Public hearing with Claudia Buch, Chair of the ECB / SSM Supervisory Board

Table of Contents

• Public hearing with Claudia Buch, Chair of the ECB / SSM Supervisory Board 1
•  ECB feedback to the EP’s Banking Union annual report 2023, 1
•  ECB Annual Report on supervisory activities 2023, 1
•  Status quo of banks retreating from Russia, 1
•  UK bonus cap abolition and its impact in Europe, 1
•  the latest supervisory banking statistics for Q1 ’24, and 1
•  miscellaneous other issues (the next stress-testing exercises, the ECB Governing Council statement on macroprudential policies, the ECB Annual Report on Sanctioning Activities, the Asset Quality Reviews of FinecoBank and LHV Group, and the ECB Annua... 1
• ECB feedback to the EP’s Banking Union annual report 1
•  as regards the call to help banks make an orderly exit from exposures to Russia, the ECB points to intense monitoring and dialogue with banks (also see the related separate section of this briefing); 2
•  as regards the importance of banks’ role in transitioning to a digitalised and carbon-neutral economy, the ECB response focusses on banks’ ESG risks which it considers a threat for banks and financial stability overall, therefore having made it a su... 2
•  the ECB’s response concurs with a desire for a rapid and effective adoption of the CMDI proposal and for further work to establish EDIS; 2
•  the ECB’s response also concurs with the call on the Commission to maintain Banking and Capital Markets Union as policy priorities. The EP report furtheremore called on the Commission to assess impediments to cross-border bank mergers, while emphasi... 2
•  the ECB uses the reference to the negotiations over the AML legislation in the EP report as a peg to present its own work with AML authorities; 3
•  as regards the call on supervisory authorities to use their powers to ensure gender balance in financial institutions’ management bodies, the ECB responds that it does address the issue through the Supervisory Review and Evaluation Proces (SREP) and... 3
•  as regards the EP’s regret over the lack of gender balance in the ECB’s own Governing Council, the ECB’s response notes in this context its own call on Member States to ensure a gender balance in their respective shortlists and appointments. 3
• ECB Annual Report on supervisory activities 2023 3
•  Brexit follow-up: On p. 29 of the Annual Report, the ECB describes that after Brexit, some banks relocated some business activities to subsidiaries in the euro area, in particular trading desks. In the second quarter of 2020, the ECB initiated a rev... 3
•  Supervision of entities with subsidiaries in Russia: The ECB’s Annual Report features a short section dedicated to the few directly supervised entities that have subsidiaries in Russia. The section reports that those banks are closely monitored by t... 3
•  Internal model investigations: The Annual Report sets out (see p. 33f.) that in 2023, the investigations exposed several weaknesses, indicating the banks’ lack of preparedness in terms of model change requests. Moreover, approximately one-third of t... 4
• Status quo of banks retreating from Russia 4
• UK bankers’ “bonus cap” abolition - any impact on the Banking Union? 6
•  Are UK banks expected to take more risk going forward? 6
•  Could higher risk taking by UK banks indirectly pose any risk for the Banking Union, and how would the ECB try to mitigate that? 6
•  Does the abolition of the bonus cap in the UK potentially distort the competitive position of banks in the Banking Union, and how could supervisors and policy makers prevent unfair competition? 6
• Latest supervisory banking statistics 7
• Figure 2: Distribution of profitability (shows the average, the highest and lowest values and the 1st and 3rd quartiles across 110 Significant Institutions’ returns on equity) 8
• Figure 3: Distribution of LCRs (shows the median, the 5th and 95th percentiles plus the 1st and 3rd quartiles across 109 significant institutions) 8
• Figure 4: Distribution of NSFRs (shows the median, the 5th and 95th percentiles plus the 1st and 3rd quartiles across 109 significant institutions) 8
• Miscellaneous 9
• Annex: 10 years of parliamentary scrutiny over the Single Supervisory Mechanism (summary of a paper by Andrea Resti) 11
• Disclaimer and copyright. The opinions expressed in this document are the sole responsibility of the authors and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes ar... 12