ECB oversight of less significant institutions

What are less significant institutions?

Less significant institutions (LSIs) are banks that do not fulfil any of the significance criteria specified in the SSM Regulation – in contrast to significant institutions (SIs) that do fulfil at least one of them. The significance criteria relate to, among other things, a bank’s size, its importance to the economy of its home country or the EU as a whole, and the significance of its cross-border activities. In practice, the bulk of LSIs are smaller banks whose assets do not exceed €30 billion.

Who supervises less significant institutions?

LSIs are supervised by their national supervisors, under the oversight of the ECB, whereas significant institutions are directly supervised by the ECB.

To check if a bank is classified as a significant or less significant institution – and to determine who supervises it – consult the ECB’s list of supervised entities. The ECB reviews the significance of every bank on at least an annual basis.

What is the ECB’s role?

The ECB is responsible for the effective and consistent functioning of the whole system of European banking supervision, which comprises the ECB and the national banking supervisors of the participating countries. In its oversight function, the ECB works closely with national supervisors to further harmonise the implementation of the rules governing banking supervision, while also ensuring that joint supervisory standards are applied consistently across the system. This helps ensure a level playing field for all banks. Where necessary, in exceptional cases, the ECB may take over direct supervision of LSIs (see Article 6(5)(b) of the SSM regulation) to ensure consistent application of high supervisory standards.