For the financial system to be stable, institutions must have adequate capital and liquidity, and manage these levels effectively. It is thus crucial that they comply with supervisory requirements by establishing an Internal Capital Adequacy Assessment Process (ICAAP) to ensure capital adequacy and an Internal Liquidity Adequacy Assessment Process (ILAAP) to ensure liquidity adequacy.

Bundesbank collects ICAAP and ILAAP information for SREP purposes on an annual basis (as of 31st December). Relevant information is provided by LSIs via an XBRL based reporting system without delivery of internal documents or use of ‚reader‘s manuals‘. The reporting framework is designed to facilitate the prudential assessment without compromising the flexibbility in the choice of methods within Pillar 2. Structural ICAAP and ILAAP information provide a vital input for the assessment of the individual institution as well as for the identification of sector wide developments and a range of practices in terms of ICAAP and ILAAP.

Ensuring internal capital adequacy of less significant institutions (LSIs)
Cover: Sicherstellung der Risikotragfähigkeit bei weniger bedeutenden Instituten (LSI)

The Bundesbank has conducted an analysis of how internal capital adequacy is ensured within the German banking market. The results are generally positive, but most of the institutions still show a need for further structural improvement.

Supervisory assessment of bank-internal capital adequacy concepts and their integration into firm-wide performance and risk management processes ("ICAAP") – realignment

Bundesbank and BaFin have jointly redrafted the 2011 ICAAP guideline and published it on 24.05.2018. The realignment of the paper was made necessary by developments at the global and European levels as well as ongoing changes in institutional and regulatory practices.

Further details on the liquidity transfer pricing systems

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