Determining and setting P2G and P2G-LR
423. Competent authorities should determine P2G and P2G-LR as specified in this section, and, where the determination leads to a positive value, they should set P2G or P2G-LR to address supervisory concerns about the sensitivity of the institution to the adverse scenarios used in the supervisory stress tests.
424. P2G is the amount of capital that should be set to reach the overall level of own funds considered appropriate under the SREP and the outcomes of supervisory stress tests. The level of P2G should protect against the potential breach of TSCR in the adverse scenario The level of P2G-LR should protect against the breach of TSLRR in the adverse scenario. Where the quantitative outcomes of the supervisory stress tests suggest that the institution is not expected to breach its TSCR under the adverse stress test scenario, competent authorities may decide not to set P2G. Similarly, competent authorities may decide not to set P2G-LR where TSLRR i
…