On January 14, the European Court of Auditors (“ECA“) published a communication to the European Parliament on the European Central Bank’s (“ECB“) position on the ECA’s access to audit documents and information relating to its banking supervision role under the single supervisory mechanism (“SSM“). READ MORE
On January 10, the European Central Bank (“ECB“) published a letter (SSM/2019/010) (dated January 9, 2019) from Andrea Enria, ECB Supervisory Board Chair, on the variable remuneration policies of credit institutions in the single supervisory mechanism (“SSM“).
The letter states that the ECB pays close attention to the dividend and remuneration policies of the financial institutions under its supervision. In particular, the ECB will focus on any impact that these policies may have on the maintenance of a sound capital base. READ MORE
On September 21, the European Central Bank (the “ECB“) finalized its guide to on-site inspections and internal model investigations under the single supervisory mechanism (the “SSM“).
Under the SSM Regulation (Regulation 1024/2013), the aim of ECB Banking Supervision is ensuring a detailed and thorough analysis of the supervised entities’ business and can be exercised on and off-site. On-site supervision is performed through on-site investigations or internal model investigations, as specified under Article 12 of the SSM Regulation. On-site investigations are in-depth investigations of risk, risk controls and governance. Internal model investigations are in-depth assessments of internal models used for the calculation of own fund requirements, in particular with regard to methodologies, economic appropriateness, risks, risk controls and governance.
The guide aims to provide a reference document for supervised entities and other legal entities for which an on-site inspection has been launched by the ECB. It provides a general overview of the legal and supervisory framework for the investigations, describes the process and sets out applicable principles for inspections, covering the powers of inspection teams and the rights of inspected legal entities. The guide applies to inspections conducted in significant institutions, less significant institutions and other legal entities referred to in Article 10(1) of the SSM Regulation, including third parties to whom credit institutions have outsourced functions.
The European Central Bank (“ECB“) published a letter on June 13, 2018 (dated June 7, 2018) relating to internal model requests by significant institutions.
It appears that the letter has been sent to the boards of significant institutions that the ECB supervises under the single supervisory mechanism (“SSM“).
The ECB explains the set of documents and processes that firms are invited to use when communicating any applications for initial internal model approvals, material model changes and extensions, reversions to less sophisticated approaches, and modifications to the scope of assets for which permanent partial use of the standardised approach is permitted. The letter also contains links to the set of documents to be used when communicating any non-material model changes or extensions.
Firms are invited to follow a pre-application process, which aims to increase the efficiency of the assessment of internal model requests. The letter provides detail on the scope, process and timeline for the pre-application process.
The ECB believes that significant institutions that follow the pre-application process will benefit from a more certain and transparent time plan.
Participation in the pre-application process is not a legal requirement, but information that firms provide in the pre-application is key to enabling the ECB to efficiently plan its assessment of internal model requests. If firms do not use this process, the ECB can only carry out its preparation once it has received the formal application. The ECB also points out that the level of information requested after submission of the formal application is at least equivalent to that foreseen in the pre-application process.
Significant institutions are invited to follow the pre-application process for applications from 1 July 2018 onwards, using the forms referred to in the letter. The ECB advises that the pre-application process may be updated and enhanced in the light of post-implementation experience, and changes in the applicable legal framework.
For communicating non-material model changes, institutions are asked to start using the forms referred to as of 1 July 2018.
Separately, the ECB is consulting on a guide to internal models under the SSM.
On March 24, 2016, Regulation ((EU) 2016/445) of the European Central Bank (ECB) on the exercise of options and discretions (ODs) was published in the Official Journal of the EU (OJ). The ECB has also published a guide on the ODs available under Union law.
The Regulation details the legal obligations of the significant credit institutions within the scope of the single supervisory mechanism (SSM) regarding the prudential treatment of certain “general” ODs available to competent authorities under EU banking law (that is, the CRD IV Directive (2013/36/EU), the Capital Requirements Regulation (Regulation 575/2013) (CRR) and delegated acts).
The guide sets out the ECB’s approach concerning the exercise of the ODs. It aims to provide coherence, effectiveness and transparency regarding the supervisory policies that will be applied in supervisory processes within the SSM as far as the significant credit institutions are concerned. In particular, it is designed to assist the joint supervisory teams (JSTs) in the performance of their tasks regarding the principles the ECB intends to follow in supervising significant credit institutions.
A related ECB press release advises that, soon, the ECB will launch a consultation on how to harmonise a second, smaller group of identified ODs. Regulation. Guide.
On January 6, the European Central Bank (“ECB”) published a paper setting out its supervisory priorities in relation to the banks it supervises under the Single Supervisory Mechanism (“SSM”).
The ECB’s supervisory priorities under the SSM are:
The priorities are not an exhaustive list but are meant to provide an essential tool to coordinate supervisory actions across banks in an appropriately harmonized, proportionate and efficient way, thereby contributing to a level playing field and a stronger supervisory impact. Paper.
On November 20, the European Central Bank (ECB) published a speech given on November 18 by Yves Mersch, ECB executive board member, on the ECB’s perspective on current issues relating to the European banking union.
Among other things, Mr Mersch:
The UK Prime Minister has stated that the UK will not participate in the SSM. Speech.
On November 7, the European Central Bank (ECB) updated its webpage on building a banking union to reflect the coming into force of the inter-institutional agreement (IIA). The ECB has agreed with the European Parliament on cooperation on procedures related to the single supervisory mechanism (SSM). The ECB also published a copy of the IIA, which will also be published in the Official Journal of the EU.
The UK Prime Minister has stated that the UK will not participate in the SSM. ECB webpage. IIA.
