In an interview published by European Central Bank Banking Supervision, Vice-Chair of the Supervisory Board Frank Elderson said the supervisor is advancing its next-level supervision simplification agenda, with faster handling of lower-risk cases, a more proportionate approach for smaller banks and a review of supervisory guides to make their non-binding status clearer. He also argued that the main constraint on European Union banks’ competitiveness is market fragmentation rather than prudential resilience. Elderson said that in the first quarter of 2026, 80% of simple capital-related decisions were approved within one week on average, while the new fast-track process for simple securitisations has reduced approval times from three months to less than ten working days thus far in 2026. The reform programme also covers more standardised processes for internal model approvals, fit and proper assessments and on-site inspections, with banks expected to see clearer sequencing, less duplication in information requests and more predictable supervisory processes. For small and non-complex institutions, the ECB is developing a more proportionate approach to supervision and reporting in 2026, and it aims to lower reporting costs through an integrated reporting framework for statistical, prudential and resolution authorities. On supervisory guides, the ECB plans to remove outdated or duplicated documents, improve accessibility and clarify that supervisory expectations and good practices are not binding requirements. As one example, it will revise the ICAAP guide to make clear that the management buffer does not constitute a supervisory requirement. On broader policy issues, Elderson said the euro area should be treated as a single jurisdiction for financial regulation and called for synchronised progress on banking union, including concrete steps towards a European deposit insurance scheme and freer movement of capital and liquidity within cross-border banking groups. He also said ECB supervisors are following up on weaknesses in banks’ management of private credit exposures, which rose by 16% between 2023 and 2024, and urged banks to strengthen cyber resilience and patching practices in light of rapidly advancing artificial intelligence capabilities, with responses tailored to each bank’s risk profile and aligned with DORA.
European Central Bank - Banking Supervision 2026-05-13
European Central Bank Banking Supervision details simplification reforms with faster approvals and a review of supervisory guides
The European Central Bank Banking Supervision is advancing its “next-level supervision” simplification agenda, including faster handling of lower-risk cases, more proportionate supervision for smaller banks, streamlined internal model and fit and proper processes, and a review of supervisory guides to clarify their non-binding status. Vice-Chair Frank Elderson called for treating the euro area as a single jurisdiction and further progress on banking union, and noted that supervisors are following up on banks’ private credit risk management and cyber resilience, with expectations aligned to the Digital Operational Resilience Act.