14 March 2019
The European Banking Authority (EBA) published today its annual Report on the convergence of supervisory practices in the EU. The EBA's work in supervisory convergence aims at fostering comparable supervisory approaches across the single market. This is necessary to ensure a level playing field, effective supervision of cross border groups, and to promote supervisory best practices.
This Report provides a summary of the EBA's observations on the current state of convergence of supervisory practices and highlights the EBA's activities carried out in 2018 to promote this convergence in accordance with its mandates as set out in its Founding Regulation and in the Capital Requirements Directive (CRD).
The Report covers, in particular, the EBA's assessment of the convergence in the supervisory review and evaluation process (SREP) as well as the supervisory convergence in the continuum between ongoing supervision, recovery and resolution. The latter is a new consideration given the relatively new entry into force of the Bank Recovery and Resolution Directive (BRRD).
Overall, the Report notes that in 2018, competent authorities made good progress in the implementation of the 2014 SREP Guidelines as well as in taking forward the recommendations and observations made by the EBA during the 2016 and 2017 bilateral convergence visits. The Report highlights, however, a number of remaining challenges, in particular, in converging capital adequacy assessments and determining institution-specific additional own funds requirements.
The Report observes that the continuum between ongoing supervision, recovery and resolution is progressively benefitting from the implementation of internal procedures, which take into account the Single Rulebook and contributes to ensuring the convergence of supervisory practices. Further improvements are still needed on key aspects, in particular, to ensure that all the institutions, which do not benefit from a waiver have developed a recovery plan.
The development of the Single Rulebook dedicated to supervisory activities, as well as the monitoring of its effective and consistent application will remain the core business of the EBA in the coming years. The EBA will also further expand its training programme for authorities assisting in the implementation of the regulatory and policy products.
One of the EBA's key mandates is to develop ensure supervisory convergence and consistency of supervisory outcomes within the EU. In addition, Article 107 of Directive the CRD includes a specific mandate for the EBA on consistency of supervisory reviews, evaluations and supervisory measures in Member States. This Article also requires the EBA to report to the EU Parliament and the Council on the degree of convergence of supervisory practices.
Based on this mandate, the EBA has collected information and analysed relevant supervisory practices. It has also developed a number of Guidelines and Technical Standards and contributed to the promotion of convergence in supervision through its participation in colleges of supervisors of cross-border institutions, the development of a European Supervisory Handbook, the provision of dedicated training, and the performance of analytical and benchmarking activities.