The European Banking Authority (EBA) has published its annual assessment of EU supervisory colleges. The report highlights a number of achievements and identifies areas for improvement.
Overall, the report notes that the level and quality of engagements in supervisory colleges have further improved, in particular the quality and depth of discussions.
The report also notes that the EBA identified eight topics for supervisory attention in 2016 stemming from its risk assessment and policy work, namely non-performing loans and balance sheet cleaning, business model sustainability, operational risk including conduct risk and IT risk, the implementation of SREP guidelines, internal ratings based models (review and cross-border cooperation), the impact of IFRS 9, remuneration (bonus cap) and the EU-wide stress test (home-host cooperation and communication to the market). Supervisory colleges were expected to incorporate these topics into their supervisory work and discuss the themes relevant for the banking group under their supervision.
The report further states that generally, liquidity joint decisions were of a lower quality than the capital joint decisions, mainly because of their less granular reasoning, particularly for the subsidiaries; their lack of consistency in the structure of the document for the subsidiaries; or their weak connection between the reasoning in the liquidity joint decision document and the group liquidity risk assessment.
As in every year, based on the experiences gained in 2016, the EBA has drawn up a Colleges Action Plan for 2017, which is set out in Annex I of this report.
View EBA 2016 report on functioning of supervisory colleges and 2017 action plan, 22 March 2017