Pillar 2 in Jersey

This paper comprises an overview of expectations in respect of the application of the internal capital adequacy and liquidity assessment process (ICAAP) and the related supervisory review and evaluation process (SREP). This is applicable only to a deposit taker incorporated in Jersey (JIB).

1 Summary

1.1 Overview

1.1.1 This guidance note provides an overview of the expectations of the Jersey Financial Services Commission (JFSC) in respect of a JIB’s ICAAP and the SREP undertaken by
the JFSC.

1.1.2 The JFSC does not impose capital or liquidity requirements on branches, as the home regulator has primary responsibility for the overall financial wellbeing of a legal entity and hence this guidance note is not relevant to such registered persons. The term JIB refers only to deposit takers that are incorporated in Jersey.

1.1.3 The guidance note has three main aims:

1.1.3.1 the provision of guidance on the ICAAP, including:

• best practice observed by the JFSC;
• the JFSC’s views in respect of risks that are particularly relevant to
  JIBs;
• Basel Committee on Banking Supervision (Basel Committee) standards and guidance in respect of Pillar 2, particularly stress testing and liquidity; and
• Financial Stability Board (FSB) guidance in respect of recovery planning, particularly reverse stress testing and early warning indicators;

1.1.3.2 clarification of the JFSC’s use of the ICAAP in its assessment of capital and liquidity requirements; and

1.1.3.3 clarification of the JFSC’s expectations regarding submission of revised ICAAP documentation.

Read our full Pillar 2 in Jersey guidance note.