On 4 November 2015 the Single Supervisory Mechanism completed its first year of supervisory responsibility over the Euro Area’s banking system. A total number of 122 credit institutions are directly supervised by the ECB, 94 of which are represented by the EBF. Each institution has a dedicated Joint Supervisory Team (JST) made of ECB officials and staff of the National Competent Authorities (NCA). Together, they have conducted the 2015 Supervisory Review and Evaluation Process (SREP) exercise that finishes by the end of the year.
The deployment of the SSM has meant a big challenge for the ECB and for the banks during this first year of common supervision. New SSM standards and methodologies are being developed. The JSTs are made of officials from various countries and are led by a Coordinator who must not come from the country of the supervised bank. The use of English as supervisory language is accepted by the majority of banks but requires an additional effort of all those involved. The prevalence of many options and national discretions, which were exerted by NCAs and Member States when the Capital Requirements Regulation (CRR) came into force in 2014, has compounded the difficulties to conduct consistent supervision across the Euro Area.
In the face of these and other hurdles much progress the determination shown by the ECB heralds that the objective of common and consistent supervision can be successfully completed in the next exercises. As reminded by the ECB President in his speech during the celebration on the SSM’s first anniversary, the SSM is a critical step towards a Banking Union but it needs to be completed and followed by the implementation of the remaining two blocks, namely the Single Resolution Mechanism and the Deposit Guarantee Scheme.
The EBF has engaged with the ECB to collaborate in the implementation of the SSM from the beginning. The SSM Strategy Group and its platform of working groups have held numerous exchanges with the ECB seeking common understanding and delivering to the ECB the banks’ supervisory experience sur le terrain. The EBF continued commitment and critical views have been welcomed by the ECB. The challenge continues in the second year that has just begun.
EBF Contact: Gonzalo Gasos (firstname.lastname@example.org)