Set-up and start of the Single Supervisory Mechanism

Transcription

1 Giacomo Caviglia Head of Division Oversight & NCA relations Directorate General Micro-Prudential Supervision III Set-up and start of the Single Mechanism Fudan-Frankfurt Financial Research Forum Frankfurt am Main, 25 September 2015

2 Elements of the Banking Union Euro Area Banking Union Supervision Single Mechanism (SSM) ECB NCA NCA NCA Resolution Single Resolution Mechanism (SRM) Single Resolution Authority and Fund NRA NRA NRA Single Mechanism Prudential Requirements Common Rules EU28 (Single Rulebook) Recovery & Resolution State-aid Deposit Guarantee 2

3 SSM Preparatory Work Achievement of key milestones laid the foundations for the start of the SSM operations on 4 November 2014 Comprehensive Assessment Staffing Legal framework SSM Model IT systems Data reporting framework First preparatory work for the SSM initiated following euro area summit of 29 June 2012 Entry into force of SSM Regulation on 3 November 2013 one transitional year to finalise preparations for the operational start 3

4 SSM goals and expected benefits Enhance financial integration Leverage on the best (of the national) supervisory practices Reduce (crisis) coordination failures among national supervisors Reduce the supervisory burden through the harmonization of supervisory practices Restore confidence in a healthier banking system Make customers deposits safer through three mechanisms Help the economy recover, building on a more stable banking system Intrusive, tough and fair supervision 4

5 Overview of the SSM scope Total assets: ~ EUR 26,000 bn (for comparison: USA USD 14,700 bn) Direct supervision of ~ 120 significant institutions (comprising ~ 1,200 individual institutions) and ~ 3,400 less significant institutions Total assets of the significant institutions amount to ~ EUR 21,000 bn, those of LSIs to ~ EUR 5,000 bn 9 global systemically important banks (G-SIBs) are headquartered within the SSM 5

6 SSM covers SI and LSI institutions in one integrated supervisory system Significant Institutions (SIs) Direct supervision by Joint Teams (JSTs) Joint Teams comprise staff from the ECB and from National Competent Authorities (NCAs) Important: peer group analysis and benchmarking of institutions Less Significant Institutions (LSIs) Indirect supervision by the ECB NCAs carry out supervision in practice, the ECB conducts oversight of the supervisory system and high priority institutions Important: specific national / regional knowledge Consistent supervision Guidance provided by the ECB SSM Risk Assessment System 6

7 The SSM functions as one integrated system of national and ECB supervisors direct supervision ECB oversees the system indirect supervision Principles of coordination between ECB and NCAs: assisting, instructing, cooperating, exchanging information supports Joint Teams (JSTs) Horizontal divisions National Competent Authorities (NCAs) Significant institutions Less significant institutions

8 SSM operating structure Direct Supervision Indirect Supervision Horizontal Supervision & Specialised Expertise Secretariat Micro-prudential Supervision I Micro-prudential Supervision II Micro-prudential Supervision III Micro-prudential Supervision IV Secretariat to the Board Joint Teams Joint Teams Oversight & NCA Relations Institutional & Sectoral Oversight Analysis & Methodological Support Authorisation Centralised On-site Inspections Crisis Management Enforcement & Sanctions Decision-Making Process Decision-Making Policy Methodology & Standards Development ± 30 credit institutions ± 90 credit institutions Planning & Coordination of Examination Programme Policies Quality Assurance Risk Analysis Internal Models This organisational chart shows the first two layers of the organisational structure. DG (Directorate General) D (Directorate)

9 JSTs are key structure of the SSM Governing Council approval / validation of high-level decisions Board ECB intermediate structure (DGs) support JSTs JST coordinator (Chair) Horizontal divisions Core JST Sub-coordinators (support JST coordinator) Team of experts from NCAs and ECB Established for every significant banking group Responsible for day-to-day supervision and for implementing the annual examination programme (SEP) Deep integration between ECB and NCAs Joint understanding of bank s conditions

10 The SSM Risk, Capital and Liquidity assessment leverages information from several building blocks Continuous evaluation of quantitative and qualitative information Business Model Analysis Internal Governance and Risk Management Analysis Risk level and risk control analysis for capital related risks Risk level and risk control analysis for liquidity risk Own Funds analysis ICAAP / ILAAP reviews are essential element of the overall analysis Quantitative supervisory tools are used to challenge and verify Benchmarking Stress testing measures are taken as necessary Quantitative capital measures Quantitative liquidity measures Other supervisory measures 10

11 Indirect Supervision Establishment of the framework for indirect supervision of less significant institutions Indirect Supervision Oversight Promote best supervisory practices and develop common standards Ensure consistency of supervisory outcomes Institutional and Sectoral Oversight Oversee sectors and countryspecific institutional arrangements Exchange information with NCAs on highpriority LSIs Participate in crisis management Analysis and Methodological Support Prepare methodologies for LSI supervision (e.g. risk-based prioritisation of banks, SREP application) Analyse common sources of risk 11

12 Indirect Supervision Applying the ECB s tools for indirect supervision Tools at the ECB s disposal : Ex ante notification of procedures and draft decisions by NCAs to ECB ECB assessment of draft material decisions and procedures Regular ex post reporting by NCAs on their supervisory activities Issuance of ECB regulations, guidelines or general instructions to NCAs Thematic reviews: deep dives into specific risk areas Possibility to request information and to perform on-site inspections Possibility to take over supervision of individual LSIs at any time Staff exchanges 12

13 Thank you for the attention 13