ECB proposes easing supervisory requirements for smaller banks

The European Central Bank (ECB) has proposed a more proportionate regulatory framework for small and non-complex institutions (SNCIs) to reduce their administrative burden. According to Frank Elderson, a member of the ECB’s Executive Board and Vice-Chair of the Supervisory Board, the core of the proposal involves expanding the eligibility criteria for these institutions.

The initiative suggests raising the asset threshold for SNCIs from the current €5 billion to €10 billion, provided that national supervisory authorities determine it is appropriate for their specific market conditions. This adjustment could see approximately 150 additional banks qualify for the simplified status, potentially covering up to 85% of less significant institutions. For these banks, the ECB plans to reduce both the frequency and intensity of supervisory tasks, including the Supervisory Review and Evaluation Process (SREP), without compromising the fundamental safety standards of the banking system.

The proposed changes aim to streamline reporting and governance obligations while maintaining financial stability across the European banking sector.