SSM 10th Anniversary Report and Recommendations

November 2024 is the tenth anniversary of European banking supervision. Set up in response to the global financial crisis and subsequent Eurozone sovereign crisis, the Single Supervisory Mechanism (SSM) is a key pillar of the EU Banking Union. At the centre of the SSM, the European Central Bank (ECB) began direct supervision of the largest and most complex European banks – known as ‘Significant Institutions' – in November 2014.

To mark the anniversary, KPMG and the Association of German Banks (Bundesverband deutscher Banken, BdB) have published a joint paper assessing the SSM’s record and offering recommendations for the future. The paper is informed by the results of a survey of ECB-supervised banks conducted by KPMG, the BdB and the Centre for Financial Studies at the Goethe University, Frankfurt (CFS).

The joint paper acknowledges that the SSM has had real and significant success in its first decade. Since 2014 the SSM has improved the quality of banking supervision in Europe, and has overseen a major strengthening of European bank balance sheets. This success has, however, come at a significant price: compliance costs for European banks have increased substantially. Many banks regard these costs as excessive and believe they create a competitive disadvantage for European banks.

EU leaders have made promoting growth their top policy priority. In this context, the joint KPMG / BdB paper makes three recommendations for the SSM as it enter its second decade:

1. The SSM should adopt a formal growth objective alongside its goal of protecting financial stability
2. The SSM should commit to more proportionate supervision reflecting the differences between banks’ business models and risk profiles
3. The SSM should improve communication with banks on its supervisory assessments and expectations.

Adopting these recommendations will allow the SSM to build on its successes so far, and continue to maintain financial stability while supporting European banks’ ongoing viability and ability to finance investment and innovation. In this way the SSM can make a significant contribution to promoting European growth and prosperity.

Please do reach out to our KPMG contacts if you would like more information on the survey results.