Consultation Paper on Guidelines on ICAAP and ILAAP information collected for SREP purposes and ECB supervisory expectations

European Banking Authority (EBA) - European Central Bank (ECB)

The CRD IV requires institutions to have in place an internal capital adequacy assessment process (ICAAP); and an internal liquidity adequacy assessment process (ILAAP). These processes are key risk management instruments for institutions, and competent authorities (CAs) review them as part of the Supervisory Review and Evaluation Process (SREP).
In the European Union, the European Central Bank (ECB) assumed responsibility for the supervision of significant institutions within the Single Supervisory Mechanism (SSM) from November 2014 onwards. Thus, the ECB is responsible for carrying out the SREP with respect to these institutions.
The EBA published in December 2015 a Consultation Paper on Draft Guidelines intended to ensure convergence of supervisory practices in the assessment of ICAAP and ILAAP as required by the SREP.

  • In particular, these Guidelines specify what information regarding ICAAP and ILAAP CAs should collect from the institutions in order to perform their assessments.
  • In addition to specifying information items, these Guidelines also set general considerations for CAs to organize collection of ICAAP and ILAAP information from institutions and using such information for the purposes of their assessments of other SREP elements.

Following the publication of the Guidelines by the EBA, the ECB published in January 2016 a document addressed to the management of significant institutions within the SSM on this matter.

  • This document specifies that institutions shall submit ICAAP and ILAAP information as spelled out in the EBA Guidelines, but taking into account some specifications concerning the delivery dates, format and content of the information collected.
  • Moreover, the ECB sets out some supervisory expectations with regard to the ICAAP and ILAAP.

The technical note prepared by Management Solutions’ R&D department analyzes and summarizes the Draft Guidelines published by the EBA. Moreover, an analysis of the ECB document addressed to the management of significant institutions is included.

Executive summary

Regarding the Guidelines, the information items to be collected by CAs are divided into four categories: information common to ICAAP and ILAAP, ICAAP-specific information, ILAAP-specific information, conclusions and quality assurance.

The ECB document encourages institutions to develop and maintain high-quality ICAAPs and ILAAPs, and to clarify the type of information they should share with the SSM on these. It includes specifications regarding the EBA Guidelines, and supervisory expectations on the ICAAP and ILAAP.

Scope of application:

  • The Guidelines apply to institutions, as defined in the CRR/CRD IV: credit institutions and investment firms. The ECB document applies to significant institutions within the SSM, as defined in the Guide to banking supervision.

Main content:

  • GL on ICAAP and ILAAP information, including: general considerations; information common to ICAAP and ILAAP; ICAAP –specific information; ILAAP –specific information; supporting information on ICAAP and ILAAP; and information on conclusions and quality assurance.
  • ECB supervisory expectations, including: overview; specifications; supervisory expectations on ICAAP; and supervisory expectations on ILAAP.

Download the technical note by clicking here