Summary of findings and scoring
Following the above assessment, competent authorities should form a view on whether existing liquidity resources provide sound coverage of the risks to which the institution is or might be exposed. This view should be reflected in a summary of findings, accompanied by a viability score based on the considerations specified in Table 12.
For the joint decision (where relevant), competent authorities should use the liquidity assessment and score to determine whether the liquidity resources are adequate.
Table 12. Supervisory considerations for assigning a score to liquidity adequacy
Supervisory view | Considerations |
The institution’s liquidity position and funding profile pose a low level of risk to the viability of the institution. | • The institution’s counterbalancing capacity and liquidity buffers are comfortably above specific supervisory quantitative requirements and are expected to remain so in the future. • The composition and stability of longer-term funding (>1 year) pose non-material/very low risk in relation to the activities and business model of the institution. • The free flow of liquidity between entities in the group, where relevant, is not impeded, or all entities have a counterbalancing capacity and liquidity buffers above supervisory requirements. • The institution has a plausible and credible liquidity contingency plan that has the potential to be effective if required. |
The institution’s liquidity position and/or funding profile pose a medium-low level of risk to the viability of the institution. | • The institution’s counterbalancing capacity and liquidity buffers are above the specific supervisory quantitative requirements, but there is a risk that they will not remain so. • The composition and stability of longer-term funding (>1 year) pose a low level of risk in relation to the activities and business model of the institution. • The free flow of liquidity between entities in the group, where relevant, is or could be marginally impeded. • The institution has a plausible and credible liquidity contingency plan that, although not without risk, has the potential to be effective if required. |
The institution’s liquidity position and/or funding profile pose a medium-high level of risk to the viability of the institution. | • The institution’s counterbalancing capacity and liquidity buffers are deteriorating and/or are below specific supervisory quantitative requirements, and there are concerns about the institution’s ability to restore compliance |
Score
1
2
3
Supervisory view | Considerations |
with these requirements in a timely manner. • The composition and stability of longer-term funding (>1 year) pose a medium level of risk in relation to the activities and business model of the institution. • The free flow of liquidity between entities in the group, where relevant, is impeded. • The institution has a liquidity contingency plan that is unlikely to be effective. | |
The institution’s liquidity position and/or funding profile pose a high level of risk to the viability of the institution. | • The institution’s counterbalancing capacity and liquidity buffers are rapidly deteriorating and/or are below the specific supervisory quantitative requirements, and there are serious concerns about the institution’s ability to restore compliance with these requirements in a timely manner. • The composition and stability of longer-term funding (>1 year) pose a high level of risk in relation to the activities and business model of the institution. • The free flow of liquidity between entities in the group, where relevant, is severely impeded. • The institution has no liquidity contingency plan, or one that is manifestly inadequate. |
Score
4