Streamlining supervision, safeguarding resilience: tangible progress on our reform agenda

6 July 2026

By Sharon Donnery, Member of the Supervisory Board of the ECB, and Patrick Amis, Director General Horizontal Line Supervision at the ECB

Good supervision is not measured by the number of requests, letters or procedures it generates, but by how clearly it identifies the risks that matter and how effectively it ensures that banks address those risks.

That principle is guiding our work to streamline European banking supervision. There is no shortage of debate about simplification, but our focus is now on delivery. Over recent months, in line with our strategic reform agenda, we have moved from designing and planning to implementation: improving communication with banks, simplifying processes where risks are straightforward, making better use of digital tools and data, and focusing supervisors’ efforts on the areas where they can add the most value. The aim is not to lower the bar but to make supervision more effective in a risk environment that is becoming more complex, not less.

This blog post highlights the first set of simplification reforms that we have already introduced and the real difference they are making for banks, supervisors and ultimately – by helping us deliver our mandate more effectively – the general public. Meanwhile, we are continuing to implement our reform agenda across all areas and are tracking progress transparently. In the next ECB Annual Report on supervisory activities, we will provide a comprehensive overview of the progress of all our initiatives alongside a broader set of quantitative indicators showing the practical impact of the reform agenda.

Putting simplification into practice

At its core, simplification is about improving the day-to-day interactions between banks and supervisors. For banks, that means more predictable supervisory engagement, the ability to plan more efficiently and more time and resources to focus on managing material risks. For supervisors, it means freeing up more capacity to address complex cases, evolving risks and weaknesses that require closer scrutiny.

Faster decisions: from months to days

One of the clearest examples is faster decision-making. For standard capital-related transactions, such as own funds reductions or certain securitisations, the ECB has introduced fast-track procedures for eligible cases. Where the eligibility criteria are met, approvals that previously took several months can now be completed in around one week.

This is already making a practical difference. In the first four months of 2026, around 80% of applications for own funds reductions were eligible for the fast-track procedure and were processed in less than a week. For banks, this means greater certainty, shorter planning cycles and the ability to manage capital and liquidity buffers in a more agile way.

Prudential standards remain unchanged, of course. Faster timelines are the result of a more risk-based approach, clearer eligibility criteria and standardised data templates, not lower supervisory scrutiny.

Streamlined processes and fewer administrative steps

Simplification is also about streamlining the internal processes behind supervisory decisions, enabling supervisors to react to banks’ requests more quickly and efficiently. The wider use of delegated decision-making is a case in point: having long applied the delegation framework to fit and proper decisions, we are extending it to other types of supervisory decisions. More supervisory decisions can now be taken by ECB senior managers, when conditions for delegation have been met, without needing to be approved by the Supervisory Board and adopted by the Governing Council. This means that straightforward cases can be handled more efficiently, while ensuring that more complex or higher-risk issues continue to receive the appropriate level of scrutiny.

In the same spirit, we are also simplifying fit and proper assessments and authorisation procedures by making data requests to banks more targeted, proportionate and efficient. Where individuals have already been assessed in the past, supervisors could in future reuse information that is already available instead of requesting it again. Assessments of acquisitions of qualifying holdings and extensions of banking licences also now follow a more risk-based framework, with fewer interactions in straightforward cases and faster processing times as a result. This approach already covers around 50% of ECB decisions on authorisations and qualifying holding procedures, enabling supervisors to process lower-risk cases more quickly and focus their attention on higher-risk cases.

Together, these changes aim to reduce the potential for duplication and unnecessary administrative effort. They make supervisory processes more predictable for banks, while allowing supervisory resources to be better directed to the areas where they add the most value.

Leaner and more targeted stress testing

Stress testing remains a key tool for assessing banks’ resilience. It helps supervisors understand how banks would perform under adverse conditions and where vulnerabilities may emerge. But stress tests are also resource-intensive for banks.

The ECB, together with the European Banking Authority (EBA), is therefore making stress tests leaner and more targeted, while preserving their core purpose. A central element is a significant reduction in data requirements. For EU-wide stress tests, including the 2027 exercise, the number of data points that banks need to report is being reduced by around 55%, while the templates are being better aligned with the data banks already provide through regular supervisory reporting.

The ECB is also streamlining and making more risk-focused the stress test quality assurance, making stress tests more focused and relying more, where appropriate, on banks’ existing internal processes such as the internal capital adequacy assessment process. For banks, this means less undue effort and a more predictable process. At the same time, the stress-testing framework remains robust, meaningful, forward-looking and focused on relevant risks.

Fewer templates, better reporting

Reporting is another area where simplification is becoming clearly visible. A key supervisory reporting package, the short-term exercise, has already been streamlined, reducing the number of data points by around 20%, and further reductions are planned.

