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					                      SREP




           Scope of Application of SREP




            Individual risk assessment




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    N    Review and evaluation of ICAAP




        Overall assessment and supervisory
                     measures
                       Overall assessment and supervisory
                                    measures




Supervisory disclosure on EBA website

Back to supervisory disclosure
                                 BG
Guidelines on the Application of the Supervisory Review Process
The SREP is applied for credit institutions on a consolidated or
sub-consolidated level, depending on the particular case and
on individual basis. The scope and structure of the SREP also
reflect the level of integration when supervising financial
groups or subsidiaries. Further coordination is performed
through the supervisory colleges and other forms of
cooperation.
Guidelines on the Application of the Supervisory Review Process
During the SREP, the BNB reviews the bank's risk profile. The
analysis of the BNB covers all risks listed in Guidelines on the
Application of the Supervisory Review Process, issued by the
BNB. Using the Risk Assessment System (RAS) the BNB
organizes and manages the supervisory process by prioritizing
the individual risks. In order to assess a bank's risks and
controls, the BNB needs to prepare a breakdown of the bank's
activities, down to the material business units or processes
where risks are actually taken and where to a large extent
controls are actually applied. The bank has the burden of
proof the immateriality of certain risks. The results of the
supervisory risk assessments should be based on an
assessment of both quantitative and qualitative information.
Guidelines on the Application of the Supervisory Review Process

The BNB examines the bank's ICAAP as part of SREP. This
includes also evaluation of the assumptions, methodology,
components, coverage and outcome of the ICAAP. The SREP
covers the institution's risk management processes and
assessment of the adequacy of the capital. The controls in
place to mitigate risk, as well as the adequacy and
composition of capital are reviewed. This includes how a bank
covers Pillar 1 risks, and those risks not fully covered by Pillar
1, specific Pillar 2 risks and external factors. The responsibility
for initiating and designing the ICAAP rests with the
management body. The ICAAP and its review process should
be subject to independent internal review

Guidelines on the Application of the Supervisory Review Process
The BNB applies consistent method of performing SREP
within all the banks. However a scope and depth of review
varies according on size and structure of the particular
institution. There is also an ongoing dialogue between the
banks and the Supervisory authority for improving banks'
internal control and systems and for ensuring adequacy of the
capital according to its risk profile. The BNB may impose
corrective measures, including maintaining higher minimum
capital, applying specific provisions for certain assets,
improving internal controls, etc. It should be noted that the
higher capital requirement should be seen as a measure of
last resort when the identified weaknesses were not corrected
through previous measures.

				
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posted:11/10/2011
language:English
pages:4