Supervision. Explained.

Supervision. Explained. takes a closer look at European banking supervision and introduces some of the people and activities involved.

Why should banks care about climate change?

Climate and environmental risks play a growing role for banks. Find out how extreme weather events can affect banks and what they can do to continue their important role as lenders in the future and do their part in the transition to a low carbon economy.

Published on: 10 September 2021

What should banks focus on in 2021 and beyond?

Banks have weathered the first shock of the pandemic well, but what measures should they take once it is over?

Published on: 15 July 2021

How are people’s needs changing traditional banks?

Banks are undergoing a digital transformation and the coronavirus pandemic has acted as a catalyst to speed up this process.

Published on: 15 July 2021

What are internal models?

Banks have to maintain enough capital to cover unexpected losses. They can use internal models to calculate how much of it they need. Find out how this works.

Published on: 6 April 2021

What are provisions and non-performing loan (NPL) coverage?

To cover the expected losses from loans, banks must book provisions. What are they, and what is meant with NPL coverage? And what ensures that banks properly cover these loans?

Published on: 21 December2020

Are the pandemic relief measures creating zombie firms?

To help companies cope with the coronavirus crisis, the ECB and national governments have put in place measures that support banks’ lending to viable businesses. But are the relief measures also keeping alive unhealthy companies?

Published on: 14 December2020

The ECB Explains: the banking union

The banking union allows EU banking rules to be applied consistently. This helps to ensure the banking system is resilient. Our colleague Filipa explains the basis of the banking union and how it ensures people in Europe can confidently save, spend or borrow money.

Published on: 21 August 2020

The ECB Explains: European banking supervision

As European banking supervisor, we check that banks comply with the rules. Our colleague François explains how this ultimately serves the people of Europe, as it helps to ensure banks are safe and sound.

Published on: 21 August 2020

Why do banks need to hold capital?

We all rely on banks, for example to look after our deposits or to lend us money, and we need them to be safe and sound. Banks have to hold enough capital to ensure they can keep going in good times and bad. But what is capital and how does it make banks more resilient?

Published on: 23 May 2019

What is the ECB’s role in bank mergers and acquisitions?

When two banks are thinking of merging, the ECB maintains a neutral stance and assesses the project put forward by them purely on technical grounds. What does it look at? And how does its role depend on the consolidation form they choose? Read our explainer to find out.

Published on: 5 April 2019

Understanding the 2018 EU-wide stress test

Euro area banks are more resilient to financial shocks, the stress test led by the European Banking Authority shows. Learn more about the scenarios used in the test, what role the ECB plays and how the results will feed into supervisors’ decisions about individual banks.

Published on: 2 November 2018

How is the Supervisory Board Chair chosen?

A new Chair is appointed to the Supervisory Board every five years. The position is advertised publicly and any EU citizen with sound experience in banking and finance can apply. Find out who is involved in choosing the final candidate and what it takes to secure the position.

Published on: 17 July 2018

Why supervise commercial banks?
Why supervise commercial banks?

As bank customers we need commercial banks to be healthy so that we have access to the financial services they provide. Banks also need to stay healthy to ensure the financial system remains stable.

Published on: 30 April 2018

How does the ECB supervise banks that use fintech?
How does the ECB supervise banks that use fintech?

For many of us it’s now quite normal to pay for things using our smartphones. Our banks use innovative technology known as fintech to provide this kind of service. But what exactly is fintech and how can we be sure it’s safe?

Published on: 27 March 2018

Why is it important for banks to reduce bad loans?

The ECB supports banks under its supervision in tackling bad loans, i.e. loans that have not been repaid for a certain amount of time or that are unlikely to be repaid. Find out why bad loans are a problem and what the ECB’s role is on this front.

Published on: 7 February 2018

What does it mean when a bank is failing or likely to fail?
What does it mean when a bank is failing or likely to fail?

Banks, just like any other business, can fail. However, the important services they provide to the economy and the possibility that their failure will damage other parts of the economy mean that there are special rules regarding bank failures.

Published on: 14 June 2017

2017 stress test FAQ
What is the ECB sensitivity analysis of IRRBB?

The ECB sensitivity analysis of interest rate risk in the banking book (IRRBB) will examine how hypothetical changes in the interest rate environment would affect banks. Find out more about this exercise and how it feeds into the broader supervisory process.

Published on: 28 February 2017

What is a precautionary recapitalisation and how does it work?

Find out what it means for a bank to receive a precautionary recapitalisation and what part the ECB plays in the process.

Published on: 27 December 2016

European banking supervision at a glance

In European banking supervision, the ECB is responsible for supervising the largest banks. Find out more about the objectives and functions of European banking supervision.

Published on: 4 November 2016

What are non-performing loans (NPLs)?

Loans are considered “non-performing” when there are indications that they are unlikely to be repaid or when more than 90 days have passed without the borrower paying the agreed instalments. Why are bad loans an issue and what is our role as a supervisor?

Published on: 12 September 2016

Frequently asked questions on the 2016 EU-wide stress test

The 2016 bank stress test results will be published on 29 July 2016 by the European Banking Authority. Find out what this year’s stress test entails and how it feeds into the broader supervisory process.

Published on: 26 July 2016

What are supervisory colleges?

In an increasingly globalised world, it is crucial that banks operating in more than one country are supervised as effectively as possible. Supervisory colleges play an important role in this regard.

Published on: 14 July 2016

What is the SREP?

Supervisors regularly assess and measure the risks for each bank. This core activity is called the Supervisory Review and Evaluation Process, or SREP for short. What is it about and what does it mean for banks?

Published on: 16 June 2016

What are “high-priority less significant institutions”?

As well as supervising the largest European banks, ECB supervisors take a closer look at smaller banks that are classified as “high priority”.

Published on: 24 March 2016

What is fit and proper supervision?

Supervisors assess whether board members of banks are “fit and proper” to do their jobs. In other words, we check their reputation and assess their knowledge, skills and experience to perform their duties.

Published on: 18 March 2016

What is a qualifying holding?

One of our tasks is to assess proposed acquisitions of “qualifying holdings” in a bank. The ECB takes such decisions as part of the common procedures that apply to all banks under European banking supervision.

Published on: 18 March 2016

What is AnaCredit?

AnaCredit will be a new dataset with detailed information on individual bank loans in the euro area. The name stands for “analytical credit datasets”.

Published on: 11 November 2015

Whistleblowers act in the greater good

Breach reports, or whistleblowing, are an important tool in the detection of misconduct by supervised banks or banking supervisors. Citizens who suspect breaches of relevant EU law act in the public interest when reporting those breaches to the ECB.

Published on: 8 September 2015

Supervisory statistics

Data are at the heart of banking supervision and a truly European approach to supervision can only be achieved with comparable information. This article describes the ECB’s harmonised approach to collecting data and looks at the role of statistics in day-to-day supervision.

Published on: 19 May 2015

Explaining the ABoR

Jean-Paul Redouin, Chair of the Administrative Board of Review (ABoR), answers questions on its specific role in the new era of ECB Banking Supervision.

Published on: 25 March 2015

Ingrida Šimonytė, Deputy Chairperson of Lietuvos bankas
Ingrida Šimonytė, Deputy Chairperson of Lietuvos bankas
Lithuania: High supervisory standards important

With the adoption of the euro, Lithuania will join the Single Supervisory Mechanism on 1 January 2015. Ingrida Šimonytė, Lietuvos bankas’ Deputy Chairperson, will become a Member of the Supervisory Board. In a web-interview, she talks about the main features of Lithuania’s banking sector and the challenges for ECB Banking Supervision.

Published on: 29 December 2014