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Cards Wire 6 segments
SSM ECB Banking Supervision Source document ↗
European Union ECB Banking Supervision Prudential & Capital ✓ 20 claims 30 Oct 2026

ECB flags insurance counterparty risk in synthetic securitisation revival

The ECB's Pedro Machado sets out supervisory concerns as Brussels moves to revive European securitisation. He backs significant risk transfer in principle but warns on unfunded insurance protection, risk weight floors below 7%, and growing bank-insurer interlinkages in synthetic risk transfer. The interview also covers AI adoption, data centre lending, deposit volatility and the case for an integrated banking market.

  • Machado objects to the EU deal's treatment of unfunded insurance protection in STS synthetic securitisations, which deviates from the ECB's recommendation.
  • The ECB prefers absolute risk weight floors and would not lower floors on senior tranches below 7%, the Basel II level.
  • Between 2022 and end-2025 synthetic securitisation transaction activity almost doubled and underlying exposures more than doubled.
  • Around 85% of banks already use generative AI, across fraud detection, KYC, transaction monitoring and credit scoring.
  • Roughly 230 billion euro of high-quality liquid assets are trapped at subsidiary level in the banking union.
Source document
SSM ECB Banking Supervision Source document ↗
European Union ECB Banking Supervision Prudential & Capital ✓ 21 claims 27 Oct 2026

ECB supervisor warns banks against complacency despite strong capital ratios

A keynote from the ECB's Supervisory Board flags where risk is building even as reported bank metrics look strong. It covers credit underwriting, capital planning, geopolitical stress testing, climate exposure, AI-driven cyber threats and data quality, and argues against unwinding post-crisis regulation. Relevant for prudential and risk teams tracking supervisory priorities into next year.

  • Montagner said a recent ECB reverse stress test on geopolitical risk showed effective preparation cannot rely on a single scenario.
  • The ECB will continue horizontal analyses, targeted reviews and on-site inspections of bank loan-granting practices.
  • Some banks show shortcomings in risk data aggregation and reporting, which can limit crisis response even when aggregate ratios look robust.
  • The speech cited extreme 2026 summer heat and exceptionally low water levels on the Rhine and Danube as evidence climate risks are already materialising.
  • Montagner said the ECB supports removing regulatory redundancies and inconsistencies but opposes dismantling core post-crisis reforms.
Source document
SSM ECB Banking Supervision Source document ↗
European Union ECB Banking Supervision Prudential & Capital ✓ 20 claims 26 Oct 2026

ECB to review 12,000-strong stock of supervisory measures in October refocus

In a Vienna panel contribution, ECB Vice-Chair of the Supervisory Board Frank Elderson sets out how banking supervision is recalibrating its follow-up on findings and measures. The piece explains the tiered approach introduced in 2025, a refocusing exercise starting mid-October, and what changes for banks carrying low-severity findings. It matters because it signals where supervisory pressure will concentrate and where it will ease.

  • The stock of outstanding supervisory measures across significant banks rose to around 12,000 by the end of 2025, roughly 100 per bank on average.
  • In 2025 the ECB closed 1,200 more measures than it created, and the stock fell by a further 600 in 2026.
  • From mid-October a refocusing exercise will review the accumulated stock against each weakness's risk profile, severity, prudential relevance and remediation status.
  • The least severe F1 findings will in future be communicated as supervisory observations rather than generating measures, and low-severity F2 findings may be closed where further assessment is not warranted.
  • Mandatory verification of remediation by internal audit or internal validation will be removed for low-severity F1 or F2 findings related to internal models.
Source document
SSM ECB Banking Supervision Source document ↗
European Union ECB Banking Supervision Prudential & Capital ✓ 28 claims 23 Oct 2026

ECB supervisor says output floor and Single Rulebook must survive simplification push

An ECB Supervisory Board member discusses rising global interest rates, sovereign bond exposure and the EU's bank competitiveness debate. Relevant for compliance and government affairs teams tracking how the ECB will position itself on Basel output floor calibration and any move to tailor capital rules by bank size.

  • Montagner says sovereign bonds account for around 9% of euro area banks' total assets.
  • He states banks are under no obligation to sell sovereign bond holdings even as values fall.
  • He says current bank capital is mainly Common Equity Tier 1, unlike 2008 when it was largely subordinated debt.
  • He supports preserving the Basel output floor's role even if its calibration is reassessed, as proposed by the European Commission.
  • He says the ECB will always favour retaining a Single Rulebook rather than tailoring capital rules by bank size.
Source document
SSM ECB Banking Supervision Source document ↗
European Union ECB Banking Supervision Prudential & Capital ✓ 19 claims 23 Oct 2026

ECB supervisor urges system-wide stress tests to catch AI financing risks

A keynote from the ECB Supervisory Board member responsible for stress testing sets out how the framework is evolving beyond bank-only, scenario-based exercises toward system-wide and exploratory tools. It matters because it signals where ECB and ESRB stress-testing priorities, and future data requests to banks, are heading over the next two years.

  • The ESRB has launched a project to develop a desktop-based system-wide stress test by 2028, building on recommendations of its High-Level Group.
  • The 2026 reverse stress test on geopolitical risk asked banks to design scenarios depleting at least 300 basis points of their CET1 ratios.
  • The exercise found some banks' risk assessments lacked granularity and that certain mitigating management actions were not credible once replicated across institutions.
  • The ECB's 2025 macroprudential stress test extension used a top-down system-wide model to examine contagion between banks, investment funds and insurance corporations.
  • The speech cites the Bank of England's system-wide exploratory scenarios and the first French system-wide stress test, run jointly by the Banque de France, ACPR and AMF, as comparable precedents.
Source document
SSM ECB Banking Supervision Source document ↗
European Union ECB Banking Supervision Prudential & Capital ✓ 15 claims 15 Oct 2026

ECB lets banks report P&L under IAS 1 or IFRS 18 during transition to new standard

The ECB has set out how euro area banks should handle supervisory profit-and-loss reporting when IFRS 18 takes effect while the EBA's implementing standards lag behind. For the window between the two dates, institutions get a choice of accounting format. This segment covers who the option binds, the dates that drive it, and the FINREP templates affected.

  • IFRS 18 takes effect on 1 January 2027, while the amended EBA ITS incorporating it are expected to apply from the September 2027 reference period.
  • Institutions may report regulatory templates under either IAS 1 or IFRS 18 during the transition, in line with the EBA Opinion published on 8 July 2026.
  • Significant institutions may voluntarily use IFRS 18-aligned FINREP templates from the EBA technical package version 4.4 (Phase 1).
  • Less significant institutions can use the option only where their national competent authority permits it, and NCAs will collect the chosen option.
  • Annex A lists the affected ECB FINREP templates F02, F16.01, F16.03 and F16.04 and their interim equivalents.
Source document