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Supervision Newsletter - February 2024


"Strengthening bank resilience is priority"

Banks must be prudent in the current risk environment, says Supervisory Board Chair Claudia Buch in an exclusive interview. The ECB will focus on banks’ provisioning practices and how they manage counterparty credit risk, internal governance, and climate and environmental risks.

Interview with Claudia Buch
Get the latest on banking supervision!

In focus

Rise in outsourcing calls for attention

Data from banks show that outsourcing is on the rise, with half of the contracts covering critical functions. At the same time, around 10% of these contracts do not comply with regulation. Banks must therefore step up their efforts in managing outsourcing risks.

Article on rise in outsourcing

ESG data quality: Pillar 3 disclosures in focus

New standardised environmental, social and corporate governance disclosures provide a valuable resource for bank-by-bank comparisons of key metrics. However, banks are facing data quality issues when populating qualitative and quantitative templates.

Article on data quality

New policy for more bank board expertise on ICT and security risks

People leading banks must have relevant, up-to-date knowledge of ICT and security risks. Supervisors will assess the expertise and experience of banks’ management bodies in these areas, in line with our new policy, as of March 2024.

Article on ICT and security risks

Stronger collaboration on non-EU banks

Within the EU, branches and subsidiaries of non-EU banks face a different regulatory and supervisory treatment. To ensure a level playing field and strong supervision of all banks operating in Europe, we will be working even more closely with affected national supervisors.

Article on stronger collaboration on non-EU banks

Key data

New details on stage 2 loans in supervisory statistics

The data now include the share of loans with a significant increase in credit risk (stage 2 loans) by counterparty. In Q3 2023 stage 2 ratios ranged from 17.82% for loans to non-financial corporations collateralised by immovable property to 1.65% for loans to credit institutions.

Supervisory banking statistics

Did you know...

… that the ECB updated its public Supervisory Manual at the beginning of 2024? The SSM Supervisory Manual was first released in March 2018, to enhance transparency about supervisory practices within European banking supervision. The 2024 revision reflects structural changes following the 2020 reorganisation of ECB Banking Supervision. These changes include the introduction of a second line of defence as well as the interplay between planning supervisory activities, setting supervisory priorities and applying the new risk tolerance framework. The updated manual includes a dedicated chapter on significant institutions, offering detailed insights into offsite and onsite supervisory activities, crisis assessments, enforcement and sanctions, and the evaluation of institutional protection schemes. It also addresses changes in the work of the supervisors triggered by legislative developments over the past five years.

SSM Supervisory Manual
Upcoming events
12 March 2024
Claudia Buch at Morgan Stanley Annual European Financials Conference
The Chair of the Supervisory Board will speak about the financial sector’s strength and stability, European regulation and the banking union.
13 March 2024
Kerstin af Jochnick at Landesbank Baden-Württemberg Fixed Income Forum
The ECB representative to the Supervisory Board will give a keynote speech about European banking supervision’s achievements and priorities.
18 March 2024
Claudia Buch at Handelsblatt Annual Conference on Banking Regulation
The Chair of the Supervisory Board will explain the ECB’s supervisory priorities and the work plans for 2024 in a fireside chat.
21 March 2024
Claudia Buch at regular European Parliament hearing
The Chair of the Supervisory Board will present the ECB’s Annual Report on supervisory activities 2023 and discuss current topics with members of the European Parliament’s Economic and Monetary Affairs Committee (ECON).
24 April 2024
Anneli Tuominen at ECB-EUI governance seminar
The ECB representative to the Supervisory Board will participate in a panel discussion at the ECB-EUI governance seminar.