On March 21, the (ECB) published its annual report on supervisory activities for 2018, which sets out the ECB’s key achievements during 2018 under the single supervisory mechanism (SSM).

The ECB has also published a speech on the annual report given by Andrea Enria, ECB Supervisory Board Chair, at a meeting of the European Parliament’s Economic and Monetary Affairs Committee (ECON). Among other things, the speech sets out the following SSM supervisory priorities for 2019:

• Credit risk: ECB banking supervision will continue to promote the reduction of the stock of non-performing loans. As part of a new initiative, the ECB will assess banks’ credit underwriting criteria with a view to avoiding excessive risk-taking by banks. The quality of specific asset class exposures, such as commercial real estate, residential real estate and leveraged finance, will be closely examined.

• Risk management: The targeted review of internal models (TRIM) will continue. ECB banking supervision will also continue to push for improvements to banks’ internal processes for capital and liquidity adequacy (that is, the ICAAP and ILAAP processes). The 2019 supervisory stress test will also assess banks’ resilience to liquidity shocks, while new measures will be taken to examine IT and cyber risks.

• 2019 supervisory activities: The supervisory activities planned for 2019 include work relating to trading risk and asset valuations.

• Brexit: The ECB is closely working with the UK authorities to agree on a solid post-Brexit cooperation framework. It has also assessed multiple license applications from banks relocating to the euro area and examined the Brexit contingency plans of banks headquartered within the euro area. Overall, it is finding that banks have prepared reasonably well.