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- Source: European Central Bank https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp261006_1~0df91e4e44.en.html
The European Central Bank will escalate supervisory action against banks that fail to fix serious weaknesses in a timely manner, Frank Elderson, Vice-Chair of the ECB's Supervisory Board and a member of its Executive Board, said at the 17th FMA Supervisory Conference in Vienna. Speaking on a panel titled "Effective Supervision and Enforcement", Elderson said the ECB now expects all supervisory findings to be remediated promptly and durably, and that it is making greater use of a clear escalation ladder when material issues persist. By the end of 2025, the stock of outstanding measures across significant banks had risen to around 12,000, or roughly 100 per bank on average.
Key facts
Why is the ECB focusing on timely remediation?
- Frank Elderson, Vice-Chair of the ECB's Supervisory Board and member of the ECB Executive Board, spoke at the 17th FMA Supervisory Conference on "Europe's Financial Future: Sovereignty and Resilience" in Vienna.
- The stock of outstanding supervisory measures across significant banks reached around 12,000 by the end of 2025, averaging about 100 per bank, with severity ranging from very low to very high.
- For low-severity findings, the ECB now expects banks simply to confirm that sufficient action has been taken, without submitting further documentation.
- The ECB's escalation toolkit includes capital requirements, qualitative measures such as requiring stronger risk management, business restrictions and periodic penalty payments as enforcement measures.
Elderson argued that supervision only creates value when it leads to effective risk management and coverage. Identifying shortcomings, known as findings, and requesting remedial action, known as measures, are two sides of the same coin, he said. High-severity findings and measures that remain open for years without meaningful progress do not strengthen resilience and do not contribute to simplification, he added. How does simplification fit with tougher supervision?
Elderson rejected the idea that simplification and effective supervision are competing objectives, saying they reinforce one another. A simpler supervisory dialogue requires supervision that is more focused on material risks, more efficient and more effective in driving concrete improvements, he said. When supervisors concentrate on the issues that matter most for a bank's safety and soundness, discussions become more targeted and the follow-up process more focused, allowing both sides to devote more attention to root causes of material weaknesses. What tools can supervisors use?
When material weaknesses are not addressed in a timely manner, the ECB is making greater use of an escalation ladder involving more intrusive tools. Elderson said the toolkit is well-equipped, including capital requirements as well as qualitative measures ranging from requiring banks to strengthen risk management to imposing business restrictions or periodic penalty payments as enforcement measures. Supervisors must be prepared to use the right tools at the right time, proportionately, considering the materiality of the weakness, the persistence of the issue and the bank's responsiveness. How does the ECB prioritise among thousands of findings?
Elderson said supervisors must distinguish between issues critical for a bank's safety and soundness and those that are less consequential from a prudential perspective. He cited an increasingly complex risk environment including geopolitical fragmentation, high asset valuations, AI-powered cyberattacks, interlinkages between banks and non-banks, and more material manifestations of climate and nature-related risks. The accumulation of around 12,000 outstanding measures by the end of 2025 raises the question of whether all underlying findings are equally important, he said. What happens next?
The ECB's approach will remain "simpler where possible, more intrusive where needed", Elderson said, with supervisors focusing their efforts where they have the biggest impact and ensuring material findings are addressed without undue delay. The source does not specify a date for the next review of outstanding measures or for further changes to the supervisory framework.
Source: European Central Bank
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