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ECB zeroes its sights in

On 4 September 2014, ECB published the final list of significant credit institutions that it will directly supervise from 4 November 2014.

The 120 significant credit institutions represent almost 85% of total banking assets in the euro area. Almost all of them have been designated as significant due to their size or due to total assets representing more than 20% of GDP. Only three groups are systemically important due to significant cross-border assets:

  • Banque Degroof S.A.
  • Sberbank Europe AG
  • VTB Bank (Austria) AG

The Single Supervisory Mechanism (SSM) presents a form of myopia as a regime aimed at prudential supervision.  Since the United Kingdom did not opt-in, important financial institutions operating in London will be outside ECB’s field of vision:

  • JP Morgan Chase
  • Citigroup
  • Bank of America
  • Goldman Sachs
  • Mitsubishi UFJ FG
  • Morgan Stanley

More importantly, these institutions were shortlisted by the FSB as Global Systemically Important Banks (G-SIBs), using a methodology developed by the BCBS.

ECB will need to prove shortly that it can assume the role for which it was created:  translate extensive supervisory powers on paper to truly effective oversight on the field.  Indeed, a Member of the Executive Board of the ECB recently suggested that the next few months will not be at all relaxing.

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