+357. In setting the score for capital adequacy, where applicable, competent authorities should …

357. In setting the score for capital adequacy, where applicable, competent authorities should …

In setting the score for capital adequacy,whereapplicable, competent authorities should

consider the score of the overall recovery capacity with regard to capital (weak, adequate with potential room for improvement, or satisfactory) as specified in paragraphs 41 to 43 of the EBA Guidelines on Overall Recovery Capacity in Recovery Planning53 . The consideration of the overall recovery capacity score in the context of capital adequacy is especially relevant in case of a ‘weak’ overall recovery capacity score for capital.

Table 15. Supervisory considerations for assigning a score to capital adequacy Score Supervisory view Considerations

The quantity and composition of own 1 funds held pose a low level of risk to the viability of the institution.• • • • • • • • • •The institution is able to comfortably meet its P2G and P2G LR. The institution holds a level of own funds comfortably above its OCR and OLRR, and is expected to do so in the future. Stress testing does not reveal any discernible risk regarding the impact of a severe but plausible economic downturn on own funds or leverage. The free flow of capital between entities in the group, where relevant, is not impeded, or all entities are well capitalised above supervisory requirements. The institution has a plausible and credible capital plan that has the potential to be effective if required. The overall recovery capacity of the institution with regard to capital, resulting from the supervisory assessment, is ‘satisfactory’. There is no material/a very low risk of excessive leverage. The institution has difficulty meeting its P2G or P2G LR. Management mitigating actions to address this are assessed as credible. The institution is near to breaching some of its capital buffers but is still clearly above its TSCR and TSLRR. Stress testing reveals a low level of risk regarding the impact of a severe but plausible economic downturn on own funds or leverage, but management actions to address this seem
The quantity and composition of own 2 funds held pose a medium-low level of risk to the viability of the institution.• • • •credible. The free flow of capital between entities in the group, where relevant, is or could be marginally impeded. The institution has a plausible and credible capital plan that, although not without risk, has the potential to be effective if required. The overall recovery capacity of the institution with regard to capital, resulting from the supervisory assessment, is ‘satisfactory’ or ‘adequate with room for improvement’. There is a low level of risk of excessive leverage.
The quantity and composition of own 3 funds held pose a medium-high level of risk to the viability of the institution.•The institution does not meet its P2G or P2G LR. There are concerns about the credibility of management mitigating actions to address this.
Score Supervisory view• • • • • • • • •Considerations The institution is using some of its capital buffers. There is potential for the institution to breach its TSCR or TSLRR if the situation deteriorates. Stress testing reveals a medium level of risk regarding the impact of a severe but plausible economic downturn on own funds or leverage. Management actions may not credibly address this. The free flow of capital between entities in the group, where relevant, is impeded. The institution has a capital plan that is unlikely to be effective. The overall recovery capacity of the institution with regard to capital, resulting from the supervisory assessment, is ‘adequate with room for improvement’ or ‘weak’ . There is a medium level of risk of excessive leverage. The institution does not meet its P2G or P2G LR (or deliberately has not established P2G or P2G LR) and will not be able to do so in the foreseeable future. Management mitigating actions to address this are assessed as not credible. The institution is near to breaching its TSCR or TSLRR. Stress testing reveals that TSCR or TSLRR would
The quantity and composition of own 4 funds held pose a high level of risk to the viability of the institution.• • • •be breached near the beginning of a severe but plausible economic downturn. Management actions will not credibly address this. The free flow of capital between entities in the group, where relevant, is impeded. The institution has no capital plan, or one that is manifestly inadequate. The overall recovery capacity of the institution with regard to capital, resulting from the supervisory assessment, is ‘weak’ There is a high level of risk of excessive leverage.

53 EBA/GL/2023/06

1. Přehled

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1.1 Odkazy

1.2 Identifikované požadavky

1.3 Související standardy

2. Identifikované požadavky

Požadavky

3. Související standardy

Standardy
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