What can Bulgarian and Croatian banks expect from European banking supervision? Martina Drvar from the Croatian central bank and Radoslav Milenkov from the Bulgarian National Bank discuss what’s in store and their priorities.
Banks are having to adjust certain governance arrangements in response to the coronavirus (COVID-19) pandemic. What are good practices in this crisis, what actions would raise red flags in supervisory assessments and where is further effort needed?
Small and medium-sized banks play a key role in the European economy but the fallout from the current crisis could affect their asset quality and solvency, as struggling companies have spillover effects on banks.
Banks need to prepare for the end of the Brexit transition period to ensure that the EU financial system remains strong. Supervisory expectations are clear, but some banks are yet to complete their to-do lists.
Can the ECB improve fit and proper supervision even though the underlying rules are not yet harmonised across Europe? Yes – it will implement more efficient processes, enhance assessment scopes and provide additional guidance to banks.
With its guide on climate-related and environmental risks, the ECB is stepping up its efforts to make banks more resilient to physical and transition risks. Banks’ practices will be subject to increased supervisory scrutiny.
According to Pillar 3 disclosures of significant banks in the euro area, the share of encumbered assets had been trending downwards in recent years, but increased to 22.15% in Q2 2020, up from 19.26% in Q4 2019. Reconciliation efforts resulted in significantly improved data consistency.
… that submitting information to the ECB for supervisory processes, exchanging documents or reporting a breach of EU law is only a click away? Through the ECB’s new Banking Supervision Portal, all banks will soon be able to initiate and track fit and proper assessments and share confidential information with their dedicated supervisory teams securely, quickly and efficiently. The Portal is also the entry point to our external whistleblowing platform that allows stakeholders to report suspected breaches in a secure and protected way. More supervisory processes will be added to the Portal over time, creating a one-stop shop for banks and other stakeholders.