Accountability Gaps in the Single Supervisory Mechanism (SSM) Framework

• Author: Argyro Karagianni, Miroslava Scholten
• Position: PhD Candidate, Utrecht University, Utrecht Centre for Regulation and Enforcement in Europe (RENFORCE), NL/Associate Professor of EU Law, Utrecht Centre for Regulation and Enforcement in Europe (RENFORCE), Utrecht University, NL
• Pages: 185-194

Argyro Karagianni and Miroslava Scholten, ‘Accountability Gaps

in the Single Supervisory Mechanism (SSM) Framework’ (2018)

34(2) Utrecht Journal of International and European Law

pp. 185–194. DOI: https://doi.org/10.5334/ujiel.463

UTRECHT JOURNAL OF

INTERNATIONAL AND EUROPEAN LAW

RESEARCH ARTICLE

Accountability Gaps in the Single Supervisory

Mechanism (SSM) Framework

Argyro Karagianni* and Miroslava Scholten†

The first judgement of the General Court (EU) pertaining to the Single Supervision Mechanism

(SSM) raised an issue concerning the source of the shared supervisory powers in the system of

EU prudential supervision. In the General Court’s view, the SSM Regulation conferred on the

European Central Bank (ECB) exclusive powers to carry out specific prudential supervisory tasks

vis-à-vis all euro area credit institutions (significant and less significant). At the same time, the

ECB’s national counterparts assist the former in implementing its supervisory tasks vis-à-vis

less significant credit institutions. We argue that such a scheme requires a clear accountability

relationship also between the ECB and the national competent authorities (NCAs), something

that is not fully fledged in the current legal framework.

Keywords: ECB; Single Supervisory Mechanism; accountability; banking supervision

I. Introduction

Prudential supervision in the EU has drastically changed since the 2014 entry into force of Regulation

EU/1024/2013 establishing the Single Supervisory Mechanism (SSM Regulation).1 According to Article 4(1) of

the SSM Regulation, the European Central Bank (ECB) assumed the role of the exclusive prudential supervisor

over the euro area credit institutions. The ECB did not, however, fully replace national competent authorities

(NCAs). NCAs assist the EU authority in discharging its supervisory tasks.2 Indeed, banking supervision has

become very much shared between the EU and national level authorities and staff.3 The ECB has taken control

over the ‘significant credit institutions’ (SIs), i.e. 120 groups representing approximately 1,200 supervised

entities (out of 4,700 in total).4 At the same time, NCAs oversee the ‘less significant credit institutions’ (LSIs).

Moreover, concerning the supervision of SIs, the joint supervisory teams (JSTs) – entrusted with the day-

to-day supervision of individual banks – are composed of EU and national staff members.5 The system of

banking supervision has thus truly become ‘shared’. While (academic) research has given significant atten-

tion to the SSM, its operation and its accountability mechanisms,6 little attention has been given to the exact

* PhD Candidate,

Utrecht University, Utrecht Centre for Regulation and Enforcement in Europe (RENFORCE), NL.

Contact: a.m.karagianni@uu.nl.

† Associate Professor of EU Law, Utrecht Centre for Regulation and Enforcement in Europe (RENFORCE), Utrecht University, NL.

Contact: m.scholten@uu.nl.

1 Council Regulation (EU) 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the

prudential supervision of credit institutions (SSM Regulation) [2013] OJ L 287.

2 Article 6(3), SSM Regulation.

3 Ton Duijkersloot, Argyro Karagianni and Robert Kraaijeveld, ‘Political and Judicial Accountability in the EU Shared System of

Banking Supervision and Enforcement’, in Miroslava. Scholten and Michiel Luchtman (eds), Law Enforcement by EU Authorities.

Implications for Political and Judicial Accountability (Edward Elgar 2017).

4

For a list of significant supervised entities see: European Central Bank, ‘List of Supervised Entities’ ttps://www.bankingsupervision.

europa.eu/ecb/pub/pdf/list_of_supervised_entities_201709.en.pdf?aaff7233233ab4ae58a1b4acfc3a7b5a> accessed 23 July 2018.

5 Regulation (EU) 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within

the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national

designated authorities (SSM Framework Regulation) [2014] OJ L 141, art 4.

6 Duijkersloot, Karagianni and Kraaijeveld (n 3); Laura Wissink, Ton Duijkersloot, Rob Widdershoven, ‘Shifts in Competences

Between Member States and the EU in the New Supervisory System for Credit Institutions and Their Consequences for Judicial

Protection’ (2014) 10 Utrecht Law Review 92; Gijsbert Ter Kuile, Laura Wissink, Willem Bovenschen, ‘Tailor-made Accountability

Within the Single Supervisory Mechanism’ (2015) 52 Common Market Law Review 155; European Court of Auditors, ‘Special

Report No 29/2016: Single Supervisory Mechanism – Good Start But Further Improvements Needed’ ttps://www.eca.europa.