SREP
Supervisory Review and Evaluation Process
Definition
The process by which supervisors assess a firm's business model viability, internal governance, risks to capital, and risks to liquidity and funding. SREP results in a supervisory determination of whether a firm's own funds, liquidity, and risk management are adequate, and may impose additional requirements.
Regulatory Context
In the EU, the EBA has issued guidelines harmonising the SREP methodology across member states. The ECB conducts SREP annually for directly supervised banks and communicates the results through a SREP decision letter, which may include Pillar 2 requirements (P2R) and Pillar 2 guidance (P2G).