This is part of a broader effort to make reporting more focused and more predictable. The ECB is introducing regular reviews to eliminate avoidable data collections and, together with the EBA, we are publishing a central inventory to avoid potential duplications and increase transparency. We are also implementing a risk-based materiality threshold, which will mean that banks will not be required to resubmit reports containing small errors. It is expected to reduce total resubmissions by around 15%. In addition, targeted measures for smaller banks, including simplified requirements and less frequent data requests, support a more proportionate approach.

The result is a reporting framework with fewer templates, fewer avoidable corrections and greater predictability, while supervisors still have the data they need to identify and assess risks.

A more strategic and proactive approach to internal models

Internal models remain an important part of prudential supervision. Supervision in this area needs to be strategic and less driven by formal processes. Currently, more than 90% of on-site internal model investigations are initiated primarily in response to requests from banks. Therefore, one aim of our reform is to regain a more proactive role in internal model supervision, while fully preserving prudential standards.

As a first step, a more risk-based approach for the materiality assessment of model changes should be used, which is expected to lead to fewer requests by banks that require supervisory approval. In this context, earlier this year, the EBA has published changes to the relevant regulatory technical standards that govern the criteria for the classification of material model changes requiring supervisory permission. These regulatory technical standards are now subject to adoption by the European Commission. In parallel, the ECB has introduced a new approach for approvals of material changes and extensions, the early implementation approach, which, from 1 October 2026, allows banks to implement such changes quickly, but subject to prudential safeguards.

This should allow supervisory resources to be directed more clearly to higher-priority areas, such as idiosyncratic issues identified by Joint Supervisory Teams (JSTs), outlier models flagged through benchmarking, and model areas that are particularly sensitive to macroeconomic or regulatory changes. The result is a more strategic and more risk-based model supervision, without lowering prudential safeguards.

Shorter, sharper and more risk-focused on-site inspections

On-site inspections are an important tool for gaining an in-depth understanding of banks’ risks, controls and governance. But to be effective, on-site work needs to be embedded into each bank’s supervisory work plan and focused on key risks and vulnerabilities.

We are therefore making inspections shorter, sharper and more clearly aligned with the risks that matter most, without compromising on rigour or quality. And based on data for 2026, on-site inspections are now being completed around 10% more quickly than before, on average.

The ECB is also increasing the use of more targeted inspections, selecting the right supervisory tool for the risk at hand and prioritising effort where it has the greatest impact. To achieve this, internal processes are being streamlined, reports are being shortened by 20% on average and simplified while maintaining clarity and quality. Coordination between inspectors and JSTs is being strengthened, and on-site work is being embedded even more firmly in an integrated, multi-year supervisory plan for each bank. This will avoid potential undue duplication of supervisory activities, enhance prioritisation and improve clarity and predictability for banks.

In parallel, the ECB is strengthening its approach to findings and measures through a tiered follow-up process that is calibrated to the materiality and urgency of issues. This will help banks and supervisors focus on the most significant weaknesses, while addressing less material issues more proportionately. The overall aim is clearer prioritisation and faster risk reduction, while keeping key risks fully covered.

Clearer and simpler supervisory guidance

Simplification is extending to supervisory guidance, as explained in our recent press release and a recent blog post by Supervisory Board Vice-Chair Frank Elderson.

Since the start of European banking supervision, a large body of relevant publications has accumulated. We took a close look at over 100 guides and similar documents, with the aim of streamlining, shortening and consolidating them. Around 40 documents have been identified as outdated, superseded or no longer relevant and will be discontinued. Some guides required targeted updates to clarify specific aspects or reflect recent regulatory developments.

For example, in the ECB Guide to the internal capital adequacy assessment process, we have clarified the role of the management buffer to avoid it being misunderstood as an additional capital requirement or supervisory expectation on top of the existing Pillar 2 guidance framework. The management buffer reflects banks’ own forward‑looking capital planning above the minimum requirement. It is not a supervisory add‑on.

Other guides warrant more in-depth revisions to fully take into account forthcoming legislative developments and feedback received from stakeholders, including those in the banking industry. For example, this more substantive review currently includes the Draft guide on governance and risk culture (which will be replaced by a report on good practices), the Guide to licence applications, the Guide to on-site inspections and internal model investigations as well as the Guidance on leveraged transactions. The review is expected to be concluded by the end of the year.

Simplifying guidance is only part of the equation; equally important is how it is applied. We are strengthening our supervisory culture, including through training, to foster a common approach to the use of our guides.

Conclusion

What matters now is delivery: ensuring that the agreed reforms translate into tangible enhancements in supervisory practice. They are increasingly changing how supervision works in practice, making processes faster where risks are straightforward, more focused where vulnerabilities are material, and more predictable for banks overall.

This matters not only for supervisors and banks, but also for the wider economy and society. The strongest contribution that supervision can make to sustainable growth is to ensure that banks remain safe, sound and resilient, so that they can continue to finance households and businesses throughout the economic cycle. Our reform agenda helps create the conditions for banks to do exactly that.

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