On 4 April the European Central Bank (ECB) published a letter from Mario Draghi, President of the ECB, to Nuno Melo, MEP regarding the scope of supervisory responsibilities under the Single Supervisory Mechanism (SSM).
In the letter, the ECB makes clear that the scope of the SSM is designed to include all credit institutions in the euro area and in non-euro area Member States wishing to participate within the SSM. Furthermore, the current draft legislation regarding the SSM distinguishes between “significant” and “less significant” banks according to:
- importance to the economy;
- cross-border activity; and
- whether or not they benefit from direct EU financial assistance.
The ECB will have full supervisory powers over significant banks, with the assistance of national supervisory authorities. However, in order to ensure that it can effectively supervise all credit institutions within participating Member States, the ECB will also have certain powers with respect to less significant banks, namely:
- national supervisory authorities will need to abide by ECB regulations, guidelines and instructions; and
- the ECB may, at any time, decide to exercise direct supervision over less significant banks, based on the supervisory data on such institutions to which it will have access.