More risk-focused and effective on-site investigations

12 August 2026

The ECB is committed to reducing unnecessary complexity while maintaining the resilience of European banks. Following an external review of supervisory processes in 2023, ECB Banking Supervision launched an ambitious reform agenda, including the next-level supervision initiative, to make supervision more efficient, effective and risk-based. The Supervision Newsletter is covering some of the projects that are helping to streamline supervision without compromising on supervisory quality.

Authors: Laurent Mercier, Rocío Ripoll Sánchez and Pavla Kostribova

On-site investigations are a core tool of banking supervision. They allow supervisors to check that banks are managing their risks effectively and that their governance and internal controls work as intended. Over the past decade, on-site investigations have helped strengthen the resilience of European banks by uncovering important weaknesses and turning them into concrete supervisory follow-up actions and remediation measures.

Investigations complement the ongoing work of Joint Supervisory Teams (JSTs) and broader supervisory analyses. Together, they create a complete supervision framework and provide JSTs with in-depth insights that help them take targeted and effective actions. On-site supervision is carried out in close collaboration with the national competent authorities (NCAs), which provide the majority of on-site inspectors. This model enables the ECB to leverage local expertise while applying a consistent supervisory approach across jurisdictions, fostering a level playing field in the European banking market.

As part of its next-level supervision reforms, the ECB is working together with the NCAs to further improve the way on-site investigations are carried out. The changes reflect both the experience gathered by European banking supervision as well as feedback from the banking industry. The first results of these changes are already visible, with further improvements expected throughout 2027.

To bring concrete improvements to the investigation process, the ECB is streamlining its interactions with the banks, simplifying internal processes and harnessing new technology. The allocation of resources and efforts is further optimised to effectively focus on material risks and weaknesses. This enables faster identification and resolution of critical risk areas, and shortens the process timelines. Already in 2026, on-site investigations are being completed about 10% faster than in 2025, reducing the average duration from the kick-off of an investigation to the issuance of the final report from 33 weeks to 29 weeks (the on-site investigation phase itself typically lasts between 4 to 16 weeks). ECB Banking Supervision will further accelerate the supervisory follow-up process in a risk-based manner (see also “Timely remediation for more resilient banks”). As the ongoing initiatives are rolled out and fully embedded in the investigation cycle by end 2026 and throughout 2027, they are expected to further reduce the average duration of the overall process. The duration of individual investigations depends on their scope and complexity, the severity of the issues identified and the level of cooperation from the banks involved.

In addition, cooperation between inspectors and JSTs has been further strengthened, with more systematic interactions throughout the investigation cycle and JST members joining investigations. This more integrated process facilitates interactions with banks, improves information sharing, and contributes to shorter investigation timelines, especially for the follow-up phase.

Furthermore, the planning for the 2027 programme, building on supervisory priorities and idiosyncratic risks, is further improved through increased systematic coordination and integration, taking into account all other planned supervisory activities. In this context, the ECB will make greater use of shorter, more targeted investigations which allow presenting findings more quickly. Intense investigations, meanwhile, are now limited to cases involving more material and complex risks or reviews with a broader scope. In addition, the ECB provides guidance to investigation teams on sample sizes for credit risk investigations that include a credit file review. This guidance takes into account the scope of the investigation and the complexity of the portfolios under review, while allowing inspectors to tailor the sample size more closely to the underlying risk. This more risk-based approach can, in several cases, reduce the number of data requests addressed to banks. 

The improved risk-orientation is also visible in the on-site investigation reports, which present the outcome of the investigations. These reports are becoming shorter and more focused. Compared with 2025, they have been shortened by 20%, on average, while quality standards have been maintained with the aim to further improve clarity. This allows both supervisors and banks to prioritise issues and follow up more effectively.

The ECB aims to limit unnecessary complexity and ensure timely, focused and effective on-site assessments. Reaching this goal also benefits from the active cooperation of banks. Processes are smoother and more efficient when banks provide the necessary information in a timely manner, focus their feedback on the most material aspects of supervisory reports and address findings and measures without undue delay. The ECB fully respects banks’ right to communicate in their local language. Nonetheless, using English as the working language is encouraged during on-site investigations, especially for internationally active banks, as it can significantly enhance efficiency.

Ultimately, these changes aim to make on-site investigations more focused, effective and timely. By concentrating supervisory efforts on the most material risks, streamlining information requests and facilitating risk-based follow-up, the ECB can support faster supervisory outcomes and remediation by banks, particularly relevant in the current rapidly evolving risk environment.