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Frequently asked questions…

Section 1 – The Single Supervisory MechanismSection 2 – How European banking supervision worksSection 3 – SSM accountabilitySection 4 – Consumer protection

Section 1 – The Single Supervisory Mechanism

What is the Single Supervisory Mechanism?

The Single Supervisory Mechanism (SSM) is the system of banking supervision in Europe and is one of the pillars of the banking union. It comprises the ECB and the national supervisory authorities of all euro area countries and of other EU countries that decide to participate.

The main aims of the SSM are to:

  • ensure the safety and soundness of the European banking system;
  • increase financial integration and stability in Europe.

Why do we need the SSM?

Financial crises have shown how quickly and forcefully problems in the financial sector of one country can spread to another, especially in a monetary union like the euro area. These problems can then directly affect citizens across countries.

The SSM, as a common European supervision mechanism, ensures consistent supervision in all participating countries and helps to maintain trust in Europe’s banking sector. The ECB carries out European banking supervision – together with the national supervisory authorities – as an independent institution with the necessary expertise and technical abilities.

Which countries participate?

All twenty euro area countries automatically participate in the SSM. EU countries that don’t have the euro as their currency can also decide to participate through “close cooperation” with the ECB, as is the case with Bulgaria.

The ECB may conclude memoranda of understanding with the relevant national supervisory authorities of EU countries not participating in the SSM and with those of countries outside the EU. These describe how they will cooperate in carrying out supervisory tasks.

Section 2 – How European banking supervision works

What is ECB Banking Supervision’s exact role?

Since November 2014, the ECB has been supervising Europe’s biggest banks. It has the power, among other things, to:

  • grant/withdraw the licences of all banks in the participating countries;
  • assess acquisition and disposal of holdings in banks;
  • ensure compliance with all prudential requirements laid down in EU banking rules and set, where necessary, higher prudential requirements for banks in order to protect financial stability.

How does the SSM operate?

The Supervisory Board, supported by a Steering Committee, plans and carries out the ECB’s supervisory tasks. These include undertaking preparatory work and proposing draft decisions to the Governing Council. If the Governing Council, the ECB’s main decision-making body, does not object to the draft decisions proposed by the Supervisory Board, they are considered adopted. The day-to-day supervision of significant banks is carried out by Joint Supervisory Teams.

What are the Joint Supervisory Teams?

Joint Supervisory Teams (JSTs) are one of the main forms of cooperation between the ECB and national supervisors. For each significant bank, a team has been formed comprised of staff members of the ECB and the national supervisors involved in supervising that bank. The team is coordinated by the ECB with assistance from each national supervisor.

The JSTs carry out ongoing supervision of the significant banks. Their main tasks are conducting risk analysis of the supervised bank and proposing the supervisory programme and the appropriate supervisory actions.

Who does the ECB supervise?

Direct supervision

The ECB directly supervises more than 100 significant banks, representing around 85% of total banking assets in the participating countries.

Banks are considered significant based on:

  • their size – banks which have a total asset value over €30 billion or which are one of the three biggest banks in a country.
  • their importance for the economy of the country in which they are located or for the EU as a whole.
  • the significance of their cross-border activities.
  • whether they have requested or received financial assistance directly from the European Stability Mechanism or the European Financial Stability Facility.

Indirect supervision

The more than 2000 less significant banks are directly supervised by their national supervisor, and indirectly supervised by the ECB. However, the ECB can decide at any time to take over the direct supervision of any one of these banks to ensure consistent application of high supervisory standards.

Section 3 – SSM accountability

How is the ECB held democratically accountable for its supervision?

Several accountability arrangements are in place to hold the ECB democratically accountable for its supervisory actions, including:

  • regular discussions with the European Parliament and the Council of the European Union;
  • reporting requirements with respect to the national parliaments of Member States participating in European banking supervision;
  • auditing by the European Court of Auditors;
  • legal control by the Court of Justice of the European Union.

How does the ECB avoid potential conflicts of interest between its supervisory and monetary policy tasks?

The separation of its tasks is defined in EU law, so that the ECB carries out supervision independently of monetary policy. The Supervisory Board is responsible for the supervisory side of the ECB’s activities, while the Governing Council is responsible for issues relating to monetary policy. Draft supervisory decisions are proposed by the Supervisory Board and submitted for adoption to the Governing Council.

The organisational separation of staff members who directly contribute to monetary policy tasks also serves to avoid potential conflicts of interest.

How can I report a breach of EU law on banking supervision?

You are encouraged to report to the ECB any suspected breach of EU laws relating to the ECB’s supervisory tasks. This covers any breaches allegedly committed by supervised banks, national supervisors or the ECB itself. All information provided will be treated in the strictest confidence.

Section 4 – Consumer protection

If I have a complaint about a bank, what should I do?

The ECB supervises large and significant banks in the euro area and in countries that choose to participate in European banking supervision. Tasks such as consumer protection and combatting money laundering are outside the scope of the ECB’s duties and are therefore the responsibility of national authorities.

If you have a complaint about your bank, please contact your bank directly or address your complaint to the authority in charge of consumer protection in your country.

Can I obtain specific information about my bank from the ECB?

No. Owing to legal requirements, the ECB is not allowed to disclose information or data on individual supervised banks.

Please contact your bank directly.

How does the SSM keep my money safe?

The SSM has the power to ask banks to hold more money in reserve as a safety net in the event of problems. It can grant or withdraw bank licences and sanction banks if they breach the rules. The SSM is there to help banks carefully manage internal and external risks so they are resilient to shocks. Stable and sound banks keep your money safe. In EU countries, deposit guarantee schemes funded by banks also ensure that deposits of up to €100,000 are protected.

If you have further questions, you can contact us using the information request form or call us on +49 69 1344 1300.