2016 Deloitte Eurozone banking supervisory survey
Assessing the state of the banking union
Since the Single Supervisory Mechanism (SSM) opened for business in November 2014, it has continued to grow, both in scope and influence. However, much remains to be done for the European Central Bank (ECB) and National Supervisory Authorities (NCA) to develop and embed the new supervisory approach. Deloitte has surveyed 45 directly supervised banks to assess their perception of the SSM and its current impact.
Directly supervised banks
To be able to plan effectively, it is important for banks to understand the impact the new supervisory regime has 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 2016 survey were to monitor and analyze progress in terms of relationships, organizational impact, and technical issues regarding the new supervisory activities and regulations. In addition, it provides an overview of the topics that banks consider to be key over the short and long term.
- Many banks still have projects underway to tackle shortcomings identified following the financial crisis, including through the ECB’s 2014 comprehensive assessment exercise. New supervisory initiatives need to compete with those projects for time and resources.
- Implementation of the European Banking Authority’s (EBA’s) new guidelines on the Supervisory Review and Evaluation Process (SREP) remains a key area of concern and uncertainty.
- The establishment of the SSM has not only increased the supervisory spent at 47 percent of banks by more than 50 percent, it also necessitated changes to the way banks manage their supervisory relationships. The impact of the new supervisory regime goes beyond the supervisory approach and the new SREP methodology.
- Banks ranked risk data aggregation, data quality, implementation of IFRS 9 and supervisory assessments of business models as the most challenging aspects of the SSM’s priorities.