Insights

2016 Deloitte Eurozone Banking Supervision Survey

Assessing the state of the Banking Union

The Single Supervisory Mechanism (SSM) is now firmly established within the European Banking Union. Since the SSM opened for business in November 2014, it has continued to grow, both in scope and influence. Much work remains, however, for the European Central Bank (ECB) and National Supervisory Authorities in developing and embedding the new supervisory approach.

To be able to plan effectively, it is important for banks to understand the impact the new supervisory regime has had – and continues to have - across the region, and to benchmark their experiences and current practices against peers. For this reason Deloitte launched its Eurozone banking supervision survey. The goals of the first survey were to monitor and analyse progress in terms of relationships, organisational impact and technical issues regarding the new supervisory activities and regulations. It also provides an overview of the topics that banks consider to be key priorities over the short and long term in the context of the SSM.

Deloitte’s Eurozone banking supervision survey was carried out between January and March 2016 and targetted all directly supervised SSM Banks within the Eurozone. In total, 45 directly supervised institutions, covering 16 of the 19 Eurozone countries, participated in the survey.

Key issues highlighted in the survey included:

  • The establishment of the SSM has, for the vast majority of banks, resulted in increased supervisory expenditure, with nearly half of participating banks reporting that costs (excluding supervisory fees) has increased by more than 50%. It has also necessitated fundamental changes in the way banks manage their supervisory relationships.
  • Lack of transparency during the Supervisory Review and Evaluation Process (SREP) is a particular concern for banks.
  • SSM priorities in relation to Risk Data Aggregation, Data Quality and IFRS 9 were identified as the most challenging for banks in the short-term, while the Full Implementation of New Ratios, the Homogenisation of Internal Models and Standardised Approaches and Pillar II Capital were viewed as the most challenging longer term aspects. 

For more information contact Sean Smith, Partner or John McCarthy, Manager in Risk Advisory or visit the Deloitte Banking Union Centre in Frankfurt (BUCF) or EMEA Centre for Regulatory Strategy (ECRS) websites. 

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