ECB SSM Chair Danièle Nouy visiting Estonia
Today, 26 August 2014, Danièle Nouy, the Chair of the European Central Bank's Supervisory Board, is on a working visit to Estonia.
On 4 November, the European Central Bank’s Single Supervisory Mechanism will start direct supervision over banks with combined holdings of 85% of the banking sector assets in the Eurozone. The SSM will be automatic in all euro area countries, and non-Eurozone countries can also join on the basis of close cooperation agreements.
Nouy will meet heads and specialists from the Financial Supervision Authority and the Bank of Estonia to discuss issues of significance related to establishing the SSM.“At the ECB, we are well on track to assume supervisory responsibility of Europe’s largest banks on 4 November. For the first time, Europe will have a banking supervisor with a truly European mandate and this will enhance confidence in the supervision of banks and the banking sector at large. In this context, I am in Estonia today because it is important for me to meet the people I will be working with,” said Nouy.
While in Tallinn, Nouy will also meet the directors of the Estonian and Latvian Swedbank and SEB Bank as these two banks are the only ones operating in Estonia and Latvia that will come directly under ECB’s single supervision.
“Through the SSM, the ECB will assume new functions in the field of banking supervision that were previously in the competence of the national authorities. With the SSM, the ECB will be responsible for the granting and revocation of bank licences for Eurozone banks, granting permission for acquisitions of major holdings in banks, as well as compliance with fiduciary regulations and company management requirements,” said Kilvar Kessler, chairman of the board of the Estonian Financial Supervision Authority.
The Single Supervisory Mechanism (SSM) establishes a financial supervision system consisting of the European Central Bank and participating EU member states’ supervisory authorities. The basic function of the SSM is to ensure the security and trustworthiness of the banking system and to increase financial stability in Europe. Of the banks operating in Estonia, Swedbank and SEB Bank are directly in the purview of the ECB’s SSM. The Financial Supervision Authority generally decides in the case of other banks, following the guidelines from the European Central Bank, where applicable.
The SSM is competent to perform monitoring compliance with all capital supervision regulations, to lead on-site and off-site inspections at the banks under direct supervision and to implement sanctions. The SSM system does not encompass oversight regarding fulfilment of capital requirements at other financial institutions, supervision in the field of financial services, oversight regarding implementation of rules for prevention of money laundering and many other areas.
Besides the Single Supervisory Mechanism, the pillars of banking union being established in the European Union also include a common depositor guarantee scheme and a single resolution mechanism.