The European Central Bank (ECB) reportedly plans to give banks more time to prepare for its supervisory examinations by notifying them of its schedule further in advance.
The ECB plans to provide this notification by the end of the year prior to the one in which it will conduct the review, Bloomberg reported Tuesday (July 29), citing unnamed sources. Currently, it notifies banks during the early months of the year of the review.
At the same time, under the new plan, the ECB may make mid-year changes in its plans, if necessary, according to the report.
This planned change is part of a broader effort by the ECB to reduce the regulatory burden on banks by simplifying its rules and accelerating its processes, the report said.
The ECB said in an article published in its Supervision Spotlight newsletter in May and posted on LinkedIn July 10 that it is reforming its “regular health check for banks,” known as the Supervisory Review and Evaluation Process (SREP).
These changes include making the decisions that result from its SREP streamlined in a way that focuses on strategic risk drivers and key supervisory concerns, rather than providing a comprehensive list of findings, and implementing a streamlined approach to the follow-up on findings and measures that allows supervisors to focus on the most severe issues, according to the article.
“The ECB is committed to reducing unnecessary complexity while maintaining the resilience of European banks,” the article said. “Following an external review of supervisory processes in 2023, ECB Banking Supervision launched a number of projects to make supervision more efficient, effective and risk-based.”
It was reported in April that the ECB created a task force to simplify Europe’s banking rules. The task force’s recommendations would need to be considered by lawmakers, as the ECB has no authority to change rules that are set by the European Union.
That report came after the central bank governors from Germany, France, Italy and Spain wrote a letter to a European commissioner, calling for the simplification of “unduly complex” European banking rules and saying that a “comprehensive analysis of the implications of all the standards produced in Europe should be carried out.”