ECB Banking Supervision: SSM Supervisory Priorities 2020

07 October 2019

The supervisory priorities set out focus areas for supervision in 2020. They build on an assessment of the key challenges facing supervised banks in the current economic, regulatory and supervisory environment.

ECB Banking Supervision has identified sources of banking sector risk in cooperation with the national competent authorities, drawing on input from the Joint Supervisory Teams (JSTs), ECB microprudential and macroprudential analyses, as well as reports by international bodies.

The key drivers of banking sector risks identified are:

• economic, political and debt sustainability challenges in the euro area,
• business model sustainability, and
• cybercrime and IT deficiencies.
• Further significant risk drivers are:
• execution risk attached to banks’ strategies for non-performing loans (NPLs);
• easing lending standards;
• repricing in financial markets;
• misconduct/money laundering/terrorism financing;
• Brexit;
• global outlook and geopolitical uncertainties;
• reaction to regulation; and
• climate-change related risks.

To ensure that banks address these key challenges effectively, ECB Banking Supervision has reviewed its supervisory priorities.

Whereas restoring the health of balance sheets was crucial in the years after the inception of the Single Supervisory Mechanism (SSM), the supervisory focus has gradually shifted to encompass banks’ future resilience and the sustainability of their business models.

The supervisory priorities have therefore been realigned to the high level priority areas of

• continuing balance sheet repair,
• strengthening future resilience,
• other priorities.

The prioritised supervisory activities have been regrouped under these areas.

Full priorities on ECB

© ECB - European Central Bank