On January 6, the European Central Bank (“ECB”) published a paper setting out its supervisory priorities in relation to the banks it supervises under the Single Supervisory Mechanism (“SSM”).

The ECB’s supervisory priorities under the SSM are:

  • business model and profitability risk;
  • credit risk;
  • capital adequacy;
  • risk governance and data quality; and
  • liquidity.

The priorities are not an exhaustive list but are meant to provide an essential tool to coordinate supervisory actions across banks in an appropriately harmonized, proportionate and efficient way, thereby contributing to a level playing field and a stronger supervisory impact. Paper.