EU Supervisory Framework

While the new European supervisory structure, consisting of three European supervisory authorities (EBA, EIOPA and ESMA) and the European Systemic Risk Council, became operational in 2011, the European Commission’s proposals of 12 September 2012 to introduce a Single Supervisory Mechanism for banks under the authority of the European Central Bank was another game changer.

Indeed, the proposal for a Single Supervisory Mechanism (SSM) was the first building block of the Banking Union, which also encompasses a single EU Deposit Guarantee Scheme and Resolution Scheme set up under the control of an EU Resolution Authority.

Adopted in October 2013, the SSM was launched in November 2014, date when the ECB took over the supervisory responsibility of banks located in the Euro-zone. Prior to this important event, the ECB conducted a comprehensive assessment of the banking sector, covering the 130 significant banks identified according to the criteria of the SSM Regulation (consolidated balance sheet bigger than EUR 30 billion, etc.): the supervisory risk assessment, the Asset Quality Review (AQR) and the stress tests.

The Comprehensive Assessment concluded in November 2014 revealed the robustness and the reliability of the European Banking sector at large and the Luxembourg Banking sector in particular.