CEBS publishes additional guidelines on stress testing

14 December 2006

The Committee of European Banking Supervisors (CEBS) is today publishing additional technical guidance to complement the CEBS guidelines on the Supervisory Review Process issued in January 2006 in the area of stress testing.

Numerous requirements of the Capital Requirements Directive dealing with stress tests have been addressed, therefore CEBS proposes common high level guidance on how these could be conducted by institutions and assessed by supervisors, namely concerning desirable features relating to the scope, calibration, frequency, documentation or risks covered.

These guidelines have benefited from a couple of meetings with industry experts. Moreover, as usual, the guidelines were subject to public consultation, which has been closed on 30 September 2006. All in all, 9 responses have been received: the responses are available on the CEBS website. Industry feedback has been considered by CEBS and is reflected in the guidelines.

CEBS considers that a strong stress testing framework, designed under the principle of proportionality, is the key to manage the institution risk profile. CEBS believes that the dialogue under the supervisory review process will be crucial from this perspective. It also clarifies that the guidelines were to be seen from an evolutionary perspective. Moreover, CEBS recognises that the Guidelines could require maintenance in light of industry and supervisory developments.

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