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

    EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis

    The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.

    November 28, 2023 WebPage Regulatory News

    EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules

    The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.

    October 31, 2023 WebPage Regulatory News

    BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks

    As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.

    October 19, 2023 WebPage Regulatory News

    BCBS and EBA Publish Results of Basel III Monitoring Exercise

    The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.

    October 18, 2023 WebPage Regulatory News

    PRA Updates Timeline for Final Basel III Rules, Issues Other Updates

    The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.

    October 18, 2023 WebPage Regulatory News

    US Treasury Sets Out Principles for Net-Zero Financing

    The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.

    October 17, 2023 WebPage Regulatory News

    EC Launches Survey on G7 Principles on Generative AI

    The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.

    October 14, 2023 WebPage Regulatory News

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8938