On 20 June 2018, the European Central Bank (ECB) updated its manual for the Asset Quality Review (AQR) of euro area banks.

The ECB and certain Member State national competent authorities (NCAs) responsible for conducting banking supervision carry out comprehensive assessments of banks, in line with the provisions of the Regulation on the single supervisory mechanism. A comprehensive assessment consists of an AQR and a stress test. Following completion of Phase 1 of the AQR (portfolio selection), Phase 2 – execution of the AQR – begins. The manual sets out the steps for executing Phase 2 of the AQR.

The updated manual incorporates the implications of the entry into force of the new accounting standard IFRS 9. In addition, it also reflects the increased importance for ECB Banking Supervision of business models focused on investment services.