On 18 March 2022, the European Banking Authority (EBA) issued final revised guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing. The revisions aim at implementing the amendments to the Capital Requirements Directive (CRD V) and Capital Requirements Regulation (CRR II) and promoting convergence towards best supervisory practices.
The guidelines are addressed to Member State competent authorities. When compared to the previous version the guidelines:
- Better articulate the principle of proportionality, through the categorisation of institutions and the application of the minimum engagement model.
- Fully incorporate the assessment of the money laundering and terrorist financing (ML/TF) risks, in line with the EBA opinion on how to take into account ML/TF risks in the SREP.
- Review the provisions on Pillar 2 capital add-ons and the Pillar 2 guidance, to ensure they reflect a purely micro-prudential perspective and appropriately implement the separate stack of own funds requirements based on the leverage ratio.
- Align the assessment of the interest rate risk in the non-trading book, as well as the assessment of liquidity risk and liquidity adequacy with the current regulatory framework.
- Enhance the dialogue among institutions and supervisors in relation to the setting of the Pillar 2 requirements.
The guidelines will be translated into the official EU languages and published on the EBA website. The deadline for Member State competent authorities to report whether they comply with the guidelines will be 2 months after the publication of the translations. The guidelines will apply from 1 January 2023.