On 12 May 2021, the European Banking Authority (EBA) published a report on convergence of supervisory practices in 2020.
In the context of the supervisory review and evaluation process (SREP), the EBA is mandated to annually report to the European Parliament and the Council on the degree of convergence of the application of the supervisory review as mandated by Article 107 of the Capital Requirements Directive IV. In line with this mandate the EBA prepared this report to inform the European Parliament and the Council on the degree of convergence of supervisory practices in 2020.
Overall, the report finds that in 2020, increased supervisory attention was given to the assessment of profitability and business model (closely linked to asset quality), as well as to selected areas of information and communication technology risk and operational resilience, while the topic of loan origination received less supervisory attention as COVID-19 shifted the focus within the ‘life cycle’ from loan origination to the management of distressed debtors and to the monitoring of risk exposures. Loan origination practices will remain an area of attention for supervisors in 2021 and onwards.