On 25 July 2025, the European Central Bank (ECB), updated its policies outlining how it exercises options and discretions when supervising banks, following a public consultation which ended on 24 January 2025. The ECB has also published a feedback statement providing an overview of the comments received and the ECB’s assessment of these comments.
In particular the ECB has:
- Made amendments that relate, amongst others, to how the ECB grants permissions to banks concerning how they calculate capital requirements for operational and market risks, and to whether minority interests in subsidiaries can be included in the capital of a banking group.
- Updated policies to clarify how the Danish Compromise should be applied in the banking union. This is a specific rule in EU regulation that allows banks, in certain circumstances, to risk-weight their investments in insurance subsidiaries instead of deducting them from their capital. Banks risk-weighting their investments in an insurance subsidiary should risk-weight all the own funds instruments they hold in that subsidiary and not only core equity instruments. The ECB will grant a one-year transition period to all affected banks.