Comprehensive assessment
The ECB together with the national supervisors carries out financial health checks of the banks it supervises directly. These comprehensive assessments help to ensure that the banks are adequately capitalised and can withstand possible financial shocks.
Comprehensive assessments are carried out either regularly or on an ad hoc basis:
- regular: an initial health check of banks that have been recently classified as significant (meaning they will now be supervised directly by the ECB)
- ad hoc: an assessment prompted by exceptional circumstances
Aims
| Transparency | enhance the quality of information available on the condition of banks |
|---|---|
| Repair | identify problems and implement necessary corrective actions |
| Confidence building | assure all stakeholders that banks are fundamentally sound and trustworthy |
Methodology
The assessment usually comprises two main pillars:
- an asset quality review (AQR) – to enhance the transparency of bank exposures, including the adequacy of asset and collateral valuation and related provisions
- a stress test – to test the resilience of banks’ balance sheets, performed in close cooperation with the European Banking Authority (EBA)
The methodology used is set out in the following documents:
Asset Quality Review – Phase 2 Manual
EU-Wide Stress Test – Methodological Note
Results
Each comprehensive assessment concludes with an aggregate disclosure of the overall outcomes as well as bank-level data.
Supervisors address the identified risks in their day-to-day work. In particular, results are factored into the ongoing assessment of banks’ risks, their governance arrangements and their capital and liquidity situation as part of the Supervisory Review and Evaluation Process (SREP).
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