Targeted Review of Internal Models

Definition

Targeted Review of Internal Models (TRIM) denotes a broad exercise performed by European Banking regulators aimed at enhancing the credibility and confirming the adequacy and appropriateness of approved Pillar I internal models permitted for use by significant institutions when calculating own funds requirements

TRIM Components

Establish Compliance with regulatory requirements related to internal models, through an assessment based on the

• Capital Requirements Regulation (CRR)
• the Capital Requirements Directive (CRD IV)
• relevant Commission Delegated Regulations and Commission Implementing Regulations
• regulatory technical standards (RTS)
• European Banking Authority (EBA) guidelines, and
• the approved European Central Bank (ECB) Banking Supervision manuals and guidelines

Reduction of unwarranted variability in RWA as it relates to internal model outcomes, taking into account

• the results of benchmarking
• delivering interpretations of the CRR and
• addressing current gaps in interpretation of regulations relating to internal models, in situations where significant modelling issues contributing to unwarranted variability have been identified.