Austrian Federal Economic Chamber Division Bank and Insurance
The objectivity of the stress test assumptions and process cannot be ensured by separation: The objectivity has to be ensured in the planning phase by the DGS-Board, who is responsible for all matters of the tests as well as for all other matters regarding the DGS. How the test participants are controlled and supervised and how the results are evaluated are genuine tasks of the DGS Board, who is responsible for the implementing of changes within the DGS as a result of the tests, either.
The organisation of tests regarding personnel is depending on the size of the DGS as well as on other specific issues, thus only the goals and a certain time-frame should be dealt with by the EBA guidelines: The rest should to be evaluated and cleared by every DGS with its respective local authority. Depending on the results of the first tests the local authority may instruct external audits of (individual or all) further tests.
In general we agree. Nevertheless, we see a need to make the rules not too formal as to enable the flexibility and proportionality needed to react to local needs and (future) developments.
The test of a sample should be sufficient. The definition of a sample should follow the same rules as the definition of a sample done by an auditor.
As THBs depend on individual singular circumstances unknown to banks, and on customer request, the actual possible impact of THB can’t be predicted at all. Thus we do not see any possible way to undertake any test in this area.
Whereas the list of priorities seems to be ambitious but contains relevant tasks, the 2019 time frame is too short: Not having international rules for some questions (e.g. cross-border framework) in place yet, it does not seem possible to make all the testing efforts in a qualitative manner in time (that means, including re-testing, if some tasks have not been solved in the first test). Whereas the focus on payout scenario seems to be fine, the tests on resolution tasks do not seem possible: The resolution authority has to be in the driving seat. How should DGSs plan/make a test?
The funding tests don’t seem to be appropriate yet: As far as alternative funding methods are not set legally we see no additional value to make arrangements for a hypothetical payout case. An unsecured facility granted to a DGS is highly unrealistic, given the increasingly complex regulatory framework. The limited cross border test seems to be fine.