ECB pushes simpler supervision, faster remediation of findings

• ECB says simplification and effective supervision reinforce each other.
• By end-2025, outstanding measures across significant banks had risen to around 12,000.
• A refocusing exercise will launch in mid-October.
• Least severe F1 findings will in future be communicated as supervisory observations.

Frank Elderson said European banking supervision is placing effectiveness and timely remediation at the centre of its dialogue with banks. He said a refocusing exercise will be launched in mid-October.

ECB pushes simpler supervision, faster remediation of findings

Action

Elderson said simplification and effective supervision are not competing objectives. He said they reinforce one another.

He said ECB Banking Supervision is making it clearer that all supervisory findings need to be remediated in a timely and durable manner. He said low-severity findings can be confirmed by banks without further documentation.

He said the ECB will use a clearer escalation ladder when material weaknesses are not addressed in time. The toolkit includes capital requirements, qualitative measures, business restrictions and periodic penalty payments.

Respondents

The contribution was by Frank Elderson, Vice-Chair of the Supervisory Board of the ECB and Member of the Executive Board of the ECB.

He said the ECB started in 2025 to implement a tiered approach for findings and measures. He said the approach aligns follow-up with risk severity.

Effective

Elderson said the refocusing exercise will be launched in mid-October. He said banks will receive further information on the implications for their individual stock of findings and measures.

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

He said low-severity F2 findings and measures will be handled more proportionately and may be closed where further supervisory assessment is no longer warranted. He said mandatory verification of remediation by internal audit or internal validation will be removed for low-severity F1 or F2 findings related to internal models.

Penalty

He said the toolkit includes periodic penalty payments as an enforcement measure.

Elderson said the stock of outstanding measures across significant banks had increased to around 12,000 by the end of 2025. He said that was around 100 measures per bank on average. He said in 2025 the number of supervisory measures closed was 1,200 higher than the number created, and in 2026 the stock has already fallen by a further 600.