11. It is important that the executive summary of the ICAAP document produced by each bank should explain the views of Senior Management and the Board on the suitability of the bank’s capital to cover the risks faced by the bank in light of its risk profile, its risk appetite and its future business plans. These views must be supported by key quantitative results including the current and expected capital position of the bank under various economic conditions including stressed circumstances. It should also provide a clear analysis of the drivers of capital consumption, including Pillar 1 and Pillar 2 risks and stress testing. The conclusion should be unambiguous, forward-looking and consider the uncertainty of the business and economic conditions.
12. More specifically, the executive summary of the ICAAP report should contain the following elements:
| | | (i) | The main findings of the ICAAP;
| | (ii) | A brief description of the ICAAP governance framework covering the stakeholders, the assessment process, the challenging process and the approval process;
| | (iii) | A brief presentation of the bank’s structure, subsidiaries, businesses, material risks, risk appetite, and risk mitigating actions, where applicable;
| | (iv) | A description of the current capital position of the bank showing the allocation of capital per risk type, covering Pillar 1 and Pillar 2 risks;
| | (v) | Each bank should complete the ICAAP Executive Summary Table (Table 3) as indicated in Appendix 2 of this document;
| | (vi) | A description of the current capital composition of the bank against minimum capital requirements covering at least CET1, AT1, and Tier 2 capital ratios;
| | (vii) | A forward-looking analysis of the budgeted capital position of the bank, based on the bank’s expected business plan over the next three (3) years, reflecting the current, and expected economic conditions. This needs to cover expected dividend distribution;
| | (viii) | An analysis of the capital position and capital ratios under several stress scenarios, the analysis of the stress scenarios should include the intended risk mitigation actions;
| | (ix) | An assessment of the adequacy of the bank’s risk management processes including critical judgment on the areas that need improvement; and
| | (x) | A conclusion of the ICAAP addressing the suitability of the capital to cover the bank’s current and expected risks.
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13. Appendix 3.4 lists further information and documentation that is required to accompany a bank’s ICAAP report.