The Single Supervisory Mechanism

Getting to grips with the new regime

It has been six months since the European Central Bank (ECB) took on its responsibilities for prudential supervision under the Single Supervisory Mechanism (SSM). For both the supervisors and banks in the Eurozone, it has been something of a learning exercise with many unknowns, and the new supervisory regime is still under development.

As the SSM is set to deliver on key outputs from the Comprehensive Assessment and other more recently identified priorities, banks will need to assess implications and prepare to address these in the short term. The SSM’s drive for more consistency and sustainability will effectively produce a more stringent set of capital requirements and force banks to look into their business models. The new regime also adds complexity to the supervisory relationships as banks have to manage their links with both the ECB and national supervisors.

The paper is aimed at helping banks to define their strategy whilst the SSM approach is still in flux, and offers perspective on trends and on the approaches employed by others, particularly in supervisory relationship management. It also includes insights into the ECB’s priorities and the implications for banks’ capital positions and capital planning, as well as how to make business models sustainable from a supervisory perspective.

This paper draws on insights from the EMEA Centre for Regulatory Strategy and the Deloitte Banking Union Centre in Frankfurt, and the experience of Deloitte practitioners and clients.

The Single Supervisory Mechanism
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