22 March 2017

EBA publishes annual assessment of EU supervisory colleges for 2016

The Report highlighted a number of achievements made by colleges in the course of 2016, including a good level and quality of engagement, and also identified areas for improvement as well as topics for supervisory attention for 2017.

Overall, the Report concluded that the level and quality of engagements in supervisory colleges have been further improved in 2016, in particular the quality and depth of the discussions.

The European Banking Authority (EBA) staff observed that the group risk assessment reports, one of the key deliverables of colleges, provided a good overview of risk profiles, with all material risks being captured and a sufficient level of details included. Improvements are expected in the completion and sharing of the decomposition of capital requirements by individual risks.

In addition, the Report highlighted that the joint decision documents on capital and liquidity, which are the ultimate outcomes of colleges work, were well reasoned and contained information on and references to the conclusions of the Supervisory Review and Evaluation Process (SREP), as reflected in the group risk/liquidity risk assessment reports. The articulation of the own funds requirements (P2R) in the 2016 capital joint decision documents have been brought more in line with the SREP guidelines. In terms of the joint decision process, colleges have to ensure that substantial information is shared with college members in a timely manner.

Supervisory colleges were required, for the second year in a row, to assess group recovery plans for cross-border banking groups and to reach joint decisions in 2016. Securing a formal agreement was challenging in many colleges, as they had to deal with issues arising from the treatment of pre-existing individual recovery plans, which had been developed before the BRRD came into force, and the appropriate coverage of individual entities in the group recovery plans. These issues have led to delays in reaching a joint decision, to a partial decision or to a situation in which no joint decision could be reached.

Among the items which deserve supervisory attention in 2017 are the ongoing balance sheet cleaning and NPLs reduction for legacy portfolios and the sustainability of banks' business models. 

Press release

Full report

© EBA