The key messages of the report:

 

The establishment of the SSM governance structures, including the related organisational rules and arrangements, has largely been completed. The Supervisory Board held five meetings during the period under review and adopted its own Rules of Procedure, which enabled the establishment of the Steering Committee. The ECB Decision on the establishment of the Administrative Board of Review was also adopted and a call for expressions of interest for its members is ongoing. The ECB Regulation on the establishment of the Mediation Panel is close to being finalised with a view to its formal adoption in the course of May. The Governing Council adopted an ECB Decision on the ECB representatives on the Supervisory Board and appointed three of these representatives. The Governing Council also adopted an ECB Decision on the close cooperation with the national competent authorities (NCAs) of participating Member States whose currency is not the euro.

 

The SSM Framework Regulation was adopted by the Governing Council on a proposal of the Supervisory Board and published on 25 April 2014, together with a Feedback Statement on the outcome of the consultation and the amendments which had been introduced. This complies with the deadline of 4 May 2014 specified in the SSM Regulation. The SSM Framework Regulation sets out the practical arrangements for the implementation of Article 6 of the SSM Regulation (concerning the cooperation between the ECB and the NCAs within the SSM). In line with the SSM Regulation, the draft text of the SSM Framework Regulation was submitted for public consultation between 7 February and 7 March 2014. The outcome of the public consultation was very positive, with broad support for the approach proposed in the consultation document.

 

Work on the SSM Supervisory Manual continued during the period under review. The supervisory model of the SSM, as reflected in the draft Supervisory Manual, which covers the processes and procedures as well as the methodology for the supervision of significant and less significant institutions, has been further refined using feedback from the NCAs. The manual is a living document intended for SSM staff that will continue to be updated regularly before and after 4 November 2014. The ECB will publish a guide to supervisory practices, clarifying the features, tasks and processes of the SSM.

 

The establishment of Joint Supervisory Teams (JSTs), which will be the main operational structure for the conduct of supervision by the SSM, has been initiated. The JSTs will directly supervise the approximately 130 banking groups considered significant in accordance with the SSM Regulation. The establishment of fully functional JSTs is one of the main challenges facing the SSM for the timely assumption of supervisory tasks on 4 November 2014. Besides adequate staff, the task requires the development of operational infrastructures, training and effective organisational arrangements. The SSM is making good progress in selecting the staff and carrying out the preparatory work. It is expected that all the JST coordinators will have been appointed by the end of June and that nearly all of them will have joined the ECB by the end of the summer. Progress in this key area will be monitored closely throughout the year.

 

The staffing of the SSM is proceeding at a satisfactory pace, after initial delays in the appointments at senior manager level. Staffing in general is taking place in a topdown fashion and the internal planning has been adjusted to take account of the starting dates of the senior managers and to ensure that a critical mass of staff will be available in time for the operational start of the SSM. The large number of applications (more than 8,000 for the positions advertised so far) shows that there is considerable interest in the SSM positions. The timely fulfilment of staffing needs is another main challenge facing the SSM.

 

There has been significant progress in the conduct of the comprehensive assessment. The selection of portfolios subject to examination in the asset quality review has been concluded, and the execution phase initiated. The details of the scenario of the stress test, as decided by the European Banking Authority (EBA), and prepared in cooperation with the European Systemic Risk Board (ESRB) and the ECB, were released on 29 April 2014.

 

The Supervisory Board approved a Supervisory Reporting Manual, which will provide the data framework to support the conduct of supervision. The manual is an internal document which lays down the approach for supervisory reporting and describes the data and reporting framework for the SSM.

 

The preparatory work is also well advanced in many areas, such as IT infrastructure, HR, premises, internal and external communication, framework for supervisory fees, logistical organisation and legal and statistical services.

 

Full report