Featured Product

    ECB Updates SREP Methodology Booklet for Less Significant Institutions

    March 25, 2020

    ECB updated the booklet on the Supervisory Review and Evaluation Process (SREP) methodology for less significant institutions. This common SREP methodology for less significant institutions is based on the EBA SREP Guidelines and builds on the methodology for significant institutions and existing national SREP methodologies. The national competent authorities are implementing the harmonized SREP methodology for less significant institutions and aiming for full implementation by 2020.

    The SREP booklet highlights that, in 2019, 15 national competent authorities implemented this SREP methodology for non-high-priority less significant institutions, in addition to the high-priority less significant institutions that were covered last year as a minimum. Some authorities had already done so in 2018. These authorities are expected to continue the roll-out of the methodology to non-high-priority less significant institutions to ensure that, by the end of 2020, all less significant institutions will have been assessed on the basis of the SREP methodology for less significant institutions. For 2020, the SREP methodology has been enhanced in the areas of interest rate risk in the banking book and IT risk assessment, in line with the EBA guidelines and the supervisory priorities of the Single Supervisory Mechanism. Additionally, the national competent authorities are expected to implement the Pillar 2 Guidance by 2021, in line with the revised EBA guidelines on SREP.

    As per the methodology, national competent authorities continue to retain full responsibility, as direct supervisors of less significant institutions, for carrying out the assessments and deciding on capital, liquidity, and qualitative measures. The methodology reflects the principle of proportionality, as it sets out the minimum extent to which supervisors must engage with a less significant institution, according to the priority assigned to the less significant institution and the nature of its business (minimum supervisory engagement model). As a result, the SREP differs between less significant institutions, for example, in terms of how intense the assessment is, what information the less significant institutions needs to submit to the supervisors, and what the supervisors expect from the less significant institutions. The methodology also offers some flexibility to the national competent authorities. Flexibility in the SREP plays an important role when it comes to assessing the Internal Capital Adequacy Assessment Process (ICAAP), the Internal Liquidity Adequacy Assessment Process (ILAAP), and the stress tests for less significant institutions. The SREP for less significant institutions is an ongoing process and the methodology will continue to evolve in the future.

     

    Related Links

    Keywords: Europe, EU, Banking, Less Significant Institutions, SREP Supervisory Approach, Proportionality, SSM, Stress Testing, ECB

    Featured Experts
    Related Articles
    News

    EBA Guide to Monitor Threshold for Intermediate Parent Undertakings

    The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).

    July 28, 2021 WebPage Regulatory News
    News

    PRA Finalizes Approach to Supervision of International Banks

    In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.

    July 26, 2021 WebPage Regulatory News
    News

    FCA Issues PS21/9 on Implementation of Investment Firms Regime

    The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.

    July 26, 2021 WebPage Regulatory News
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    ESMA Group Issues Recommendations on RFR Switch in Interdealer Market

    The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.

    July 26, 2021 WebPage Regulatory News
    News

    EC to Defer Application of SFDR Standards Till July 2022

    The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.

    July 23, 2021 WebPage Regulatory News
    News

    EIOPA Consults on Reporting and Disclosures Under Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.

    July 23, 2021 WebPage Regulatory News
    News

    BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance

    The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.

    July 22, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Proportionality Assessment Methodology

    The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.

    July 22, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7295