ECB Banking Supervision

The Single Supervisory Mechanism began work on 4 November 2014. The legal basis of the Single Supervisory Mechanism is Council Regulation (EU) No 1024/2013, which gave the ECB specific tasks in the prudential supervision of credit institutions and created its Supervisory Board. The board prepares supervisory decisions, and the Governing Council adopts them.

The ECB applies European banking law, above all the Capital Requirements Regulation and Directive, which set the rules on capital, risk management and governance. The ECB legal framework also includes the SSM Framework Regulation on procedures, decisions addressed to single banks, guidelines and instructions to national supervisors, and recommendations.

A bank is significant, and supervised by the ECB, when it meets one of the significance criteria. Total assets above 30 billion euros are enough. A bank with assets above 5 billion euros is also significant when more than 20 percent of its assets or liabilities are cross-border in other participating member states. Economic importance for its country or the EU, funding from the European Stability Mechanism, and a place among the three largest banks of a country are further grounds.

Each significant bank has a Joint Supervisory Team with staff from the ECB and the national supervisors. In Germany that means BaFin and the Bundesbank, which runs the ongoing monitoring of banks, assesses their capital and liquidity and carries out on-site inspections. All other German banks, the less significant institutions, stay with BaFin and the Bundesbank, and the ECB oversees how they are supervised.

Once a year the Supervisory Review and Evaluation Process assesses each bank's business model, governance, capital and liquidity, and the result sets its capital requirement on top of the legal minimum. Read about the steps in ICAAP and the SREP in Germany and the capital rules in Basel III in Germany.

Banks file applications and notifications through ECB portals, and ECB Banking Supervision builds its own tools for reading reports and documents. Read about suptech in Europe for these tools and model risk management for supervisory expectations of bank internal models.

The ECB runs its own Supervision Innovators Conference, which brings people from supervisors, the private sector and academia together on supervisory technology, including suptech in Europe. Supervisory topics also come up at Frankfurt Digital Finance, a conference Finance Loop has partnered with.

Finance Loop events in Frankfurt bring together the risk, compliance, regulatory reporting and data teams of banks with the technology firms that build their tools. Read about the teams working in risk management in Frankfurt and compliance in Frankfurt within the city.

The Single Supervisory Mechanism is the system of banking supervision in the euro area, made up of the ECB and the national supervisory authorities of the participating countries. The Single Supervisory Mechanism began work on 4 November 2014 under Regulation (EU) No 1024/2013, and the ECB uses the name ECB Banking Supervision for it.

The ECB supervises German banking groups that meet the significance criteria, such as total assets above 30 billion euros. The ECB identifies these institutions in its published list of supervised banks. Savings banks, cooperative banks and most smaller private banks are less significant institutions supervised by BaFin and the Bundesbank.

The ECB supervises the significant banks of the euro area directly, through teams that include BaFin and Bundesbank staff. BaFin supervises the less significant German banks together with the Bundesbank, and it remains the supervisor for insurers, payment institutions, investment firms and crypto-asset service providers, which the ECB does not supervise.

ECB Banking Supervision is based at the European Central Bank in Frankfurt am Main. The Supervisory Board of the ECB prepares the supervisory decisions, and the ECB Governing Council adopts them.