EU Banks Must Prepare For More Effective Supervision

On May 28, 2024, the Chair of the Supervisory Board of the European Central Bank ("ECB"), Claudia Buch, announced the decision to reform the current process of annual review of credit institutions under direct ECB supervision ("SREP").

Beyond general remarks such as "as risks evolve, supervision must evolve too," the Supervisory Board made some more practical statements that will impact the interactions of the authority with banks, not only in the review itself but also in the controls to be conducted:

• Implementing a multi-year approach where supervision intensity varies on the risks to be assessed;
• Applying supervisory tools comprehensively, from on-site-inspections, to thematical horizontal reviews to better coordinate review over supervised institutions;