66. Competent authorities should complement the analysis by carrying out a forward-looking analysis …

Competent authorities should complement the analysis by carrying out a forward-looking analysis (both quantitative and qualitative) of the institution’s financial projections and strategic plan to understand the underlying assumptions and dependencies, plausibility and riskiness of its business strategy. Areas for analysis by competent authorities should include:

• a. overall strategy and success drivers, by assessing the main quantitative and qualitative management objectives and the gap between the envisaged business model – post execution
• – and the current model;
• b. projected financial performance, by assessing the plausibility and consistency of the assumptions made by the institution that drive its strategy and forecasts;
• c. execution capabilities, by assessing management’s track record on delivering previous strategies and forecasts, as well as the overall ability of the institution to make use of competitive advantages and success drivers in carrying out its business and to generate returns in an effective way. As part of this assessment, competent authorities should consider:
• i. the adequacy of the cost allocation framework - in terms of adequacy to reflect the profitability of business lines/units;
• ii. the fund transfer pricing framework – in terms of adequate determination of the net income component for each business line/unit, product and customer;
• iii. the loan pricing framework – in terms of adequate governance of the loan pricing process, pricing methodology, appropriate consideration of all the loan pricing components, and ex post profitability monitoring and reporting of product pricing decisions;
• iv. the revenue sharing framework between institutions established in the Union that are part of third-country groups and other entities of that group established outside the Union and not consolidated by the EU parent undertaking – in terms of fair sharing of P&L between entities or business lines taking part in the life cycle of transactions, and of the adequate governance.

1. Resumen

1.1 Referencias

1.2 Requisitos identificados

1.3 Estándares relacionados

2. Requisitos identificados

3. Estándares relacionados

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