The EBA's report on supervisory convergence aims to enhance the coherence and effectiveness of the European financial system by promoting uniform supervisory standards. It addresses key areas such as anti-money laundering, consumer protection, and technological innovation. This annual report also assesses the degree of convergence in supervisory review processes, thereby contributing to a unified supervisory…
The document is an annual report entitled "Report on Supervisory Convergence 2024", published in 2025 by the European Banking Authority (EBA). It covers convergence activities of banking supervision within the European Union, including prudential areas, resolution and crisis management, digital finance, consumer protection, and anti-money laundering and counter-terrorist financing (AML/CFT). The main temporal scope is the year 2024, focusing on supervisory practices and outcomes in the European banking sector. The report is based on approximately the first 38 pages provided, out of a total of 52.
The report addresses the convergence of banking supervisory practices in the European Union in 2024, a key issue to ensure a stable, transparent, and fair financial system. The EBA, in accordance with its mandate, aims to harmonize supervisory practices across several areas: prudential supervision, resolution and crisis management, digital finance, consumer protection, and AML/CFT.
Key findings show that competent authorities (CAs) have integrated the priorities defined by the EBA into their supervisory programs, notably on liquidity and funding risks, interest rate risk in the banking book, and operationalization of recovery plans. Risks are generally stable compared to 2023, but challenges remain, notably data quality, modeling of assumptions, and severity of stress scenarios.
In resolution, authorities have progressed in operationalizing resolution tools, notably bail-in, despite difficulties related to international coordination, quality of information systems, and liquidity management in crisis situations. Supervision of digital assets has been prepared ahead of the application of the MiCA regulation, with defined priorities for issuers of asset-referenced tokens and electronic money tokens.
The EBA has also continued its cross-cutting work such as peer reviews, Q&A, investigations on breaches of Union law, and its training program for competent authorities.
Main recommendations emphasize continued vigilance in supervising identified risks, continuous improvement of information systems and testing methodologies, strengthening cross-border cooperation, and operational preparedness for new regulatory frameworks, notably in digital finance.
This annual report is drafted to fulfill the EBA's regulatory obligation to provide an update on the convergence of banking supervisory practices in the European Union, notably within the framework of the Supervisory Review and Evaluation Process (SREP) provided by the Capital Requirements Directive (CRD). The objective is to ensure consistent and effective application of the European regulatory framework, strengthen financial stability, and promote a common supervisory culture.
The report relies on several tools, notably the European Supervisory Examination Program (ESEP) which annually identifies priority themes for supervision, as well as monitoring of supervisory and resolution colleges. It also covers cross-cutting activities such as peer reviews, Q&A, and investigations on breaches of Union law.
The scope is centered on the year 2024, focusing on prudential, resolution, digital finance, consumer protection, and AML/CFT themes. The report does not cover pages beyond page 38 provided.
Theme 1: Prudential Supervision
- Three key priorities in 2024: liquidity and funding risk, interest rate risk and hedging, operationalization of recovery plans.
- The majority of competent authorities (about 90%) have integrated these priorities into their supervisory programs.
- Risks are considered generally stable compared to 2023.
- Main challenges: data quality, modeling of assumptions (notably for non-maturity deposits), insufficient severity of stress and recovery scenarios.
- Authorities mainly used off-site analyses, on-site inspections, thematic reviews, and questionnaires.
- Supervisory colleges have improved cooperation, with action plans for 2024-2026 aiming to enhance frequency and quality of exchanges.
Theme 2: Resolution and Crisis Management
- Four priorities: operationalization of resolution tools (notably bail-in), information systems for valuation, MREL monitoring, liquidity strategy in resolution.
- Significant progress in coordination with central depositories and other stakeholders.
- Near-universal publication of bail-in mechanisms by authorities, accompanied by workshops and tests.
- Persistent difficulties in executing cross-border bail-ins, notably for liabilities governed by third-country laws.
- Development and testing of transfer tools (sale of business, bridge institution) with legislative and operational advances.
- Institutions' information systems for valuation are progressing but remain heterogeneous; regular tests conducted by authorities.
- Liquidity strategies in resolution are more detailed, but doubts remain about their feasibility in real situations.
- Increased monitoring of MREL requirements, with few breaches and limited recourse to deadline extensions.
Theme 3: Digital Finance
- Preparation for the implementation of the MiCA regulation, notably via the crypto-asset supervisory coordination group.
- Defined priorities for supervision of issuers of asset-referenced tokens (ART) and electronic money tokens (EMT): governance, financial resilience, management of technological and financial crime risks.
- Adoption of a supervisory manual and development of methodologies to ensure convergence.
- Organization of several thematic workshops on key topics (multi-issuance EMT, unauthorized cessation of activity, MiCA-PSD2 intersection, token classification).
Theme 4: Cross-cutting Activities
- Peer reviews on topics such as default definition, application of proportionality in SREP, tax integrity, and management of non-performing exposures.
- Management of Q&A and complaints, with a significant volume of requests processed.
- Continuous training program for competent authorities, with broad participation across member countries.
Established Facts:
- Competent authorities have largely integrated the priorities defined by the EBA into their supervisory programs.
- Risks related to liquidity, funding, interest rate risk, and implementation of recovery plans are generally stable in 2024.
- Resolution authorities have improved publication and implementation of bail-in mechanisms, as well as development of transfer tools.
- The majority of institutions comply with MREL requirements with few breaches.
- Information systems for valuation and liquidity management in resolution are progressing but remain heterogeneous.
Assumptions:
- Observed risk stability relies on data quality and rigor of stress scenarios.
- Effectiveness of resolution tools will depend on international coordination and resolution of legal obstacles.
Interpretations:
- Convergence of supervisory practices is progressing, but technical and operational challenges remain.
- Preparation for digital finance is underway, with particular attention to crypto-asset regulation.
Uncertainties:
- Impact of macroeconomic developments, notably interest rate volatility and liquidity market tensions.
- Institutions' capacity to quickly mobilize non-standard collateral in case of resolution.
- Effectiveness of bail-in mechanisms in a complex cross-border context.
The EBA concludes that convergence of banking supervisory practices in 2024 has progressed, contributing to the stability and resilience of the European financial system. However, several technical, operational, and legal challenges must be addressed to further strengthen this convergence.
Recommendations include:
- Continued rigorous monitoring of liquidity, funding, and interest rate risks, with particular attention to data quality and scenario severity.
- Strengthening cooperation and frequency of exchanges within supervisory colleges.
- Continuous improvement of institutions' information systems for valuation and liquidity management in resolution.
- Finalization and regular testing of resolution tools, notably bail-in and transfer tools, with attention to cross-border obstacles.
- Operational preparedness for supervision of crypto-assets in accordance with the MiCA regulation, implementing defined priorities.
- Maintenance of cross-cutting convergence activities, such as peer reviews, Q&A, and training of competent authorities.
The EBA plans to progressively intensify its convergence activities alongside the development of the single regulatory framework.
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