Comprehensive assessments

In cooperation with national supervisors, the ECB carries out financial health checks for the banks that it supervises directly. These comprehensive assessments help to ensure that banks are adequately capitalised and can withstand macroeconomic and financial shocks.

Comprehensive assessments are conducted either regularly or on an ad hoc basis:

• Regular: At periodic intervals , the ECB carries out an initial health check for all banks that have recently been classified or are likely soon to be classified as significant (meaning that they will now be supervised directly by the ECB).
• Ad hoc: The ECB also conducts assessments (i) in response to exceptional circumstances and (ii) where an EU country outside the euro area requests close cooperation between its national supervisor and the ECB (i.e. where it wants to join the Single Supervisory Mechanism).

Aims

Methodology

The assessment usually comprises two main pillars:

• An asset quality review (AQR) – to enhance transparency regarding banks’ exposures, including as regards the adequacy of asset and collateral valuations and related provisions
• A stress test, performed in close cooperation with the European Banking Authority (EBA) – to test the resilience of banks’ balance sheets

The methodology applied is set out in the following documents:

• Asset Quality Review – Phase 2 Manual
• 2021 EU-Wide Stress Test – Methodological Note

Results

Each comprehensive assessment concludes with the disclosure of overall outcomes at an aggregate level, as well as the disclosure of bank-level data.

Explaining the disclosure template (based on an example from the 2014 comprehensive assessment)

Supervisors address all identified risks in their day-to-day supervision of banks. In particular, results are factored into the ongoing assessment of banks’ risks, governance, capital and liquidity as part of the Supervisory Review and Evaluation Process (SREP).

Where a comprehensive assessment is in response to a request from an EU country outside the euro area seeking close cooperation with the ECB, that country’s national supervisor will follow up on the findings.