Single Supervisory Mechanism 

Introduction

The Single Supervisory Mechanism (SSM) is a system of financial supervision comprising the European Central Bank (ECB) and the national competent authorities of participating EU countries. The main aims of the SSM are to ensure the safety and soundness of the European banking system and to increase financial integration and stability in Europe.

Historically the Central Bank of Ireland has had overall responsibility for the authorisation and supervision of credit institutions operating in Ireland. From 4 November 2014 a number of supervisory responsibilities and decision making powers moved to the ECB.

The ECB is responsible for all core supervisory responsibilities as defined in the Council Regulation (EU) No. 1024/2013 (SSMR). The Central Bank retains responsibility for the supervision activities defined in the SSMR as non-core (eg. anti-money laundering, consumer protection).

Banks within the Eurozone have been categorised into Significant Institutions and Less Significant Institutions.  For Significant Institutions, consisting of the larger institutions operating within Ireland, including AIB, BOI, PTSB, KBC, Ulster and Rabobank for example, a Joint Supervisory Team (JST), led by the ECB and consisting of both ECB and Central Bank supervisors will directly supervise these firms. A full list of significant institutions is available on the ECB website.

Those institutions defined as Less Significant continue to be directly supervised by Central Bank supervision teams.

Further information about the SSM can be found in the ECB Guide to Supervision and the ECB website.

The ECB Comprehensive Assessment

On 23 October 2013 the ECB announced that it was to perform a Comprehensive Assessment comprised of:

  1. A supervisory risk assessment to review, quantitatively and qualitatively, key risks, including liquidity, leverage and funding;
  2. An asset quality review to enhance the transparency of bank exposures by reviewing the quality of banks’ assets, including the adequacy of asset and collateral valuation and related provisions; and
  3. A stress test to examine the resilience of banks’ balance sheet to stress scenarios. These three elements are closely interlinked. The assessment will be based on a capital benchmark of 8% Common Equity Tier 1, drawing on the definition of the Capital Requirements Directive IV/Capital Requirements Regulation, including transitional arrangements, for both the AQR and the baseline stress test scenario.

The Comprehensive Assessment started in November 2013 and the results were published on 26 October 2014. The five Irish banks included were: AIB; Bank of Ireland; Merrill Lynch International Bank; permanent tsb; and Ulster Bank.

The results for all Eurozone banks, along with an aggregate report, are available on the ECB website, and the EBA's results are available here.

The results for the Irish banks are available at the following links:

Key documents and links