The deadline by which systemically important financial institutions included in category 1 of the European Central Bank (ECB) assessment can submit documents for annual supervision and assessment of capital adequacy and internal liquidity has been moved to March 31 compared to April 30 previously. The move could create additional difficulties for those institutions, including local banks for which consolidation is done at the parent company level, as many of the requested documents depend on the rapid availability of December data.

The European Banking Authority (EBA) states in the Guidelines on Information on Internal Capital Adequacy (ICAAP) and Internal Liquidity (ILAAP) collected for annual supervision and evaluation (SREP 2023) that competent authorities must notify banks of the date of transmission of information on the ICAAP framework and ILAAP, providing that this information is provided at least once a year for institutions falling under category 1, while a different frequency may be established for institutions in other categories.

Key aspects and best practices that banks should consider in this exercise:

Integration of the guidelines issued by the ECB and the EBA. Banks should consider periodic assessment of internal processes in accordance with the principles set out in the guidelines issued by the European Central Bank (ECB Guidelines on ICAAP and ILAAP). Analyzing the level of compliance with these expectations is a useful tool for obtaining additional assurance about the reliability and effectiveness of internal capital and liquidity management processes.

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The article was signed by Valentina Menescu, senior manager, and Mykhailo Plotyan, senior lawyer

Article supported by PwC Romania