How can supervisory frameworks become more risk-focused, proportionate, and efficient — without losing coherence or effectiveness?
The European Banking Authority (EBA) has published its final revised Guidelines on common procedures and methodologies for the Supervisory Review and Evaluation Process (SREP) and supervisory stress testing, a core deliverable of its regulatory simplification and efficiency agenda. The revised Guidelines do not alter the overall SREP framework, but introduce significant changes across all its main elements. Among the most relevant updates for banking supervisors: proportionality is strengthened, including the extension of the minimum SREP assessment frequency for small and non-complex institutions from three to five years under certain conditions; ESG risks and operational resilience (including ICT risks under DORA) are formally integrated into the SREP framework; a new escalation framework for supervisory measures is introduced to improve clarity, consistency, and transparency; communication requirements between supervisors and institutions are enhanced; and new mandates from CRD VI — covering third-country branches and the output floor — are incorporated. The revised Guidelines are expected to apply from 1 January 2027.
