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Bank Supervision | Supervisory Review and Evaluation Process (SREP)

Analysis of Adequacy of Bank's Liquid Assets

The Bank Supervision Department determines, in the supervisory assessment of adequacy of liquid assets, whether the bank's liquid assets are adequate for the coverage of market liquidity risk and funding risk.

After reviewing the results of the above described liquidity risk assessment, the supervisor takes the following steps as part of the supervisory assessment of liquid assets: 

  1. overall assessment of liquidity risk;
  2. determining specific liquidity requirements;
  3. quantification of potential specific liquidity requirements relative to benchmark calculations;
  4. articulation of specific liquidity requirements; and
  5. determination of the liquidity score.

To assess whether the bank's liquid assets provide appropriate coverage of market liquidity risk and funding risk, the supervisor uses the following sources of information:

  1. the outcomes of the assessment of market liquidity risk;
  2. the outcomes of the assessment of funding risk;
  3. the outcome of the supervisory benchmark calculation; and
  4. other relevant inputs (bank's regulatory reporting to the NBS, on-site examinations, peer group analysis, stress testing).

Where it deems necessary, from the standpoint of the market liquidity risk and funding risk, the supervisor may take special quantitative and/or qualitative measures relating to liquidity, depending on the sources of risk and its potential impacts on the bank's operation.

Based on the conducted analysis, the supervisor determines a score ranging from 1 (the bank's liquidity position and funding profile pose no material risk to its viability) to 4 (the bank's liquidity position and/or funding profile pose a high risk to its viability).