European banking supervision has reviewed over 130 publications to make them more concise and user‑friendly. Around 40 will be discontinued, others have been revised in a targeted manner, and several are undergoing a more in-depth review, including the guide on governance and risk culture. We have also developed concrete initiatives as part of our supervisory culture program on the use of guides in the supervisory dialogue.
The prudential framework sets out the legal requirements that banks must meet. Within that framework, banks remain responsible for putting in place governance, risk management and control arrangements that are appropriate to their size, business model and risk profile. This is precisely where supervisory guidance adds value. European banking supervision has a perspective that no individual bank can have. Across banks’ diverse business models, structures and risk profiles, we see where risks build up, where recurring weaknesses arise and where particular approaches appear to work well. By sharing these insights through guides, methodologies, letters and reports, we ensure consistency in our supervisory approach, help banks understand the issues supervisors will examine and bring to light good practices observed across the sector. This is why supervisory guidance is an important part of transparent and effective supervision.
Why we are reviewing our supervisory guidance
Since the start of European banking supervision, a fairly large body of supervisory guides, “dear CEO” letters and other publications has accumulated. These documents were issued with good reason – often at the request of banks – to enhance transparency and consistency in how we intend to apply the prudential framework. As part of our ‘’Next level supervision’’ reform agenda[1], we have taken a step back and looked carefully at this body of publications. And we have concluded that it is time to clean up, streamline and simplify it.
Our objective is simple: to ensure that our supervisory guidance remains clear, consistent and fit for purpose in an increasingly complex risk environment. To this end we have asked ourselves a number of fundamental questions. How can we streamline our guidance? Are some publications outdated? Can we make it clearer that supervisory expectations are not legally binding? And importantly foster an approach fully consistent with the non-binding nature of supervisory expectations in day-to-day supervisory interactions.
What we are doing to improve clarity
We have reviewed around 130 supervisory publications, including guides, reports, letters and methodologies that communicate supervisory expectations and good practices. Supervisory guidance ensures a consistent supervisory approach, helps banks understand how we perform our supervisory tasks and explains how the ECB intends to apply the prudential framework. However, supervisory guidance does not create new legal requirements beyond the applicable prudential framework. Binding obligations come only from directly applicable European regulations or directives as transposed into national law.[2]
We have assessed the relevance, usefulness and clarity of each publication and this has resulted in a more focused and coherent set of supervisory guidance documents. What does this mean exactly?
In practice, around 40 documents have been identified as outdated, superseded or no longer relevant. These will be discontinued, while remaining accessible for transparency and archival purposes on our website, ensuring that supervisors and banks can rely on up-to-date and relevant material.
At the same time, we have also clarified the typology of supervisory publications considering their main objectives. By distinguishing more clearly between guides, reports, letters and methodologies, we aim to enhance consistency in how these tools are presented, understood and used. And looking further ahead, we will work towards creating a single guidebook consolidating supervisory publications by thematic area.
Targeted updates and more substantive revisions
Our review also identified a number of publications requiring targeted updates to clarify specific aspects or reflect recent regulatory developments. [3] For example, supervisory expectations on the management buffer have been clarified in the Guide to the internal capital adequacy assessment process (ICAAP). The revised ICAAP Guide, due to be published shortly, makes it crystal clear that the management buffer reflects banks’ own forward‑looking capital planning above the minimum requirement and that it does not constitute an additional capital requirement. It is not a supervisory add‑on.
Meanwhile, some guides warrant more in-depth revisions to fully reflect forthcoming legislative developments and feedback received from stakeholders, including the banking industry. This more substantive review currently covers among others the Guide to licence applications, the Guide to on-site inspections and the Guidance on leveraged transactions. The reviews are already ongoing and are expected to be concluded by the end of this year.
Governance and risk culture
The draft guide on governance and risk culture is a particularly important example of supervisory guidance undergoing more substantive changes. We first published the draft guide for public consultation in July 2024. It sets out supervisory expectations and good practices on governance and risk culture while taking into account the diversity of governance structures across Europe. After listening carefully to valuable feedback provided in over 1,000 comments from stakeholders during the consultation, and also taking into account the ongoing review of the European Banking Authority (EBA) Guidelines on internal governance, we decided to focus exclusively on good practices observed in the area of governance and risk culture. Hence, the draft guide will be replaced by a report on good practices.[4] This publication is planned for the first quarter of 2027.The good practices report will build on our ongoing supervisory work focusing on the effectiveness of banks’ management bodies and internal control functions. This includes aspects such as the formal independence of its members, as well as the bank’s risk culture and risk appetite framework and will also take into account the revised EBA Guidelines on internal governance. The report will also take materiality and institution-specific circumstances into consideration.
