On December 15, 2016, the European Central Bank published the outcome of its second Supervisory Review and Evaluation Process in 2016 and updated Recommendations on dividend distribution and remuneration policies for 2017. The ECB comments that SREP outcomes reveal a broadly stable capital demand for 2017 and that any changes in individual bank levels reflect changes in individual bank risk profiles. The aggregate capital demand by directly supervised banks for 2017 is comparable to that of 2016, with an average of around 10% Common Equity Tier 1. The ECB also imposed liquidity measures that require banks to have higher LCRs than the regulatory minimum. The updated ECB Recommendations on dividend distribution and remuneration policies are to be adopted in 2017, for the financial year 2016. The ECB has maintained its general stance on both topics while accounting for regulatory change on the obligation of the supervisor to differentiate between the types of Pillar 2 capital that a bank is required to hold.
The press release is available at: https://www.bankingsupervision.europa.eu/press/pr/date/2016/html/sr161215.en.html
and the recommendations are available at: https://www.bankingsupervision.europa.eu/banking/letterstobanks/shared/pdf/2016/dividend_distribution_2016.en.pdf?83c005cff616993b65529396bc811c02 .
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