Perspectives

ICAAP and ILAAP in the SREP framework

ICAAP and ILAAP in the SREP framework

Institutions’ Internal Capital Adequacy Assessment Process (ICAAP) (performed by the bank) is an internal risk based assessment of capital requirements and resources, whist the SREP (performed by the regulator) is a review and challenge of the ICAAP and underlying processes. Under the EBA guidelines, the scope of the SREP has considerably widened to include many other elements: including business model analysis, Individual Liquidity Adequacy Assessment Processes (ILAAPs), internal governance and controls. Institutions are therefore expected to have their ICAAP and ILAAP processes intertwined with the business strategy of the bank.

Our paper looks at the challenges presented in integrating ICAAP and ILAAP in the SREP framework.

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