On November 4, 2014, the Single Supervisory Mechanism (SSM) became effective. It entrusts the European Central Bank (ECB) with the final approval of a credit institutions licence application. Here some first impressions from one of the SSM licensing procedures currently on the way:
Theory and practice of an SSM licensing procedure
While the corresponding EU-provisions describe ECB’s involvement in an SSM licensing procedure as having 10 (20) working days for its final approval once the national application procedure came to a positive preliminary result, the practice is rather different. In reality, ECB will be involved in an SSM licensing procedure from the first day the applicant approaches the national competent authority (the national regulator). Thereafter, ECB and the national regulator will liaise closely. The national regulator will remain the first point of contact for the applicant in the daily operations of the licensing procedure. However, ECB will join the meetings with the applicant once the application is filed.
Learning by doing
Beside this basic approach, ECB and national Regulators seem still busy with establishing their internal procedures and aligning them with each other. ‘Learning by doing’, sometimes paired with ‘try and error’, seems to be one of the best practices currently used. As an example, we experienced a situation where the national regulator cancelled a meeting for preparing the application on short notice by ECB. We were told that ECB would not allow any bilateral meetings between the applicant and the national regulator. We found such strong influence of ECB at this stage rather surprising. Especially so, since the application was not filed at that moment and, thus, the SSM procedure had not even started. Obviously, also our contact persons at the national regulator were baffled by ECB’s approach: They struggled in this situation to explain their next steps. A week later we were informed that there was a misunderstanding between the national regulator and ECB: ECB thought the application had already been submitted.
Digitalisation of application to come?
We also had the chance to have a first glance at the web portal which ECB currently develops for the national regulators to submit information on the application during the SSM licensing procedure. It seems that currently there is a lot of data keying expected from the national regulator’s staff. Maybe over time this will lead to a boost in digitalisation requirements regarding the format of an application.
It will be interesting to see which further usance for the SSM licensing procedure will develop from this ongoing liaising process between ECB and national regulators.