The European Court of Auditors (ECA) will publish a special report “The operational efficiency of the ECB’s crisis management for banks” on Tuesday 16 January 2018 at 11h30 in 23 EU languages.
ABOUT THE AUDIT
The auditors examined whether the European Central Bank efficiently managed the establishment of crisis management procedures for the banks under its supervision. Crisis management involves identification by the supervisor of a deterioration in the financial situation of a bank and, where necessary, the use of early intervention powers. It also includes advance recovery planning by banks in order to be prepared for a crisis.
This is the second ECA report in a month on the EU’s systems for handling banks in difficulty. The first was published in December 2017 about the Single Resolution Board (SRB), and should also be read in conjunction with the ECA’s 2016 audit of the Single Supervisory Mechanism (SSM): both reports are available on the ECA website.
ABOUT THE TOPIC
The ECB assumed extensive responsibilities for banking supervision in 2014. There are now around 120 banks in the euro area under its remit, holding just over 80 % of banking assets or about €22 000 billion. The ECB estimates its total costs for prudential supervision of the banking system for 2017 at €490 million, funded by the banks themselves.
Recent legislation provides for increasingly intensive supervisory attention from the ECB when a “systemically important” bank in the EU exhibits signs of being in difficulty, although, ultimately, if a bank reaches the point where it is failing or likely to fail, it falls to the Single Resolution Board to take charge of its resolution.
The ECA’s special reports set out the results of its audits of EU policies and programmes or management topics related to specific budgetary areas. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks to performance or compliance, the level of income or spending involved, forthcoming developments and political and public interest.