EBA Publishes Revised Supervisory Process

Late last month, the European Banking Authority (EBA) published its final revised Guidelines on the Supervisory Review and Evaluation Process (SREP), a core deliverable of its efficiency and simplification agenda.

“​​Since their adoption in 2014, the SREP Guidelines have given every EU supervisor a common language for assessing credit institutions, providing the foundation on which the Single Supervisory Mechanism (SSM) was built, ending supervisory disputes in cross-border colleges, and enabling the Banking Union to get off the ground," the EBA explained. “Nearly a decade of implementation has now confirmed both their value and their need to evolve.”

The revisions seek to strengthen the risk-based character of the framework, calibrating supervisory assessments in “scope, depth and intensity ” to institutions' risk profiles and making greater use of information already available to supervisors. In support of broader supervisory modernization efforts, the EBA will aim to make risk identification broader and more forward-looking, with an increased focus on emerging risk drivers.

The guidelines also consolidate previously separate SREP guidance into a single non-duplicative set of provisions, merge liquidity and funding risk assessments, and introduce sub-categories for credit, market, and operational risk to support more consistent supervisory judgments. On supervisory effectiveness, the revised guidelines introduce a high-level, flexible escalation framework, a stronger link between supervisory findings and measures, and improved clarity in communicating SREP outcomes.