The Bank of Portugal has set its 2026 microprudential supervisory priorities for less significant credit institutions, focusing on financial resilience to geopolitical and macroeconomic shocks and on operational resilience and digitalisation. The priorities reflect those of the Single Supervisory Mechanism, adjusted proportionately for risks specific to the Portuguese banking sector, and are supported by tailored supervisory work programs. Financial resilience work will target weaknesses in loan pricing, exposures to counterparties and sectors vulnerable to geopolitical and trade tensions, board oversight of material and emerging risks, and the management of interest rate and credit spread risk in the banking book. The authority will scrutinize below-cost lending, expected-loss processes, risk appetite frameworks, internal control functions, debt securities exposures, hedging strategies and behavioral assumptions. Operational resilience supervision will focus on institutions’ implementation of the Digital Operational Resilience Act, including incident management, third-party risk, resilience testing and technology recovery plans. The Bank of Portugal will also examine external fraud through digital channels, digitalisation and artificial intelligence governance, and implementation of CRR3 capital requirements for credit and operational risk through thematic reviews and on-site inspections.

Original source