On November 12, 2018, the ECB published two finalized Guides, one on the internal capital adequacy assessment process (ICAAP) and the other on the internal liquidity adequacy assessment process (ILAAP). The ECB consulted on draft versions of the Guides between March and May 2018. The Guides, which are relevant to institutions within the Single Supervisory Mechanism, are designed to assist institutions in strengthening their ICAAPs and ILAAPs and encourage the use of best practices by explaining in greater detail the ECB's expectations.
The ICAAP and ILAAP Guides each set out seven principles that have been derived from the relevant provisions of the Capital Requirements Directive and that will be considered, among other things, by the ECB in the assessment of each institution's ICAAP or ILAAP as part of the Supervisory Review and Evaluation Process. Frequently Asked Questions have also been published alongside the Guides, along with consultation responses received and a feedback statement.
The ECB intends to use the guides to assess significant institutions' ICAAPs and ILAAPs from January 1, 2019.
The ICAAP Guide is available at:
https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.icaap_guide_201811.en.pdf,
the ILAAP Guide is available at:
https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.ilaap_guide_201811.en.pdf,
the FAQs are available at:
https://www.bankingsupervision.europa.eu/legalframework/publiccons/html/icaap_ilaap_faq.en.html,
the consultation responses are available at:
https://www.bankingsupervision.europa.eu/legalframework/publiccons/html/icaap_ilaap_comments.en.html
and the feedback statement is available at:
https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/icaap_ilaap/ssm.feedbackstatement
_201811.en.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.