Usually every January the European Central Bank (ECB), acting at the helm of the Banking Union’s Single Supervisory Mechanism (SSM), publishes its overall compliance assessment along with Banking Union Supervised Institution (BUSI) specific findings from the previous year’s Supervisory Review and Evaluation Procedure (SREP) . In many ways this supervisory scorecard not only drives BUSIs to set themselves “New Year’s resolutions” but also sets out who makes the “naughty or nice” list for the next supervisory cycle and thus the next i.e. 2020 SREP exercise.
In summary this means that the national competent authority (NCA) or the ECB-SSM will issue a decision (i.e. a legally binding administrative act) spelling out the capital requirements beyond regulatory own funds established for the BUSIs at hand. In case the capital base was found to be inadequate, banks will have to build up capital. BUSIs may, moreover, be required to improve their liquidity situation beyond the minimum regulatory requirements, or they may be required to remedy identified deficiencies. Together these measures are intended to ensure that BUSIs will be sufficiently resilient even under…
