ECB reflects on supervisory priorities for 2017

Danièle Nouy, Chair of the Supervisory Board of the ECB, made the introductory statement in Brussels yesterday.

Current supervisory priorities comprise three high-level areas:

  1. business models and profitability drivers;
  2. credit risk with a focus on NPLs and concentrations;
  3. risk management.

These priorities reflect the ECB’s view that the key risks identified in 2016 remain, for the most part, relevant in 2017.

The ECB highlighted, as part of the priority area of risk management, that they will conduct a targeted review of internal models, also referred to as TRIM, to level the playing field for banks by reducing unwarranted variability in risk weights. In other words, they will review whether banks have correctly and consistently implemented their Pillar 1 internal models for the calculation of own funds requirements.