Elderson: ECB supervision will escalate faster when banks leave findings open, and simplify the rest

Victoria Shinder06 October 2026, 22:431 min read

Frank Elderson, Vice-Chair of the ECB's Supervisory Board, said on 6 October that simplification and effective supervision "are not competing objectives" but reinforce each other, in a contribution to a panel at the 17th FMA Supervisory Conference.

The two halves of the approach.

• Lighter where risk is low. For low-severity findings, banks are now expected simply to confirm that they have taken sufficient action to ensure compliance, without submitting further documentation.
• Harder where it is high. High-severity findings and measures that stay open for years without meaningful progress "do not strengthen resilience and do not contribute to simplification". When material weaknesses are not addressed in time, ECB Banking Supervision is making greater use of "a clear escalation ladder" of more intrusive tools.

The toolkit he listed. Capital requirements, and qualitative measures ranging from requiring stronger risk management to imposing business restrictions or periodic penalty payments. Supervisors must use them proportionately, he said, considering how material the weakness is, how long it has persisted and how responsive the bank has been.

The principle. "Supervision creates value only when it leads to effective risk management and coverage," Elderson said, which is why findings and the remedial "measures" that follow are "two sides of the same coin", and why all findings must be remediated "in a timely and durable manner". He rejected the reading that this lowers standards: the approach, he said, lets supervisors concentrate on, and intervene more forcefully on, the issues that matter most.