ECB to sharpen supervision, ease low-severity follow-up

• ECB says low-severity F1 findings will be communicated as supervisory observations, not measures.
• Low-severity F2 findings and measures may be closed where further assessment is no longer warranted.
• The ECB said the stock of outstanding measures across significant banks reached around 12,000 by end-2025.

Action

Frank Elderson said ECB Banking Supervision is making its follow-up more risk-based and outcome-focused.

ECB to sharpen supervision, ease low-severity follow-up

He said the ECB will launch a refocusing exercise in mid-October to review measures accumulated in recent years.

The ECB will tailor supervisory engagement to the risk profile of the underlying weakness.

Effective

The ECB said the least severe findings, or F1 findings, will in future be communicated as supervisory observations rather than generating corresponding measures.

Low-severity F2 findings and measures will be handled more proportionately and may be closed where further supervisory assessment is no longer warranted.

For low-severity findings related to internal models, mandatory verification of remediation by internal audit or internal validation will be removed.

Penalty

Elderson said the toolkit includes capital requirements, qualitative measures, business restrictions and periodic penalty payments as enforcement measures.

He said ECB Banking Supervision will use more intrusive supervisory tools where material weaknesses are not addressed in a timely manner.

The ECB said the stock of outstanding measures across significant banks had increased to around 12,000 by the end of 2025, around 100 measures per bank on average.

It said the number of supervisory measures closed in 2025 was 1,200 higher than the number created, and the stock has already fallen by a further 600 in 2026.