SREP methodology

Brief description of the
Supervisory Review and Evaluation Process (SREP) methodology

The SREP methodology is an annual supervisory process for the review and assessment by the supervisory division of the bank's financial risks based on the analysis of quantitative and qualitative indicators.

The model is based on the principle of stimulating the bank to improve the development model, related strategies and policies; internal control; risk management systems threatening capital and liquidity; corporate governance.

SREP consists of the following steps:

Stage 1 – Supervisory Examination Program (SEP) for a calendar year (planning year) determines the main directions of supervisory actions, the priority of their implementation, the degree of intensity of supervisory activities.

Stage 2 – Supervisory assessment of the risk assessment system (RAS, Risk Assessment System) is carried out in 4 categories on the basis of a qualitative and quantitative analysis:

1) business models and profitability;

2) corporate governance and risk management;

3) capital risks;

4) liquidity and funding risks.

Stage 3 – supervisory measures (if necessary), taking into account:

• the principle of proportionality;
• the effectiveness of measures;
• the expected costs and benefits of the measures;
• the bank's ability to execute the measure (availability of sufficient resources);
• the presence of an appropriate corporate structure that allows the execution of the measure.

The main supervisory response measure is the supervisory premium to capital adequacy and liquidity ratios.