If a significant bank fails to comply with prudential requirements or with the measures adopted under the Single Supervisory Mechanism (SSM) to address the non-compliance, the ECB can impose enforcement measures and efficient, proportionate and dissuasive sanctions.
Enforcement measures are designed to compel supervised banks to comply with prudential requirements laid down in supervisory decisions or regulations. These measures can only be imposed in the case of on-going breaches.
What enforcement measures can the ECB impose?
Periodic penalty payments
The pecuniary enforcement measures directly available to the ECB are the so-called “periodic penalty payments” (PPPs). The bank concerned has to pay a daily amount – up to 5% of its average daily turnover – for every day the infringement continues during a maximum period of 6 months.
Other enforcement measures
The ECB can also apply the enforcement measures available in the national implementing legislation in the relevant participating Member State. It can also instruct the national competent authorities (NCAs) to adopt purely national enforcement measures.
Principle of proportionality
When exercising its enforcement powers the ECB is guided by the principles of effectiveness and proportionality.
ECB decisions that impose enforcement measures may be reviewed by the Administrative Board of Review at the request of the bank concerned.