More than a decade after the establishment of the Single Supervisory Mechanism and the European Supervisory Authorities, European banking supervision remains highly complex. This article looks at the issues raised during our latest symposium in collaboration with the Association of German Banks that warrant further discussion.
White & Case LLP, in collaboration with the Association of German Banks (Bundesverband deutscher Banken), hosted a symposium "Towards more efficient banking supervision: clear rules for the SSM and ESAs" at the office of White & Case in Frankfurt on 11 June 2025.
The event examined the current state of the system of European banking supervision. The establishment of the Single Supervisory Mechanism (SSM), which includes the European Central Bank (ECB) and national supervisory authorities, along with the European Supervisory Authorities (ESAs), has significantly harmonized banking supervision in Europe following the global financial crisis and the euro area crisis. However, more than ten years after the creation of the SSM, European credit institutions face a highly complex regulatory system, complicated institutional structures and an abundance of continuously growing rules and regulations. These developments, coupled with ongoing debates about Europe's competitiveness and a strong tendency to deregulate in countries such as the US, call for a review of the status quo and prompt questions about the need for reforms.
In this context, at the symposium, representatives of both academia and practice engaged in two panel discussions on the role of the SSM and the ESAs as well as possible improvements. While participants agreed that the supervisory system has successfully fostered financial stability in Europe, they acknowledged existing challenges. Key issues addressed included the appropriate level of harmonization within the participating European Member States, given the specificities of national banking sectors, and the scope and limits of the ECB's powers. In addition, the panelists discussed the need of an extension of the SSM's statutory mandate with regard to the objective of facilitating the international competitiveness of the EU economy and banking industry as well as the need to reduce and simplify the level of detail of regulatory requirements set by the ESAs and possible solutions.
Overall, the symposium highlighted several current issues that warrant further study and discussion. These include:
- The adequacy of the balance between tasks, powers and procedures within the SSM, with a focus on aligning supervisory objectives with the legitimate interests of institutions and ensuring the proportionality of supervisory measures.
- Possible ways to ensure financial stability while also considering or strengthening the competitiveness of European institutions, e.g. by expanding the SSM's mandate to include the facilitation of competitiveness.
- The scope of supervisory powers and competencies and the risk of the ECB "empowering itself" by acting as a rule maker.
- The necessity of the current level of complexity and ever-growing number of regulatory requirements for effective supervision, especially concerning level 2 and level 3 frameworks and potential ways for simplification.
- Implications of and challenges to the implementation of the 2025 Savings and Investments Union strategy of the European Commission.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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