Meeting the challenge of the SSM

How banks should get ready for the new regime

The formal start of the Single Supervisory Mechanism (SSM) draws a line under months of preparations for the transfer of prudential supervision to the European Central Bank (ECB). However, this milestone is just the start of a journey that will test both supervisors and banks.

The next 12 months will be key for establishing the priorities and approach of the SSM, with the first six months dominated by addressing the findings of the recently completed Comprehensive Assessment. Banks that engage in early planning and move proactively to adapt to the new regime could be at a strategic advantage.

This paper takes note of lessons learned during the Comprehensive Assessment. It builds on those observations with an analysis of the SSM’s supervisory principles and objectives, translating them into practical expectations of the new approach. Finally, it offers a view on what banks need to consider when preparing for ECB supervision, including the profile of the new supervisor and its implications for building an effective supervisory relationship.

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