The Supervision Blog
Providing insights on supervising Europe’s biggest banks
The Supervision Blog is where ECB staff and Supervisory Board members offer insights into the workings of the banking sector, incorporating data, analysis and research.
23 January 2024
“Failing to plan is planning to fail’’ – why transition planning is essential for banks
The misalignment with the EU climate transition pathway can lead to material financial, legal and reputational risks for banks. It is therefore crucial for banks to identify, measure and − most importantly − manage transition risks, just as they do for any other material risk writes Frank Elderson, member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB.Read more
16 January 2024
Priorities to help banks withstand headwinds
Our supervisory priorities for 2024-26 clearly reflect the new and persistent risks that banks are facing. In this blog post, Kerstin af Jochnick and Mario Quagliariello highlight our key priorities, plan of action and expectations for banks.
10 October 2023
Keeping a tight lid on non-performing loans
Ever since it began supervising banks, addressing the issue of non-performing loans (NPLs) has been a key priority for the ECB and remains so today. That is why we are very concerned about legislative proposals which could undermine the effective resolution of NPLs, Elizabeth McCaul and Korbinian Ibel write.
20 July 2023
Effective management bodies – the bedrock of well-run banks
Effective management bodies are the bedrock of well-run banks, and well-run banks are the bedrock of a stable banking system, writes Supervisory Board Vice-Chair Frank Elderson in The Supervision Blog. We will continue our efforts to strengthen banks’ management bodies.
8 June 2023
The economy and banks need nature to survive
Humanity needs nature to survive, and so do the economy and banks. The more species become extinct, the less diverse are the ecosystems on which we rely. This presents a growing financial risk that cannot be ignored, warns Frank Elderson, member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB.
26 May 2023
Overlays and in-model adjustments: identifying best practices for capturing novel risks
How can banks best quantify new, unknown risks like supply chain risks and judge how much capital to set aside for them? Supervisory Board member Elizabeth McCaul and head of horizontal supervision Stefan Walter discuss this in a blog post on IFRS 9 provisioning frameworks.
9 May 2023
Diversity at the top makes banks better
Diversity is a matter of sound governance for banks and leads to better decision-making. That is why Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, and Elizabeth McCaul, Member of the Supervisory Board of the ECB, are encouraging banks to improve the diversity of their boards.
5 April 2023
Mind the gap: we need better oversight of crypto activities
Crypto assets can pose a serious risk to financial stability. That is why we need to identify and close gaps in the global supervision of crypto markets. We need better international coordination and stronger consolidated oversight, argues Supervisory Board member Elizabeth McCaul.
10 March 2023
Supervising the future of banking: navigating the digital transformation
Blog post by Elizabeth McCaul, Member of the Supervisory Board of the ECB
28 February 2023
Preventing money laundering through European banks
Enough staff, the right data, effective cooperation. That’s what a European Anti-Money Laundering Authority (AMLA) would need from EU lawmakers to be able to protect citizens, writes Supervisory Board member Édouard Fernandez-Bollo in the Supervision Blog.
13 January 2023
Tackling counterparty credit risk
Banks should be well prepared and maintain their counterparty credit risk at an acceptable level, writes Supervisory Board Chair Andrea Enria in the Supervision Blog. We will use all available supervisory tools to ensure they address weaknesses in their risk management promptly.
20 December 2022
Are banks ready to weather rising interest rates?
The ECB has gauged bank resilience to interest rate shocks under different macroeconomic scenarios. ECB Vice-President Luis de Guindos and Chair of the ECB’s Supervisory Board Andrea Enria walk us through the findings.
12 December 2022
Charting the course: our supervisory priorities
High uncertainty calls for extreme prudence by banks and supervisors, say Kerstin af Jochnick and Mario Quagliariello on The Supervision Blog. Banks should remain resilient to immediate shocks, without losing sight of structural challenges such as cyber and climate-related risks.
4 November 2022
Strong rules, strong banks: let’s stick to our commitments
We need strong rules for strong banks. Deviations from Basel III in planned EU laws could harm banks’ reputation and competitiveness, warn ECB Supervisory Board Chair Andrea Enria, ECB Vice-President Luis de Guindos and EBA Chairperson José Manuel Campa in a joint blog post.
2 November 2022
Banks need to be climate change proof
Banks must adapt the way they do business to account for climate-related and environmental risks, writes Supervisory Board Vice-Chair Frank Elderson in The Supervision Blog. The blog post takes a look at banks’ progress and the road ahead.
8 July 2022
A catalyst for greening the financial system
The ECB is reducing the carbon footprint in its portfolio and pushing banks to better manage climate risks. Within our mandate, we incorporate climate change considerations into our monetary policy and banking supervision, say Frank Elderson and Isabel Schnabel.
24 May 2022
Enhancing cooperation in the fight against money laundering
Anti-money laundering authorities and banking supervisors need to work closely with one another, say Supervisory Board members Elizabeth McCaul and Edouard Fernandez-Bollo. The new European anti-money laundering authority will play a key role in this effort.
19 May 2022
The desks mapping review – integrating Brexit banks into European banking supervision
Banks that relocated business from the UK to the EU after Brexit must have adequate local governance and risk management capabilities, says Supervisory Board Chair Andrea Enria. Our review indicates incoming banks do not yet have full control over their balance sheets.
