Each year an assessment is carried out of the risks and vulnerabilities for the banking sector, which forms the basis for setting the SSM supervisory priorities.
These priorities guide the planning of specific supervisory activities.
Direct and ongoing oversight of significant banks is mainly performed through the Joint Supervisory Teams (JSTs), which comprise staff from the ECB and from the national authority of the country where the supervised bank is located. Their work is steered by a coordinator at the ECB, who is in turn supported by one or more sub-coordinators from the relevant national authorities. These teams perform an ongoing assessment of the banks’ risk profile, solvency and liquidity as part of the Supervisory Review and Evaluation Process
.
Ongoing oversight is complemented by on-site exercises, which comprise inspections (to analyse specific risks in depth) and model investigations (to review the models used to calculate capital requirements). On-site exercises are conducted by specific teams, rather than by the JSTs. The findings from the inspections can lead to remedial action to be taken by the banks.
The SSMs criteria and supervisory policy are set by the Supervisory Board, and are drawn up with joint contributions from the ECB and the NCAs, through their expert working groups. Their application ensures consistent supervision in SSM countries.
In the case of Spanish entities considered less significant, which are directly supervised by the Banco de España, a scheme analogous to that of significant banks is followed: a set of supervisory priorities is established each year that is used to plan ongoing monitoring activities and on-site actions, carried out by separate teams.
The ECB indirectly supervises these less significant institutions. It can request information from national authorities and issue regulations, guidelines or general instructions to ensure consistent supervision, and it can even take over their direct supervision.
