Topic SSM Verdict: two years of European banking supervision
Article from the Annual Report 2016 of the BaFin
The eurozone's Single Supervisory Mechanism (SSM) for banks celebrated its second birthday in November 2016 (see info box "Supervision in the SSM"). The integration of European banking supervision has been and still is a project of historic proportion, which continues to pose major challenges for the European Central Bank (ECB) as well as the 19 participating supervisory authorities. The SSM has got off to a good start, but it hasn't got to where it should be yet, says Raimund Röseler, Chief Executive Director of Banking Supervision. "Of course it will still take some improvements to achieve the objective of standardised and efficient banking supervision."
Supervision in the SSM
Under the leadership of the European Central Bank (ECB), the Single Supervisory Mechanism (SSM) directly supervises the eurozone's approximately 130 significant institutions (SIs) or groups of institutions. The national competent authorities are part of the SSM. The so-called less significant institutions (LSIs) are supervised by the ECB indirectly; they continue to be subject to national supervision. The approximately 1,600 LSIs in Germany are supervised by BaFin with the support of the Deutsche Bundesbank. In principle, the SSM can also be joined by EU member states that are not part of the eurozone.1
One of the key challenges will be to revise the governance system, with particular emphasis on optimising the decision processes and allocating responsibilities. Currently, all major decisions in the SSM have to be taken by the 25 voting members of the Supervisory Board, the SSM's highest body. In addition, they have to be approved by the ECB's Governing Council. Given the multitude of different issues – more than 2,000 decisions have to be taken each year – this is not effective and entails unnecessary administrative effort. The Supervisory Board should rather focus on critical decisions that are of fundamental importance. BaFin therefore supports the efforts to delegate more competences to the working level.
Footnotes:
- 1 The current list of all significant institutions under direct SSM supervision can be found at https://www.bankingsupervision.europa.eu. The significant German institutions under direct SSM supervision are listed in Table 31 (Appendix).
