On 19 July 2018, the European Banking Authority (EBA) published the following documents:
- final report on the guidelines on the revised common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing;
- revised final guidelines on the management of interest rate risk arising from non-trading activities; and
- revised final guidelines on institutions’ stress testing.
The changes to the SREP guidelines do not alter the overall SREP framework and seek to enhance the requirements for supervisory stress testing and explain how stress testing outcomes will be used in setting Pillar 2 capital guidance. The changes to the SREP guidelines include: (i) a section on Pillar 2 capital guidance; (ii) supervisory stress testing requirements; (iii) clarification on the scoring framework; and (iv) consistency checks with relevant EBA standards and guidelines, in particular in the areas of internal governance and institution wide controls assessment.