Decision-making
As the European Union's banking supervisor, the ECB can take a number of supervisory decisions that are legally binding on banks under the Single Supervisory Mechanism.
These include:
- deciding on establishing prudential requirements
- approving reductions in own funds
- setting micro- and macroprudential capital requirements (“buffers”)
- deciding on supervised banks' significance status
- granting or withdrawing banking licences
- assessing acquisitions and disposals of qualifying holdings
- deciding on the suitability of all members of a management body, for both management and supervisory functions
- imposing enforcement measures and sanctions on significant banks
The ECB is bound by the requirements of due process, meaning it must motivate its decisions and give addressees the right to be heard and the right to access all documents obtained, produced or assembled by it during the supervisory procedure (the “supervisory file”).
The duty to motivate decisions
ECB supervisory decisions need to be accompanied by clear reasoning, setting out the material facts, legal reasons and supervisory considerations underlying the decision.
The right to be heard
Addressees of ECB draft decisions whose rights would be adversely affected by them are given the opportunity to comment on the decisions before they are adopted. Besides enabling an addressee to respond to the ECB’s factual and legal analysis, this right ensures that the ECB’s decision-making is based on a complete set of information. In principle, the addressee is granted two weeks but, under particular circumstances, this period can be shortened to three working days.
The right to access the supervisory file
As part of their right of defence, parties to an ECB supervisory procedure have the right to access the supervisory file before a decision that can negatively affect them is adopted. Access to the file is possible from the opening of the supervisory procedure until the decision is final. This right is subject to the protection of the business secrets of third parties and does not extend to confidential information .
How are decisions taken?
The Supervisory Board, as an internal body of the ECB, prepares the draft decisions, which are adopted by the Governing Council under the non-objection procedure. If the Governing Council does not object within a defined period of time, the decision is deemed adopted.
Apart from that, other decisions on the general framework (e.g. the SSM Framework Regulation) are taken by the Governing Council outside the non-objection procedure.
Separation principle
To prevent conflicts of interest between monetary policy and supervisory responsibilities, the ECB ensures a separation of objectives, decision-making processes and tasks.