The revised scope of the good practices that banks may follow is key to ensuring that their governance arrangements are fit for purpose in a challenging and increasingly complex external risk environment. It does not in any way alter our commitment to good governance and sound risk culture as an integral part of banks’ resilience. This is a particularly important point, since it is weak governance that allows underlying risks to build up unchecked until they have an impact on capital and liquidity. Bad governance is therefore often the earliest and most reliable warning sign that an institution is heading for trouble.[5]
Embracing a supervisory culture that walks the talk
Simplifying guidance is only one part of the equation. Equally important is how this guidance is applied in day-to-day supervision.
We have listened carefully to stakeholders, who have asked for greater clarity about how supervisory guidance informs supervisory dialogue and judgement. The fact that a guide is non-binding does not mean that it is irrelevant in practice. Guides and good practice reports are intended to help supervisors and banks identify issues that may merit attention, drawing on insights from across the European banking sector.
At the same time, a departure from a guide should not, in itself, trigger supervisory reaction. Banks may meet prudential objectives in different ways, reflecting their size, business model and risk profile. Where supervisors identify a concern, the discussion should focus on the underlying risk and on whether the bank’s arrangements are sound in its particular circumstances. Supervisors explain clearly how their assessment is linked to the applicable legal framework and to the risks identified at the institution.
This is what it means to respect the non-binding nature of supervisory guidance in practice. Guides can provide a transparent and useful reference point for dialogue. They cannot replace institution-specific supervisory judgement or serve as an automatic proxy for compliance.
We are therefore further strengthening our supervisory culture initiative, including dedicated training across European banking supervision, to foster a common approach to the use of guides. This work is part of our broader efforts to establish a more risk-based, effective, efficient and integrated supervisory culture right across the Single Supervisory Mechanism (SSM) – no matter whether supervisors are located in Vilnius, Vienna or Valletta. Our training programme will be rolled out further in the coming years and is expected to train most staff across the SSM. These efforts will take some time to be fully rolled out and implemented.
Next steps
Taken together, these changes will result in a more streamlined, accessible and coherent set of supervisory publications – one that is clearer, easier to navigate and more user-friendly.
Our ambition is clear: not to lower the bar, but to make supervisory dialogue more effective in an increasingly complex risk environment. For banks, this should mean enhanced predictability, improved planning capacity and more focus on managing material risks.
This work is not yet done. The more substantive reviews of key guides are ongoing and are expected to be finalised by the end of this year. The drive for greater simplification and effectiveness will also guide our future work – from longer-term revisions to the design and communication of new supervisory publications.
Because simplification is not about doing less or lowering standards. It is about sharpening our focus on what truly matters so that banks can fulfil their essential role: supporting the real economy with the investment needed to boost European strategic autonomy and accelerate the digital, green and defence transitions.
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For details, see ECB (2025), Streamlining supervision, safeguarding resilience, December.
For more details on supervisory guides, and in particular the difference between binding obligations derived from prudential regulation, non-binding supervisory expectations and good practices, see Elderson, F. (2025), “Making supervision simpler: the role of supervisory guides”, keynote speech at the ECB and EUI Banking Governance High-Level Seminar “Board of the Future”, Florence, 27 October.
Other publications to which targeted updates have been made include the Guide to internal models. All content related to supervisory expectations on the credit conversion factor (CCF) has been removed from this Guide, as the European Banking Authority is preparing guidelines on this topic. Further examples are the Guide on assessment methodology and the Guide on materiality assessment. In both cases, references to the credit valuation adjustment have been removed to reflect the new rules under the Capital Requirements Regulation (CRR III).
Good practices include approaches that work well and which we become aware of in the context of our supervisory tasks. This means that a bank may be fully compliant with the applicable legal framework without implementing any of the good practices described in the guides, provided that it has put in place other practices that are more appropriate to its particular risk profile, business model and circumstances.
See Elderson, F. (2025), “What good supervision looks like”, keynote speech at the 24th Annual International Conference on Policy Challenges for the Financial Sector, Washington DC, 12 June.