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Adequate levels of capital and liquidity are essential for the resilience of individual banks. Banks are expected to assess the risks they face, and in a forward-looking manner ensure that all material risks are identified, effectively managed and covered by adequate capital and liquidity levels at all times. Banks submit ICAAP and ILAAP information packages to their Joint Supervisory Teams (JSTs) on a yearly basis. The JSTs take those packages into account in the annual assessments of ICAAPs and ILAAPs they conduct as part of the Supervisory Review and Evaluation Process (SREP).
In 2016, the ECB published its expectations for ICAAPs and ILAAPs for supervised banks. After careful assessment, the ECB identified significant differences in the approaches taken by individual banks and a need for improvements at all banks.
In early 2017, the ECB launched a multi-year plan for ICAAPs and ILAAPs to foster improvements. The ECB’s objective is to develop a more detailed set of supervisory expectations, taking into account comments received from institutions and other industry participants. After a first round of feedback between February and April 2017, the ECB updated the guides and now is inviting financial industry and other interested parties to provide feedback on them.
Institutions are encouraged to address any gaps or weaknesses in their ICAAPs and ILAAPs, in close dialogue with their Joint Supervisory Team at the ECB, which will start using the guides as from 2019 when assessing ICAAPs and ILAAPs.
The consultation runs from 2 March to 4 May 2018. The ECB will hold a public hearing on 24 April 2018 via telephone conference.