The EACB welcomes the EBA’s effort to consolidate all SREP-related provisions into a single, comprehensive framework, including the integration of ICT-related aspects. We believe that this revision enhances the proportionality, sequencing, and effectiveness of the supervisory process, taking into account institutions’ track record in addressing deficiencies. In particular, we welcome the provisions included in para. 12. According to the latest, large institutions (under the CRR) that are not G-SIIs may be allocated to Categories 1, 2 or 3 depending on their business model and risk profile. This is a significant improvement also for O-SIIs, who will not automatically be considered Category 1 banks for the SREP anymore. In addition, we believe that allowing a subset of the smallest Category 4 institutions to extend from three to five years the minimum frequency for assessing all SREP elements is the right step for the establishment of a dedicated, prudent and materially simpler prudential regime for smaller banks.
Nevertheless, we raise concerns regarding:
- the restrictive interpretation of Pillar 2 Guidance (P2G) composition, which goes beyond the CRD framework;
- the risk of legal uncertainty stemming from the possibility of early application of selected guideline elements;
- insufficient transparency in the communication of SREP outcomes, methodologies, and benchmarking practices.
In addition, the Guidelines appear to assume the existence of a fully harmonised and mature framework across Member States in the supervision of digital and ICT risks. We also have strong reservations regarding the proposed integration of Overall Recovery Capacity (ORC) into the SREP framework. In particular, the EACB warns that including ORC in SREP scores risks duplicating elements already captured under capital and liquidity assessments, potentially leading to double counting.
Finally, the EACB also highlights that the interaction between Pillar 1 requirements, Pillar 2 requirements (P2R), and the output floor requires further clarification. Clear guidance is needed on how supervisors should balance model deficiencies, the binding effect of the output floor, and the proportionality principle when determining P2R. Without such clarification, there is a risk of inconsistent supervisory outcomes and unpredictable capital impacts.