EBA final revised guidelines on SREP and supervisory stress testing

The European Banking Authority (EBA) has published its final revised guidelines for the supervisory review and evaluation process (SREP) and supervisory stress testing, mandated under the Capital Requirements Directive (CRD). The SREP is the core supervisory process that consolidates findings from all supervisory activities into a comprehensive assessment of an institution. Following consultation, the guidelines consolidate all relevant SREP provisions into a single, comprehensive framework as part of the EBA's efforts to simplify and enhance the EU supervisory framework. The update integrates new elements, including environmental, social and governance factors, operational resilience, third-country branches and clarifications on the interaction between the revised Pillar 1 and Pillar 2 capital requirements, including the output floor.

The guidelines also align with the interest rate risks for the banking book and credit spread risk arising from non-trading book activities package and incorporate ICT risk assessment into the main SREP framework. Other updates include improved proportionality, sequencing, and supervisory effectiveness, with a clearer link between supervisory measures and assessment areas. The revised guidelines will replace the existing SREP Guidelines and the Guidelines on ICT risk assessment under the SREP, with application from 1 January 2027. They will be translated into all the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations.

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