ECB's Annual Report on supervisory activities.
On March 23, the ECB published its Annual Report on supervisory activities 2016 which the ECB presented to the European Parliament (public hearing) and the general media (press conference). The report includes insights for banks that aim to prioritize their activities with the European banking supervisor.
Notwithstanding other areas, the annual report on supervisory activities highlights a number of areas where the ECB has achieved further harmonization in the SSM model of supervision over the course of 2016 (summarized in the following):
Overall, these achievements and activities are well in line and a follow up of ECB’s supervisory priorities for 2017 that were published on December 15 (see figure 1).
The report also includes a number of additional insights that are worth being mentioned here:
During the press conference, Daniele Nouy (Chair of the Supervisory Board of the ECB) and Sabine Lautenschläger (Vice-Chair of the Supervisory Board of the ECB) provided also some of their views on current challenges within the SSM:
Asked about the incompleteness of the European banking union during the press conference, Lautenschläger responded that both the banking supervision and resolution mechanism, which represent two of the three banking union pillars, are functioning well already today. Adding to that, Nouy said that the EU Commission has come up with a good package for the third pillar (i.e. the European deposit guarantee scheme) that could be implemented fast. By way of analogy, this Q&A appears like a discussion about a glass of water that is either half-full or half-empty.
However, irrespective of the framing, there appears to be consents on necessary improvements to make the European banking union a success and ensure a single banking market to emerge in the future. In our view, the Brexit might de facto represent an important milestone for the harmonization of the banking union as it effectively strengthens the bargaining power of the EU and allows to address existing weaknesses due to the relocation of parts of the London financial sector and the EBA to the Euro-area. The negotiations on the proposals of the EU Commission about Intermediate Holding Companies and the supervision of broker-dealers or investment banks will show the willingness of the Member States to put European before national interests.