28 April 2022
Mind the gap, close the gap – the ECB’s views on the banking package reforms
The revised European banking package represents very good progress, says Supervisory Board Vice-Chair Frank Elderson. However, banks may be left exposed to risks if remaining gaps are not closed.
21 February 2022
For a fully fledged European anti-money laundering authority
We welcome the creation of a European anti-money laundering authority, says Supervisory Board member Edouard Fernandez-Bollo. In this blog post, he shares his thoughts on how to best make it work, based on our own experience in building European Banking Supervision.
7 December 2021
Our supervisory priorities for a healthier banking sector after the pandemic
Credit risk remains high on our agenda, say Supervisory Board Chair Andrea Enria and Director of Supervisory Strategy and Risk Mario Quagliariello. We must tackle emerging risks, including those stemming from accelerating digitalisation and the climate and environmental crisis.
30 November 2021
Provisioning for a clean balance sheet
We are implementing a new bank-specific approach to ensure banks sufficiently provision for non-performing loans granted before April 2019, says Supervisory Board member Elizabeth McCaul. We will impose a capital add-on where necessary that can be lowered swiftly if banks act.
22 November 2021
How well are European banks managing their climate-related and environmental risks?
Climate-related and environmental risks are and will remain key risk drivers for banks, says Supervisory Board Vice-Chair Frank Elderson. Banks must integrate them into their strategies, governance and risk management arrangements.
19 July 2021
Credit risk: Acting now paves the way for sound resilience later
This crisis provides an opportunity to improve credit risk management in banks, says Supervisory Board member Elizabeth McCaul. Strong credit risk controls help banks support the economic recovery, so the good practices we are seeing should be adopted more widely.
15 June 2021
ECB Banking Supervision seeking greater diversity within banks
Diversity in leadership is crucial for effective governance, say Vice-Chair Frank Elderson and Supervisory Board member Elizabeth McCaul. A richer set of knowledge, experiences and values results in better decision-making and greater efficiency in the way banks operate.
14 May 2021
Fostering a compliance culture in the European banking system
Our sanctioning powers help to ensure that banks comply with regulatory requirements, say Supervisory Board member Edouard Fernandez-Bollo and Director General Pedro Gustavo Teixeira. This in turn creates confidence in the soundness of the banking system.
4 December 2020
Who pays the piper calls the tune: The need for and benefit of strong credit risk management
Strong credit risk management to avoid bad loans piling up now will maximise value, avoid cliff effects and reduce the risk of procyclical effects, writes Supervisory Board member Elizabeth McCaul. Inaction would disrupt the supply of credit and liquidity and delay the recovery.
9 October 2020
Fostering the cross-border integration of banking groups in the banking union
We need to foster the integration of cross-border banking groups to ensure that timely liquidity support is provided within them, Andrea Enria and Edouard Fernandez-Bollo say in our latest blog post. To achieve this, recovery plans could be strengthened by using group support agreements.
28 July 2020
The coronavirus crisis and ECB Banking Supervision: taking stock and looking ahead
Euro area banks are resilient to the stress caused by the coronavirus crisis, our analysis shows. The assessment of the results justifies our decision to extend our dividend recommendation. Supervisory Board Chair Andrea Enria also clarifies the timeline for banks to replenish capital and liquidity buffers.
9 July 2020
Brexit: banks must prepare for the end of the transition period
The ECB will continue to engage with all banks affected by Brexit to ensure that they achieve their target operating models in a timely manner, says Supervisory Board Vice-Chair Yves Mersch. We will not accept banks attempting to operate as empty shells.
7 July 2020
Supervising the new normal
How do we ensure that supervision remains effective during the crisis, and which aspects will be crucial in determining the shape of the EU banking sector in the medium term? These are the key questions supervisors must now answer, writes Supervisory Board member Kerstin af Jochnick.
1 July 2020
Clarifying the ECB’s supervisory approach to consolidation
As the ECB publishes its draft Guide on consolidation in the banking sector, Supervisory Board member Edouard Fernandez-Bollo explains in his blog post the key aspects of how the ECB assesses consolidation projects involving euro area banks.
12 May 2020
A pragmatic SREP delivers appropriate supervision for the crisis
The 2020 supervisory review takes a pragmatic approach while aiming to maintain an accurate view of banks’ soundness, writes Supervisory Board member Elizabeth McCaul. We focus on how banks manage risks to capital and liquidity, and intend to keep Pillar 2 requirements and guidance stable.
8 May 2020
The first lesson from the pandemic: state-of-the-art technology is vital
The coronavirus pandemic has highlighted how important technology is for banks’ business continuity, writes Supervisory Board member Pentti Hakkarainen. This offers opportunities but also challenges, as reliance on technology can lead to an increase in IT and cyber risks.
27 March 2020
Flexibility in supervision: how ECB Banking Supervision is contributing to fighting the economic fallout from the coronavirus
Banks and their shareholders must also do their part to fight the economic effects of the coronavirus pandemic, Supervisory Board Chair Andrea Enria writes in the Supervision Blog. He explains the rationale behind the recent supervisory measures and recommended dividend restrictions.