On 12 November 2021, the European Banking Authority (EBA) published its European Supervisory Examination Programme (ESEP) for 2022. The EBA are required to contribute to enhancing supervisory convergence across the internal market. They have an active role in building a common supervisory culture and consistent supervisory practices throughout the European Union.

The ESEP is designed to inform Member State competent authorities’ (NCAs) about their planning processes as well as shaping their supervisory practices. The ESEP is also relevant for supervisory colleges as converging practices and methodologies are indispensable in the context of cross-border banking groups. The ESEP identifies five key topics which NCAs must consider when developing their 2022 priorities, which are:

  1. Impact of the COVID-19 pandemic on asset quality and adequate provisioning.
  2. Information and communication technology security risk and ICT outsourcing risk, risk data aggregation.
  3. Digital transformation and FinTech players.
  4. Environmental, social and governance risk.
  5. Anti-money laundering and countering the financing of terrorism.

Following on from the ESEP, the EBA will assess how the five key topics are embedded in NCA’s priorities for 2022 and whether they are reflected in their activities throughout the year.

On the same date the EBA also published its European Resolution Examination Programme (EREP) for 2022, which aims to inform Member State resolution authorities’ (RA’s) on their planning processes as well as shaping their supervisory practices. This programme mirrors the ESEP that has been applied to prudential supervision in recent years. The EREP identifies three key topics that NRA’s must consider when developing their 2022 priorities:

  1. How MREL shortfalls are being addressed.
  2. The development of management information systems for valuation in resolution.
  3. Preparations for managing liquidity needs in resolution.

 

These topics are also to be considered in EU resolution colleges. The EBA will assess how the three key topics are embedded in NRA’s priorities for 2022 and whether they are reflected in their activities throughout the year.