The European Central Bank (ECB) has published a working paper assessing the remediation achieved by 8,106 credit risk supervisory measures issued and closed between 2016 and 2025. Measures addressing multiple issues are associated with lower rates of full remediation and longer resolution periods. Deficiencies involving data, reporting and information technology (IT) are particularly difficult to resolve. Measures originating from inspections conducted on site show higher remediation rates and faster closure than those arising from broader supervisory processes.
The study uses large language models to assess supervisory descriptions and closure justifications, distinguishing formal closure from resolution of the underlying weakness. Within the selected sample, 55.25% of measures were classified as achieving full remediation, 43.24% partial remediation and 1.51% no meaningful remediation. More severe measures are associated with lower remediation rates and longer timelines. Nonbinding recommendations have higher full remediation rates than binding obligations, but legal enforceability has no statistically significant association with closure speed.
Stronger governance and higher profitability are associated with better remediation outcomes, although these relationships weaken after accounting for differences across supervisory teams and institutions. The results support designing focused measures tailored to banks’ implementation capacity, with sustained supervisory monitoring for complex data and IT deficiencies. The analysis identifies associations rather than causal effects and measures documented remediation rather than changes in bank risk. Its exclusion of ongoing measures also limits how representative the findings are of supervisory actions overall.