European Central Bank endorses 17 recommendations to simplify EU bank prudential regulation supervision and reporting

The European Central Bank has published a report setting out high-level recommendations from its High-Level Task Force on Simplification to reduce undue complexity in the European prudential regulatory, supervisory and reporting framework for banks. The ECB Governing Council endorsed the recommendations in December 2025, framing simplification around maintaining resilience and prudential effectiveness, fostering EU harmonisation and financial integration, and upholding international cooperation including full, timely and faithful implementation of Basel III. On regulation, the report proposes streamlining the risk-weighted and leverage ratio capital stacks, including merging capital buffers into a non-releasable and a releasable buffer while keeping Pillar 2 Guidance separate, and reducing EU-specific leverage ratio add-ons. It also calls for strengthening the going-concern quality and clarity of Additional Tier 1 and Tier 2 instruments, expanding proportionality for smaller banks by widening the small and non-complex institutions regime beyond the current EUR 5 billion asset threshold and harmonising simpler supervisory requirements, introducing more automatic reciprocation of macroprudential measures up to a threshold with clearer communication, and aligning minimum requirements for own funds and eligible liabilities and total loss-absorbing capacity more closely without reducing gone-concern resources. Other recommendations include shifting more EU prudential law from directives to directly applicable regulations and reviewing the volume of level 2 and 3 mandates, simplifying the EU-wide stress test methodology and data footprint, creating a mechanism for the ECB Governing Council to take a holistic qualitative view of overall capital demand via an enhanced Macroprudential Forum, and encouraging completion of banking union and the savings and investment union, including concrete steps towards a European deposit insurance scheme with a clear timetable. On supervision and reporting, the report advocates further harmonising national powers and options and discretions to strengthen the Single Rulebook, making supervisory processes less prescriptive and more risk-based in areas such as internal model reviews and certain approval processes, and implementing “request once/report once” reporting reforms through stronger data sharing, an integrated reporting system coordinated via the Joint Bank Reporting Committee, materiality thresholds to reduce report resubmissions for minor errors, publication of an inventory of non-market sensitive reporting requirements, periodic “need to keep” reviews every three to five years, and reforms to public disclosure by deriving Pillar 3 disclosures from supervisory reporting via an expanded Pillar 3 Data Hub. Operationalisation, impact analysis and implementation are conditional on the recommendations finding support and are envisaged to be developed in close cooperation with EU and national authorities, under the steer of the European Commission and involving bodies including the European System of Central Banks, the Single Resolution Board, the European Systemic Risk Board and the European Banking Authority, while considering implications for Member States outside the Single Supervisory Mechanism. In parallel, the Governing Council also welcomed the ECB Supervisory Board’s reform agenda to streamline the Supervisory Review and Evaluation Process and extend reforms through the “Next-level supervision” project.