SSM Supervisory priorities 2020: Continuing balance sheet repair, credit risk and business model sustainability are high on the list of priorities, with a focus on digitalization

The key drivers of banking sector risks identified by ECB are the challenges in the euro area from economic, political and debt sustainability point of view, the business model sustainability and the cybercrime and IT deficiencies with a focus on digitalisation. Further significant risk drivers are: execution risk attached to banks’ strategies for non-performing loans (NPLs); easing lending standards; repricing in financial markets; misconduct/money laundering/terrorism financing; Brexit; global outlook and geopolitical uncertainties; reaction to regulation and climate-change related risks.

The sources of banking sector risk were identified in cooperation with the national competent authorities, drawing on input from the Joint Supervisory Teams, ECB microprudential and macroprudential analysis, as well as reports from international bodies.

This article provides further insight on supervisory priorities being realigned to the high level priority areas.