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Text applicable on 1 Jan 2027Consolidated version of 1 Jan 2027Future dateUnofficial text · authentic on EBA (PDF) (opens in a new tab)

GL-SREP paragraph 61 — as applicable on 1 Jan 2027 (version of 1 Jan 2027)

4.2

Identifying the areas of focus for the BMA

Assessment areas

61.

In accordance with the engagement model set out in Title 2, competent authorities should focus their analysis on the most material assessment areas for the business model of the institution. The scope and depth of the BMA may be differentiated depending on the number and nature of supervisory reviews already performed on that institution. This assessment should in any case allow competent authorities to form a view on the overall institution’s business model viability and sustainability.

62.

Competent authorities should form a view on the materiality of the changes to the institution’s business model compared to prior supervisory review, in order to decide the scope and depth of their assessment and the extent to which the prior supervisory assessment can be used as a baseline for the new one. In forming such a view, competent authorities should, in particular, consider whether there have been relevant changes in the following areas of the institution:

a.

the previously communicated and assessed strategic plan;

b.

the structure and composition of the balance sheet, including changes in sources of profit and their concentration, asset growth, changes in the liabilities structure, or shift in the relevant financial and risk indicators, and consider the results of the indicator monitoring outlined in Title 3;

c.

governance and operations, including acquisitions, mergers or divestments of other entities, the opening or exit of business lines or geographic markets as well changes to IT infrastructure.

Identification of most important business lines

63.

Competent authorities should carry out a materiality assessment of the institution’s business lines to determine the key areas for the BMA to focus on. When performing this assessment, competent authorities should take into account:

a.

the relevance of the business lines in terms of generating profits/losses, including the geographies, subsidiaries/branches and product lines that are most material based on their contribution to the overall revenues/costs in the P&L, risk (e.g. based on TREA or other measures of risk) and/or organisational/statutory priorities (e.g. specific obligations for public sector banks to offer specific products);

b.

previous supervisory findings, including those arising from onsite inspections – where these findings can provide indicators on business lines requiring further investigation –, as well as findings and observations from internal or external audit reports – whether the internal audit function has identified specific issues regarding the sustainability or viability of certain business lines;

c.

outcomes of thematic supervisory reviews – whether a sector-wide analysis has revealed common underlying issues that prompt additional institution-specific analysis;

d.

importance to strategic plans – whether there are business lines that the institution wishes to grow substantially or decrease;

e.

peer comparisons – whether a business line has performed atypically (been an outlier) compared to peers, where such information is available to competent authorities. To identify relevant peers for the BMA, competent authorities should consider the rival product/business lines targeting the same source of profits/customers, the regulatory regimes and geopolitical risks of location of operations as well as other factors appropriate to the sector in which the institution operate.