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27 March 2024

SSM: Feedback on the input provided by the European Parliament


ECB Banking Supervision hereby replies to the comments and suggestions provided by the European Parliament in the Resolution. The feedback focuses on nine key issues raised in the Resolution -

ECB Banking Supervision welcomes the European Parliament’s “Resolution on Banking Union – Annual Report 2023” of 16 January 2024. [1] To continue the dialogue between the European Parliament and the ECB and underline our strong commitment to accountability, ECB Banking Supervision hereby replies to the comments and suggestions provided by the European Parliament in the Resolution.

The feedback focuses on nine key issues raised in the Resolution:

Topic raised by the European Parliament

ECB Banking Supervision feedback

Risks

1

Banking sector resilience

The 2023 stress test and recent data indicate a high level of resilience in the European banking sector amid economic challenges. Yet in the longer term banks will not be immune to risks and unexpected events.

2

Interest rate and asset quality risks

Risks arising from the monetary and financial market environment remain a key concern. Concrete actions are already being taken to identify, prevent and mitigate such risks should a shock occur.

3

Banks’ exposures to environmental, social and governance (ESG) risks

Recent regulatory developments will help improve ESG risk management at individual institutions and promote financial stability. ECB Banking Supervision is working closely with the European Banking Authority (EBA) to assess whether and how regulatory capital requirements should reflect sustainability risk considerations. It will also continue to monitor and work on climate-related regulatory initiatives at EU level.

4

Non-performing loans (NPLs) and the NPL secondary market

Reducing NPLs remains a priority. Although they have diminished significantly over the last ten years, further improvements are needed. This will require a robust legal framework and additional measures.

5

Impact of Russia’s war in Ukraine

Since the start of Russia’s war in Ukraine ECB Banking Supervision has engaged in intense monitoring and dialogue with all the supervised institutions that had/have subsidiaries in Russia. Activities in Russia have been substantially reduced.

Banking union and capital markets union

6

The crisis management and deposit insurance (CMDI) framework and European deposit insurance scheme (EDIS)

The rise in macro-financial and geopolitical risks makes crisis preparedness essential: the CMDI review should be urgently adopted, which in turn should pave the way for the completion of the banking union and establishment of EDIS.

7

Integration of the EU banking sector

There is a need for a more integrated banking union and further cross-border consolidation of banking groups. Achieving progress on the capital markets union is also key to mobilising the private investment needed to advance the climate and digital transitions, increase private risk sharing and the EU’s resilience to shocks, and improve the EU’s competitiveness in a fast-changing and more challenging geopolitical landscape.

Governance

8

Anti-money laundering (AML)

ECB Banking Supervision values its work with the AML/countering the financing of terrorism (CFT) authorities and has significantly stepped up such cooperation. It also looks forward to working closely with the new AML authority.

9

Diversity in financial institution boards

ECB Banking Supervision is addressing the lack of diversity in the boards of supervised banks through the Supervisory Review and Evaluation Process (SREP), as well as through fit and proper assessments. Further progress is needed.

more at SSM



© ECB - European Central Bank

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