ECB revised options and discretions when supervising banks

Details regarding the main changes within the ECB’s policies of exercising O&Ds when supervising significant and less significant institutions

The European Central Bank (ECB) updated its guidance and policies for exercising options and discretions (O&D) granted by European Union law when supervising banks. The revisions and updates reflect the recent changes in EU banking rules, namely the “CRR II-CRD V package” (Regulation (EU) 2019/876 and Directive (EU) 2019/878) and the LCR Delegated Regulation (Delegated Regulation (EU) 2015/61). In total, the CRR and CRD allow the ECB to exercise more than 100 options and discretions in its supervision of significant institutions. The set of policy instruments ensure a transparent and uniform implementation of the rules applied to banks. Moreover, harmonising these policies creates a level playing field throughout the European Banking Union.

Overview of policy instruments

The ECB updated its policies in four instruments covering O&Ds of a general nature, meaning that the supervisor sets a policy that applies to all banks under its supervision without an additional specific assessment for each bank and other O&Ds that apply on a case-by-case basis. This means the supervisor exercises the option or discretion only after a bank-specific assessment, usually following the submission of an application by the bank in question. Together, these policy instruments harmonise how O&Ds are exercised in relation to significant institutions (SIs) and promote the harmonised exercise of O&Ds by the national competent authorities (NCAs) in relation to less significant institutions (LSIs).

The four policy instruments consist of:

More information and details regarding the main changes within the ECB’s policies of exercising O&Ds when supervising significant and less significant institutions are available at free registration area at our PwC Plus research application: Link to PwC Plus

If you have any questions, please do not hesitate to contact us. Our Risk & Regulation experts have extensive experience with ECB and national banking supervision.

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Christoph Himmelmann

Christoph Himmelmann

Director
Frankfurt am Main

Tel.: +49 69 9585-2737

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