Presentation of the ECB Framework Regulation Organisational aspects

1. Presentation of the ECB Framework RegulationOrganisational aspects Tallinn, 26 February 2014

2. Timeline SSM Regulation enters into force Public hearing Publication on the ECB’s website SSM takes over banking supervision Submission to the European Parliament 4 Feb. 3 Nov. 2013 19 Feb. by 4 May 4 Nov. 7 Feb. 7 March 30 Jan. 2014 May Publication in Official Journal End of public consultation Supervisory Board endorses draft Framework Regulation at its first meeting Launch of public consultation

3. Legal basis Articles 6 and 33(1) SSMR ECB shall adopt and make public (by 4 May 2014) a framework to organise the practical arrangements for the implementation of the cooperation between the ECB and NCAs within the SSM. Article 33(2) SSMR ECB shall publish by means of regulations and decisions the detailed operational arrangements for the implementation of its supervisory tasks. Article 4(3) SSMR ECB may adopt regulations for the carrying out of its supervisory tasks. The framework will be an ECB regulation.

4. Structure of the draft Framework Regulation

5. ECB as a banking supervisor – institutional impact Shared Services (IT, Legal, HR, Statistics)

6. Functioning of the SSM SSM ECB oversees the system Grants/withdraws authorisations, assesses qualifying holdings JST (ECB/ NCAs staff) Grants/withdraws authorisations, assesses qualifying holdings May “call-up” direct supervision NCAs Direct supervision Direct supervision Significant banks Less significant banks

7. Banking supervision by the SSM

8. Methodology for assessing significance Procedures • assessment and ongoing review of a bank’s significance • determination of the date on which a change of status/supervisor takes effect and itsimpact on pending procedures • ECB takes decisions on changes in status Size • main criterion • Framework Regulation specifies how the total value of assets is determined • significance is determined at highest level of consolidation ECB lists • of significant banks • of less significant banks and their respective NCAs • published on the ECB’s website and updated regularly

9. Supervision of Significant Banks • Supervisory Tasks conferred to the SSM: • Authorization, withdrawal andassesmentof qualifying holdings • Passport • Ensure compliance with requirements on capital, leverage, liquidity, and governance • Supervisory review and Supervisory powers (Pillar 2) • Consolidated supervision and supervision of conglomerates • On-site inspection • Early intervention where a bank breaches requirements (coordinating with resolution authorities) • Sanctions • Macroprudential tasks

10. Micro-prudential tasks Colleges of Supervisors • ECB will chair colleges for any significant groups with branches/subsidiaries outside the SSM and in non-EU countries • ECB will participate in the colleges for non-SSM groups with branches/subsidiaries that are significant within the SSM Passport issues • CRD IV procedures no longer apply for the establishment of branches within the SSM • for banks within the SSM wishing to establish a branch outside the SSM, the ECB will be the home authority for significant banks and the NCA for less significant banks • ECB will act as coordinator if the bank belonging to the financial conglomerate is significant • supervision of insurance firms is excluded Financial conglomerates

11. Supervision of significant banks • NCAs • assist the ECB by preparing a draft decision upon request or on their own initiative • follow the ECB’s instructions

12. Close cooperation General principles • ECB’s position will be comparable to the one it holds in respect of supervised entities and groups established in euro area countries • ECB may not act directly vis-à-vis banks but through instructions, requests or guidelines addressed to NCAs Significant institutions • establishment of JST for each institution • ECB will be consolidating supervisor • NCAs adopt decisions in respect of significant supervised entities onlyupon the ECB’s instructions Less significant institutions • ECB may issue general instructions, guidelines or requests to the NCA under close cooperation

13. ECB’s supervisory powers Request for information • ECB may require information that it considers necessary from any person referred to in Article 10(1) SSMR • before making a request, the ECB will take into account the information available to NCAs Supervisory Reporting • ECB is the competent authority for supervisory reporting by significant banks and NCAs for that by less significant banks • NCAs are the single entry point and perform initial data checks On-site inspections • draft Framework Regulation sets out the procedures for: • the decision to conduct an on-site inspection • the establishment of an on-site inspection team • the notification of an on-site inspection

14. Transitional provisions Start of the ECB supervision • ECB sends a decision to significant banks of their status two months prior to start of supervision • bank has the right to be heard Continuity of existing procedures • supervisory procedures initiated by NCAs will generally continueafter theECB starts supervision Countries adopting the euro • transitional provisions will apply to countries that join the euro area after the start of the SSM • comprehensive assessment of banks established in countries that join the euro area Continuity ofcooperation agreements • MoUs and other cooperation agreements will continue to apply • ECBmay decide to participate

15. Thank you for your attention Jean-Christophe Cabotte jean-christophe.cabotte@ecb.europa.eu