Reporting by Huw Jones; Editing by Alex Richardson)