Joint Press release of BaFin and Deutsche Bundesbank Single Supervisory Mechanism: ECB launches comprehensive assessment of 124 banking groups in the euro area
The European Central Bank (ECB) today published first details of its comprehensive assessment. The assessment will include a total of 124 banking groups (124 banks) in the euro area, 24 of them German, and is to be concluded before the launch of the Single Supervisory Mechanism (SSM) in November 2014. Measured against total assets, the comprehensive assessment therefore covers around 65 % of the German banking sector. The ECB has stipulated a minimum ratio of 8 % of common equity tier 1 capital as the target for the balance-sheet assessment, which will be part of the comprehensive assessment. The transitional rules applicable from 1 January 2014 will be taken into consideration.
"The comprehensive assessment is vital to the success of the future European supervisory mechanism," said Dr Elke König, President of the Federal Financial Supervisory Authority (BaFin). "The assessment ensures that before the launch of ECB supervision there is transparency as to potential risks and burdens. Diligence is therefore again more important than speed." Sabine Lautenschläger, Deputy President of the Bundesbank, added: "Setting up the Single Supervisory Mechanism and the preceding intensive assessment of banks demands will be a tour de force for German banks and their supervisors. I am convinced that the effort will be worthwhile, as the SSM will give us the opportunity of getting the best out of all supervisory cultures in the euro area." Mrs König and Mrs Lautenschläger pointed out that German banks are already carrying out intensive preparations for the comprehensive assessment.
The comprehensive assessment will probably take twelve months. It comprises three elements. The first is a risk assessment, which is comparable to the supervisory review process in Germany and will cover all significant bank risks. The second step is a balance-sheet assessment, which will focus first and foremost on the quality of the main assets and their valuation. However, it will also involve valuing loan collateral and checking whether banks’ risk provisioning is appropriate. As the third element, the SSM will liaise with the European Banking Authority (EBA) on a forward-looking stress test, which will examine banks’ resilience under adverse economic conditions. The overall result of all assessment elements is scheduled for publication in November 2014.
The national supervisory authorities of the euro area and the ECB are cooperating closely on the comprehensive assessment. They will, moreover, be supported by independent consultants and auditors. BaFin and the Bundesbank will – as is customary in reviews of recoverability – make use of external auditors’ expertise.
Supplementary information for editorial offices
On 15 October 2013, the Council of the European Union passed the SSM Regulation and at the same time amended Regulation No 1093/2010 (EBA Regulation). Article 33 (4) of the SSM Regulation stipulates that there shall, before the SSM is launched, be a comprehensive assessment of the banks that will, in future, be under the ECB’s direct supervision. The SSM Regulation is scheduled to enter into force at the beginning of November 2013 upon its publication in the Official Journal of the EU.
The ECB list of the banks to be included in the comprehensive assessment contains the following German institutions.
- Aareal Bank AG
- Bayerische Landesbank
- Commerzbank Aktiengesellschaft
- DekaBank Deutsche Girozentrale
- Deutsche Apotheker- und Ärztebank EG
- Deutsche Bank Aktiengesellschaft
- DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main
- HASPA Finanzholding
- HSH Nordbank AG
- Hypo Real Estate Holding AG
- IKB Deutsche Industriebank Aktiengesellschaft
- KfW Ipex Bank GmbH
- Landesbank Baden-Württemberg
- Landesbank Berlin Holding AG
- Landesbank Hessen-Thüringen Girozentrale
- Landeskreditbank Baden-Württemberg - Förderbank -
- Landwirtschaftliche Rentenbank
- Münchener Hypothekenbank eG
- Norddeutsche Landesbank -Girozentrale-
- SEB AG
- Volkswagen Financial Services Aktiengesellschaft
- WGZ Bank AG Westdeutsche Genossenschafts-Zentralbank
- Wüstenrot & Württembergische AG (W&W AG) (Holding of Wüstenrot Bank Aktiengesellschaft Pfandbriefbank and Wüstenrot Bausparkasse Aktiengesellschaft)