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Supervision Newsletter November 2018


"We are better prepared for the next storm"

Danièle Nouy, who ends her five-year term as ECB Supervisory Board Chair this year, says European banking supervision is better prepared for the next crisis and banks are more resilient. Still, she urges Europe to do more for banking union and banks for profitability.

Full interview

In Focus

Profitability: banks see upward trend

The ECB’s annual survey of significant banks shows that they expect profitability to continue on an upward trend over the next three years with a projected aggregate return-on-equity of 8.3% by end-2020. Banks expect economic activity to stimulate income from lending at stable lending margins.

Full article

Close cooperation: entry to banking union

EU Member States that are not part of the euro area can still participate in the SSM by requesting close cooperation with the ECB. The pathway to close cooperation entails the adoption of national legislation to allow the ECB to exercise its supervisory tasks and conduct a comprehensive assessment of the banking sector.

Full article

Brexit: Preparing for ECB supervision

As a result of relocating activities from the UK, some euro area banks will be assessed as significant and be supervised directly by the ECB. They will be subject to a comprehensive assessment, which usually takes place before coming under ECB supervision but may also be conducted later on.

Full article

Assessing the significance of banks

Under the SSM, significant institutions are supervised by the ECB and less significant institutions by national competent authorities. The SSM Regulation sets out rules for identifying which banks are deemed significant. The SSM undertakes ad hoc and annual significance assessments to make this determination.

Full article

TRIM: reviewing internal models

Banking regulation requires banks to hold a minimum amount of capital to absorb unexpected losses. Banks use internal models to reflect their individual risk profile and determine this amount. The ECB is conducting a review of internal models to reduce variability and ensure consistency in supervisory treatment.

Full article

Key data

Pillar 3 data published

For the first time, the ECB has published individual information on risk-weighted assets by risk type and computation methods for ECB-supervised global and other systemically important institutions (a total of 75 institutions). This is in addition to the three solvency and leverage ratios for 118 significant institutions. This new level of transparency enables stakeholders to perform meaningful comparisons of prudential metrics.

Supervisory Banking Statistics

Did you know...

…that the ECB Banking Supervision risk assessment for 2019 found the three most significant risk drivers affecting the euro area banking system to be geopolitical uncertainties, legacy and potential future non-performing loans, and cybercrime and IT disruptions. Compared with last year’s assessment, risk stemming from geopolitical uncertainties, cybercrime and IT disruptions, and repricing in financial markets is on the rise. Low interest rates remain a concern, although to a lesser extent than a year ago. The key results are shown in the SSM Risk Map, which also serves as a basis for defining the ECB’s supervisory priorities for the coming year.

Risk assessment
Upcoming Events
19 November 2018

Danièle Nouy at Handelsblatt’s annual conference on European Banking Regulation

The conversation with Handelsblatt’s financial editor will focus on European and national regulatory and supervisory issues and upcoming regulatory changes (Basel IV, CRD V and CRR II).

20 November 2018

European Parliament – regular hearing of Supervisory Board Chair, Danièle Nouy

The Chair will discuss current issues related to banking supervision with the members of the Economic and Monetary Affairs Committee (ECON) at the European Parliament.

20 November 2018

Danièle Nouy in conversation at Bruegel on European Banking Supervision

The conversation with Bruegel’s director will look back at the achievements of ECB Banking Supervision in its first five years and at what remains to be done.

5 December 2018

Colloquium in honour of Danièle Nouy

The farewell event for Danièle Nouy will focus on the achievements of ECB Banking Supervision. ECB President Mario Draghi will open the event, at which dignitaries will discuss the accomplishments of single supervision over the last five years.

Recent Highlights
12 November 2018

ECB Youth Dialogue

Gave more than 200 young professionals and students the opportunity to discuss supervisory issues with Danièle Nouy and Sabine Lautenschläger at the Frankfurt School of Finance & Management.

Read more
2 November 2018

Publication of 2018 Stress test results

Shows that 33 banks supervised by the ECB and included in the EBA-led stress test are more resilient to financial shocks, with the average final CET1 under the adverse scenario at 9.9%, up from 8.8% in 2016.

Press release
30 October 2018

Supervisory priorities for 2019

ECB will continue to focus next year on credit risk, including non-performing loans and underwriting criteria, as well as Brexit preparations and the way banks measure and manage risks like cyber risk. Priorities are based on the ECB’s risk assessment for 2019.

Read more
15 October 2018

Speech by Danièle Nouy on the importance of ethics in banking

Explains that bankers must consider the wider consequences of their actions and limit excessive risk-taking. This requires a clear set of values, checks and balances, and incentives, through solid regulation and a credible sanctioning system.

12 October 2018

Speech by Sabine Lautenschläger on the role of central banks, supervisors and national authorities in financial stability

Stresses that price and financial stability are deeply connected and maintaining financial stability is a complex task on which the ECB will continue to cooperate with European and national institutions.

2 October 2018

Speech by Pentti Hakkarainen on regulatory reform in the banking sector after the crisis

Argues that supervisors and regulators need to set the right framework within which banks can compete with each other and that this will facilitate a safe but vibrant and increasingly contested marketplace.

21 September 2018

Publication of guide to on-site inspections and internal model investigations

Guide explains how inspections are conducted and aims to increase transparency towards the industry by describing the general framework, different inspection phases and principles to be followed by banks and supervisors.

Press release
18 September 2018

Publication of the findings of the thematic review of banks’ profitability and business models

Analyses the profitability drivers and business models of directly supervised large banks and shows improvement, but also a differing situation across banks. The ECB expects strong strategic steering and risk management capabilities from banks.

Press release