Response to consultation on revised Guidelines for common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing
Q1. What are the respondents’ views on the overall amendments and clarifications made to the revised guidelines (across Titles 2 – 12)?
N/A
Q2. What are the respondents’ views on the integration of ESG risks and factors across the existing SREP elements in the revised guidelines?
The SREP methodology and supervisory approach should factor in proportionality aspects considering the implications of ESG on Bank’s business models, the investments required both in technology and resources considering ESG reporting
Q3. What are the respondents’ views on the enhanced simplification and proportionality aspects?
N/A
Q4. What are the respondents’ views on the introduction of a high-level escalation framework?
To provide more information on the role and impact (if any) of the self-assessment of the institution in the enhanced supervisory dialogue
Q5. Do you consider the coverage and level of detail of this Title appropriate for its intended purpose?
More information should be considered in relation to key indicators relating to internal governance and control.
Q6. Do you consider the coverage and level of detail of this Title appropriate for its intended purpose?
Additional details are to be considered of the future weight of ESG risks in the overall consideration of the Business Model assessment
Q7. What are the respondents’ views on the updated section 5.7 “ICT systems, risk data aggregation and risk reporting”?
N/A
Q8. Do you consider the coverage and level of detail of this Title appropriate for its intended purpose?
N/A
Q9. Do you agree with the treatment proposed to account for transfer pricing risk in the context of trading book activities? Please elaborate.
N/A
Q10. What are the respondents’ views on the integration of the EBA GL on ICT risk assessment under the SREP (EBA/GL/2017/05) and DORA aspects?
Comment in relation to reputational risk. It is still considered subjective how reputational risk implications can be identified, quantified and compared between institutions to ensure a proportionate approach.
Q11. What are the respondents’ views on the introduction of operational resilience (section 6.4.5)?
Para 254(a) should be further clarified to include specific expectations on the management body in determining and defining ‘active role’.
Q12. What are respondents’ views on the additional section on CSRBB and the combined score for IRRBB and CSRBB?
N/A
Q13. What are the respondents’ views on the proposed assessment of the interaction between Pillar 1 and Pillar 2 requirements and on the proposed approach for operationalizing concerning cases where an institution becomes bound by the output floor?
What is the meaning of increase SREP frequency and how will this increase be linked to the assessment outlined in Para 297. Specific clarifications should be included in the final SREP Letter clearly explaining this basis to Banks.
Q14. What are the respondents’ views on the merger with the ‘SREP liquidity assessment’ and the merger of the scores into a combined liquidity and funding adequacy score?
Under para 426, what are considerations that Competent Authorities can consider if they should include the score of the liquidity overall recovery capacity in recovery planning, when setting the liquidity and funding adequacy score. How would this impact the overall liquidity and funding adequacy score?
Q15. What are the respondents’ views in relation to enhanced communication aspects?
With reference to the following para: “
The justification should provide a clear indication of the material risk drivers contributing to the P2R”, SREP communications should also include a justification on how the increase in P2R is linked to increase in the material risk drivers, including the main drivers. Peer comparisons should also be considered made available at an SSM level
Q16. Do you consider the coverage and level of detail of this Title appropriate for its intended purpose?
N/A
Q17. Do you consider the coverage and level of detail of this Title appropriate for its intended purpose?
N/A
Q18. Do respondents consider the guidance for the assessment of third-country branches appropriate and sufficiently clear?
N/A