The SSM (Single Supervisory Mechanism) is one of the pillars of the European Banking Union. It provides the legal and institutional framework that entrusts the European Central Bank (ECB) with primary supervisory responsibility for the most significant banks in the participating countries. The main objective of European banking supervision is to maintain the safety and soundness of the European banking system, promote financial integrity and stability, and ensure consistent banking supervision.
As an independent European Union institution, the European Central Bank carries out banking supervision from a European perspective. It is empowered to:
- conduct supervisory inspections;
- grant or revoke banking licences;
- assess the acquisition and disposal of qualifying holdings;
- ensure compliance with EU prudential requirements;
- set the necessary capital adequacy requirements (safety buffers) to prevent financial risks;
- identify shortcomings at an early stage and require corrective action to address them, preventing situations that could threaten overall financial stability.
In cooperation with the national supervisory authorities, the ECB is responsible for effective and consistent European banking supervision.
Directly supervised banks
The ECB carries out direct supervision of significant banks in the participating countries. Significant banks hold nearly 82% of the banking assets in these countries.
The decision on whether a bank is considered significant is taken on the basis of several criteria. Criteria for determining significance
The day-to-day supervision of significant banks is carried out by the Joint Supervisory Teams. Each significant bank has its own Joint Supervisory Team composed of staff from the ECB and the national supervisory authorities.
Indirectly supervised banks
Banks that are not considered significant are referred to as less significant banks. They are supervised by the respective national supervisory authority in close cooperation with the European Central Bank.
The ECB may, at any time, decide to assume direct supervision of any such bank in order to ensure the consistent application of high supervisory standards.
Member States
All Member States of the euro area automatically participate in the SSM. Other EU Member States that have not yet adopted the euro may choose to participate in the single banking supervision, with the national supervisory authorities launching close cooperation with the ECB.
Decision of the ECB governing the procedures for close cooperation