04 November 2014

ECB assumes responsibility for euro area banking supervision

The European Central Bank (ECB) today assumed responsibility for the supervision of euro area banks, following a year-long preparatory phase which included an in-depth examination of the resilience and balance sheets of the biggest banks in the euro area.

The Single Supervisory Mechanism (SSM) is a new system of banking supervision, comprising the ECB and the national competent authorities of the participating countries. Its main aims are to contribute to the safety and soundness of credit institutions and the stability of the European financial system and to ensure consistent supervision.

The ECB will directly supervise 120 significant banking groups. For all other 3,500 banks the ECB will set and monitor the supervisory standards and work closely with the national competent authorities in their supervision.

Danièle Nouy, Chair of the Supervisory Board of the ECB said: “Much has been achieved to prepare for ECB Banking Supervision. We now have a unique opportunity to develop a culture of supervision that is truly European, building on the best practices of supervisors from across the euro area.”

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European Commission: Commissioner Jonathan Hill welcomes the European Central Bank's new role as Single Supervisor in the Banking Union

Commenting, Commissioner Jonathan Hill said:

“Today marks the next step towards a fully operational banking union. Building on last week’s stress test results which highlighted the credibility of the ECB, the Single Supervisor will now ensure the day-to-day surveillance of banks in the eurozone, helping to keep the European banking sector safe and remaining alert to new risks emerging. Greater confidence in European banks will encourage affordable lending to the wider economy, to households and SMEs.

We also need to complete the Banking Union with the Single Resolution Mechanism: the Commission has made proposals for the Single Resolution Fund and the Single Resolution Board is being set up. The success of the SRM is vital so that insolvent banks can be resolved in an orderly fashion, without taxpayers’ having to foot the bill.”

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European Parliament: Schulz on the Single Supervisory Mechanism

Commenting on the establishment of the Single Supervisory Mechanism (SSM) for Eurozone banks, the President of the European Parliament Martin Schulz stated:

"The establishment of the Single Supervisory Mechanism, within the European Central Bank (ECB), is a crucial step towards building the Banking Union. As financial markets are cross-border, it is fundamental to unify the supervision of European banks. I welcome this major development which the European Parliament has been advocating for years.

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AFME welcomed start to SSM

Chief Executive of AFME: "As a central component of Banking Union, the SSM should make a major contribution to the further integration of Europe’s financial markets, to securing the stability of the Eurozone, and to fostering economic growth."

Commenting on the entry into force of the Single Supervisory Mechanism (SSM), Simon Lewis, Chief executive of AFME, said: “This marks an important moment in what has been a remarkable phase in the development of Europe’s bank supervisory architecture. The SSM has the potential to enhance the quality and consistency of cross-border supervision in Europe.

It is important that the establishment of the SSM contributes to more integrated financial markets across Europe as a whole, and not just in the Banking Union area. To this end, it is essential that the European Banking Authority (EBA) continues strongly with its work to achieve convergence of the practices of the ECB and national supervisors – including through the development of a European Supervisory Handbook.”

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