Supervisory Review and Evaluation Process (SREP) and Pillar 2

The aim of the Pillar 2 processes is to enhance the link between an institution's risk profile, its risk management and risk mitigation systems, and its capital planning. Pillar 2 can be divided into two major components: (i) aimed at institutions, where those are expected to establish sound, effective and complete strategies and processes to assess and maintain, on an ongoing basis, the amounts, types and distribution of internal capital commensurate to their risk profiles (ICAAP), as well as robust governance and internal control arrangements, and (ii) supervisory review and evaluation process (SREP). The key purpose of SREP is to ensure that institutions have adequate arrangements, strategies, processes and mechanisms as well as capital and liquidity to  ensure a sound management and coverage of their risks, to which they are or might be exposed, including those revealed by stress testing and risks institution may pose to the financial system.

This section brings together the EBA's work on the supervisory review and examination process in general and on some specific Pillar 2 topics, like concentration and diversification.

Technical Standards, Guidelines & Recommendations

  • Guidelines on stress testing and supervisory stress testing

    These draft Guidelines on stress testing and supervisory stress testing provide detailed guidance on the way institutions should design and conduct a stress testing programme across the EU as well as promote convergence in the use of stress test in the context of the supervisory review and evaluation process (SREP). They build on the previous CEBS Guidelines on Stress Testing (GL32), which were published in August 2010.

    Status: Under development

  • Guidelines for common procedures and methodologies for the supervisory review and evaluation process (SREP)

    The Guidelines for common procedures and methodologies for the supervisory review and evaluation process (SREP) will be applied in the supervision of all institutions across the Union and represent a major step forward in forging a consistent supervisory culture across the single market. These Guidelines provide a common framework for the work of supervisors in their assessment of risks to banks’ business models’, their solvency and liquidity.

    Status: Under development

  • Guidelines on supervision of significant branches

    These Guidelines are designed to facilitate cooperation and coordination between the Competent Authorities (CAs). They will assist them in supervising the largest systemically important branches, the so-called “significant-plus” branches, which require intensified supervision.

    Status: Final (awaiting translation into the EU official languages)

  • Guidelines on Technical aspects of the management of interest rate risk arising from non-trading activities under the supervisory review process

    These Guidelines set out high-level guidance, addressed to both credit institutions and investment firms and to supervisors, related to interest rate risk arising from non-trading activities. The paper sets out (i) guidance on what the supervisors should expect to see in the ICAAP in relation to the interest rate risk, and (ii) the corresponding guidance to supervisors in conducting SREP in relation to the ICAAP. The guidelines also define a “standard shock” required for the assessment of institutions’ resilience to interest rate changes.

    Status: Under development

Opinions, Reports and other Publications

 

Opinions

 

Other Publications

  • EBA outlines roadmap of its plan to update 2017-2018 SREP
    The European Banking Authority (EBA) issued today a roadmap outlining its plans to update the common European framework for the supervisory review and evaluation process (SREP) in 2017-2018. The roadmap explains the multi-stage approach the EBA intends to follow in updating the EU SREP framework in 2017-2018 and beyond, and summarises the ongoing policy initiatives affecting Pillar 2/SREP that will need to be reflected in the revised EBA guidelines on Pillar 2 topics.

    .. Read more »

    11/04/2017