ECB to downgrade lowest-severity supervisory findings to mere observations

ECB Vice-Chair Frank Elderson outlines how banking supervision is tiering its follow-up on supervisory findings by severity, reducing documentation burdens for low-risk issues while sharpening escalation for high-severity weaknesses. The speech explains a refocusing exercise launched in mid-October that will reassess the accumulated stock of findings and measures across significant banks.

• By the end of 2025 the stock of outstanding measures across significant banks had risen to around 12,000, averaging about 100 per bank.
• In 2025 the ECB closed 1,200 more supervisory measures than it created, and the stock fell by a further 600 in 2026.
• From mid-October 2026 a refocusing exercise will review the accumulated stock of findings and tailor engagement to severity, prudential relevance, remediation status and time elapsed.
• The least severe findings, categorised F1, will in future be communicated as supervisory observations rather than generating formal measures.
• Mandatory verification of remediation by internal audit or internal validation will be removed for low-severity (F1 or F2) findings related to internal models.

Executive summary

In a contribution to a panel at the 17th FMA Supervisory Conference in Vienna on 6 October 2026, published by the BIS on 19 October, ECB Vice-Chair Frank Elderson set out how European banking supervision is combining simplification with a…

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