SSM Regs Published in Official Journal

On 29 October 2013, the following were published in the Official Journal of the EU (OJ):

The SSM Regulation bestows supervisory powers over “significant” Eurozone banks on the European Central Bank (ECB).  The assessment of whether or not a bank is “significant” will be based on:

  • Size – the presumption being that any bank which fulfils any of the following criteria will be regarded as significant:
    • the total value of its assets exceeds EUR 30 billion; or
    • its total assets represent over 20% of the GDP of the relevant participating Member State (unless the value of those assets is below EUR 5 billion); or
    • both the bank’s national competent authority (NCA) and the ECB confirm that the bank is to be regarded as “significant”;
  • Importance for the economy of the EU or any Member State participating in the SSM; and
  • Significance of cross-border activities.

Any bank which has received public financial assistance shall be regarded as “significant” as are the three most significant banks in each of the participating Member States.  The assessment as to whether or not a bank is “significant” should not be conducted more often than annually.

Pursuant to the SSM Regulation, the ECB will have power over the authorisation (and withdrawal of authorisation) of banks, as well as authority in relation to early intervention and recovery planning (but not resolution).  In addition, it can, inter alia:

  • require banks to hold own funds in excess of capital requirements;
  • restrict, limit or require the divestment of activities of a bank;
  • impose limits on variable remuneration;
  • prohibit distributions;
  • impose additional reporting and liquidity requirements; or
  • remove members of the management body.

The ECB is due to publish a framework for the SSM by 4 May 2014, prior to assuming its supervisory role on 4 November 2014.  In advance of this, it is empowered to require NCAs to provide it with relevant information from 3 November 2013, the same day on which the SSM Regulation enters into force.

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