Claudia Buch: Results of the 2024 Supervisory Review and Evaluation Process (SREP) and the supervisory priorities for 2025-27

Introductory statement by Prof Claudia Buch, Chair of the Supervisory Board of the European Central Bank, at the press conference on the 2024 Supervisory Review and Evaluation Process (SREP) results and the supervisory priorities for 2025-27, Frankfurt am Main, 17 December 2024. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Let me welcome you to my first press conference as the Chair of the Supervisory Board of the ECB. This year marks the tenth anniversary of the Single Supervisory Mechanism, which provides a good opportunity to reflect upon what we have achieved so far and what we can improve on.

Over the past decade, European banking supervision has contributed to the increased resilience of European banks and thus to financial stability. The results of the annual Supervisory Review and Evaluation Process (SREP) for 2024, which we have published today, show that the banks directly supervised by the ECB generally have strong fundamentals. The asset quality of European banks is robust, they have overall solid capital positions, good levels of profitability, and are a reliable source of funding and financial services for European households and firms.

Looking ahead, banks will need to adapt to a changing environment. Faced with heightened geopolitical risks, structural change, climate and environmental risks, and downside risks to the macroeconomic outlook, strong financial and operational resilience will remain key. Corporate insolvencies are on the increase, potentially leading to higher credit risk. The public sector may have more limited capacity than in the past to buffer adverse shocks. The digitalisation of financial services is changing the competitive landscape. Banks must therefore remain vigilant and prudent to sustain their business and operations. Their currently good levels of profitability provide them with an opportunity to strengthen their resilience.

Against this background, the current SREP cycle has not resulted in major changes to banks' SREP scores or overall Pillar 2 requirements in aggregate terms. The annual Supervisory Review and Evaluation Process assesses each bank's risks, business model viability and resilience. Where we identify shortcomings, supervisory measures are put in place that ensure remediation by the banks. Banks' individual SREP scores and Pillar 2 requirements take bank-specific risks into account.