European Central Bank Harmonizes Regulatory Discretions for "Less Significant" Institutions

The European Central Bank has published a Guideline and Recommendation to harmonize the way in which Euro member state national regulators of "less significant" banks exercise discretions available to them under the Capital Requirements Regulation and Capital Requirements Directive. This follows a public consultation on the draft Guideline and Recommendation, which was launched on November 3, 2016 and ended on January 5, 2017. The ECB has already harmonized the application of options and discretions for the banks that it directly prudentially supervises under the Single Supervisory Mechanism.

In both the Guideline and Recommendation, many of the options and discretions are applied in the same way for less significant firms as for significant firms. A number of options covered by the Recommendation are to be assessed on a case-by-case basis following a common approach.

National regulators within the Single Supervisory Mechanism must apply the Guideline from January 2, 2018, except for certain of the provisions on liquidity. The Recommendation is addressed to national regulators within the Single Supervisory Mechanism, but is not legally binding.

View the Guideline.

View the Recommendation.

View the ECB feedback statement.