ECB finalises report on how banks govern and manage counterparty credit risk

The European Central Bank (ECB) today published its final report on “Sound practices in counterparty credit risk governance and management”, following a public consultation which ended in July 2023.

The report presents the findings of the targeted review performed in the second half of 2022 on how banks govern and manage counterparty credit risk (CCR). It highlights sound practices observed in the market and points to areas where improvement is needed.

The sound practices described in the report go beyond mere compliance with regulatory requirements and institutions are expected to consider them when designing their approach to CCR management.

The ECB has given due consideration to all comments received during the public consultation. None of the respondents expressed any general concern or fundamental disagreement with the contents of the report.

Accordingly, the ECB has also published a feedback statement providing an overview of the comments received and its assessment of them. The statement emphasises that proportionality is an overarching principle applicable to all sound practices, while considering the different organisational set-ups, areas of activity and risk profiles of the institutions under the ECB’s supervision.