On 21 March 2019, the European Central Bank (ECB) published a speech by its Supervisory Board Chair, Andrea Enria, following the publication of its 2018 annual report on supervisory activities. Alongside an overview of work conducted in 2018, Mr Enria discusses the ECB’s supervisory priorities for 2019:

  • credit risk: the ECB will continue to promote the reduction of the stock of non-performing loans. As part of a new initiative, it will assess banks’ credit underwriting criteria with a view to avoiding excessive risk-taking by banks;
  • risk management: the  targeted review of internal models will continue. The ECB will also continue to push for improvements to banks’ internal processes for capital and liquidity adequacy, the ‘ICAAP’ and ‘ILAAP’ processes. New measures will also be taken to examine IT and cyber risks;
  • more general supervisory activities planned for 2019 include work relating to trading risk and asset valuations;
  • work will continue with UK authorities to ensure a solid framework for co-operation post-Brexit – recent developments in this regard include that the European Banking Authority has successfully coordinated the preparation of a template supervisory cooperation memoranda of understanding for all EU authorities to be used bilaterally with the UK authorities; and
  • the process of taking over the direct supervision of institutions that will become significant as a result of Brexit will continue and banks’ Brexit contingency plans will continue to be monitored.