On 19 October 2022, the Malta Financial Services Authority (the “MFSA”) issued a circular informing the banking sector that it has issued a new Banking Rule BR/26 on the Stress Testing Requirements of Credit Institutions Licensed under the Banking Act (the “Rule”), repealing BR/12 Annex 2D – Principles on Stress Testing.
The Rule is applicable to all credit institutions licenced under the Banking Act (Cap. 371 of the Laws of Malta) and its scope is to implement the EBA Guidelines on institutions’ stress testing issued on 19 July 2018 (EBA/GL/2018/04).
In broad terms, the Rule provides that credit institutions are required to: (i) have a stress testing programme in place; and (ii) assess, at least on an annual basis, their stress testing programmes. The Rule also provides further detail on the risk areas to be considered by credit institutions during stress testing.
The Rule became applicable as from 19 October 2022.
Should you have any queries or require any further information on the Rule, kindly get in touch with Andrei Vella (andrei.vella@camilleripreziosi.com), Andrew Caruana Scicluna (andrew.caruanascicluna@camilleripreziosi.com) and/or Kyle Debattista (kyle.debattista@camilleripreziosi.com).
