Summary of findings, scoring and supervisory measures
Following the above assessment, competent authorities should form an overall risk on the key risks of the TCB. This view should be reflected in an annual summary of the overall SREP assessment, accompanied by a viability score based on the considerations specified in table 21. The annual summary should also include any supervisory findings made over the course of the previous 12 months.
Table 21. Supervisory considerations for assigning the overall SREP score
Supervisory view | Considerations |
The risks identified pose a low level of risk to the viability of t he TCB branch. | • The TCB’s business model and strategy do not raise concerns. • The TCB’s internal governance and controls arrangements do not raise concerns. • The TCB’s risks are not material or risk management and controls are adequate to mitigate those risks that are identified as material. • The TCB’s capital endowment and liquidity position do not raise concerns. • The TCB’s booking arrangements do not raise concerns. |
The risks identified pose a medium-low level of risk to t he viability of the TCB. | • There is a low to medium level of concern about the TCB’s business model and strategy. • There is a low to medium level of concern about the TCB’s governance or control arrangements. • There is a low to medium level of concern about the TCB’s material risks and their management and control. • There is a low to medium level of concern about the TCB's capital endowment and/or liquidity position. • There is a low to medium level of concern about the TCB’s booking arrangements. |
The risks identified pose a medium-high level of risk to t he viability of the TCB. | • There is a medium to high level of concern about the TCB’s business model and strategy. • There is a medium to high level of concern about the TCB’s governance or control arrangements. • There is a medium to high level of concern about the TCB’s material risks and their management and control. • There is a medium to high level of concern about the TCB's capital endowment and/or liquidity position. • There is a medium to high level of concern about the TCB’s booking arrangements. |
The risks identified pose a high level of risk to the viability of the TCB. | • There is a high level of concern about the TCB’s business model and strategy. • There is a high level of concern about the TCB’s governance or control arrangements. • There is a high level of concern about the TCB’s material risks and their management and control. • There is a high level of concern about the TCB’s capital endowment and/or liquidity position. • There is a high level of concern about the TCB’s booking arrangements. |
Score
1
2
3
4
Competent authorities may, on the basis of the vulnerabilities and deficiencies identified in the assessment of the SREP elements for TCBs, impose supervisory measures requiring the TCB to:
hold an amount of capital endowment in excess of the minimum requirements laid down in Article 48e of Directive 2013/36/EU;
restrict the form of instruments allowed in accordance with the EBA Guidelines on instruments available for third-country branches for unrestricted and immediate use to cover risks or losses in accordance with Article 48e(2)(c) of Directive 2013/36/EU, the instruments from a particular jurisdiction or the instruments denominated in a particular currency;
introduce operational conditions additional to those in accordance with the EBA Guidelines on instruments available for third-country branches for unrestricted and immediate use to cover risks or losses in accordance with Article 48e(2)(c) of Directive 2013/36/EU;
meet other specific liquidity requirements in addition to the requirements laid down in Article 48f of Directive 2013/36/EU;
reinforce their governance, risk management or booking arrangements;
restrict or limit the scope of their business or of the activities they conduct, as well as the counterparties to those activities;
reduce the risk inherent in their activities, products and systems, including outsourced activities, and stop engaging in such activities or offering such products;
comply with additional reporting requirements in accordance with Article 48k(3) or increase the frequency of the regular reporting;
make public disclosures;
On a case-by-case basis and having had regard to the criteria in Article 48i(1) of Directive 2013/36/EU, competent authorities may require the TCB to apply for authorisation as a subsidiary in accordance with Title III, Chapter 1 of the Directive. This includes where the competent authority assesses that the TCB is of systemic importance or poses significant financial stability risks in line with Article 48j of Directive 2013/36/EU.
For TCBs of systemic importance, competent authorities may also consider:
Requiring the TCB to structure its assets or activities in such a manner that it ceases to qualify as of systemic importance or that it ceases to pose an undue risk to the financial stability of the Union or the Member State where it is established;
imposing additional prudential – including governance – requirements on the TCB.
Competent authorities should communicate the outcomes of the SREP assessment to the management of the third-country branch and inform them of any action the third-country branch has to take to comply with supervisory measures applied based on the findings. Competent authorities should communicate the outcomes of the SREP assessment including any supervisory measures applied to the authority responsible for the supervision of the head undertaking in accordance with the administrative agreements or other arrangements concluded in accordance with Article 48c(2) of Directive 2013/36/EU.