Supervisory priorities

The supervisory priorities set out focus areas for ECB Banking Supervision in the year ahead. They build on an assessment of the main challenges facing supervised banks in the current economic, regulatory and supervisory environment and aim to ensure that banks address their key risks effectively.

As an immediate response to the economic consequences of the coronavirus (COVID-19), ECB Banking Supervision has taken several ad hoc measures aimed at strengthening banks’ ability to operate in the current environment. The measures provide temporary capital and operational relief as well as flexibility to banks, who are encouraged to draw on their capital and liquidity buffers. At the same time they are asked to withhold dividends and postpone share buy-backs until 1 January 2021. The key objective of all our measures is to ensure that banks remain in a position to absorb losses and continue lending to the economy.

ECB Banking Supervision analyses banks’ vulnerability to different hypothetical scenarios and shocks. Based on the results of this vulnerability analysis, different policy options could potentially be further explored if needed. ECB Banking Supervision will take a pragmatic approach to the annual Supervisory Review and Evaluation Process (SREP) this year. The intent is to ensure an efficient and focused assessment of the significant institutions directly supervised by the ECB, while reducing the burden compared with normal SREP cycles. This year the process will assess banks’ ability to respond to current challenges and the most material risks and vulnerabilities related to the coronavirus situation. Supervisory priorities for 2021 will be published at a later stage when we have more knowledge of the effect of the present crisis on banks.