European Central Bank to review outstanding supervisory measures and ease follow-up for low-severity findings

In a contribution to the FMA Supervisory Conference, European Central Bank Supervisory Board Vice-Chair Frank Elderson said ECB Banking Supervision will launch a review in mid-October to refocus outstanding supervisory measures on weaknesses with the greatest prudential impact. The exercise advances the ECB’s shift toward more risk-based supervision by reducing unnecessary follow-up for minor issues while retaining stronger intervention for material weaknesses that banks fail to remediate promptly and durably. The ECB will assess measures according to their severity, prudential relevance, remediation status, age and likelihood of requiring further intervention. F1 findings, the least severe category, will become supervisory observations rather than generate measures. Low-severity F2 findings and measures will receive proportionate treatment and may be closed where further assessment is unwarranted, while mandatory internal audit or internal validation checks will be removed for low-severity internal model findings. The stock of outstanding measures stood at about 12,000 at the end of 2025, but closures exceeded new measures by 1,200 that year and the stock has fallen by another 600 in 2026. For persistent material weaknesses, supervisors will set remediation paths with final and interim deadlines and may escalate through capital requirements, qualitative measures, business restrictions or periodic penalty payments. The approach is intended to direct banks and supervisors toward root-cause remediation rather than superficial closure of individual findings.