As of 4 November 2014, responsibility for banking supervision within the area of the common European currency will be transferred to the European Central Bank (ECB). The around 130 most significant groups of credit institutions will be put under the direct supervision of the ECB, while all other banks will continue to be under the control of the national supervisory authorities, which will be required, however, to exercise such control according to Europe-wide harmonised criteria and standards. Supervision of the banks directly under the ECB will also be conducted in close cooperation with national supervisory authorities, since the latter have been mandated with important tasks preliminary to decisions (e.g. data collection, analysis and on-site inspections) and with enforcing supervisory measures in operations. It is anticipated that about six groups of credit institutions in Austria, encompassing a total of some 150 independent banks, will be subject to direct ECB supervision. Roughly 650 banks licensed to operate in Austria will remain under direct supervision by the FMA.
Prior to the ECB assuming banking supervision within the euro area as part of the Single Supervisory Mechanism (SSM), a comprehensive assessment of Europe’s major banks will need to be completed. The first step in this regard is to conduct an in-depth risk analysis of each bank to identify any portfolios that are particularly exposed to risk. The second step involves carrying out an asset quality review (AQR) as a means of analysing and assessing the underlying assets. This specifically entails a review to determine whether any value adjustments that have been made are adequate and whether appropriate provisions have been set aside. In the final step, the banks will be subjected to detailed stress tests in order to simulate the impact of outside shocks. These steps are aimed at ensuring that the affected banks have capital buffers that adequately cover risks, prior to coming under supervision by the ECB.
“This will be the most comprehensive analysis and assessment of the current state of Europe’s banks to date, and we are convinced that it will strengthen and consolidate trust in the European financial market,” FMA Executive Directors Helmut Ettl and Klaus Kumpfmüller announced. They added that comprehensive assessment would in any case provide a strong foundation for the new system of European banking supervision within the framework of the SSM under the leadership of the ECB. “Uniform supervision in Europe, along with the accompanying need for more intensive joint efforts with other countries and for close cooperation with the ECB, faces us as national supervisors with tremendous challenges, and we are fully dedicated to meeting these challenges to ensure efficient and effective banking control,” the FMA Executive Directors stated, adding that rapid progress “towards a single European Resolution Mechanism (SRM) for winding down banks that are no longer competitive” and “towards Europe-wide rules applying to deposit guarantees” is expected.
Journalists may address further enquiries to:
Klaus Grubelnik (FMA Media Spokesperson)
+43/(0)1/24959-6006
+43/(0)676/882 49 516