Revisiting The ECB-SSM's Final Guide On Its Supervisory Approach To Consolidation

QuickTake

On 12 January 2021, the European Central Bank (ECB) acting in its role at the head of the Banking Union's Single Supervisory Mechanism (SSM) published its long-awaited details and supervisory expectations in the form of a "Guide on the supervisory approach to consolidation in the banking sector" (the SSM M&A Guide).¹ The publication followed a consultation process that closed in October 2020 accompanied by a feedback statement, which is useful for framing the context of the final version.²

The final version of the SSM M&A Guide now in force clarifies that:

• the use of supervisory tools by the ECB-SSM to facilitate sustainable consolidation projects;
• credible business and integration plans are not penalised with higher capital requirements (Pillar 2 capital);