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Operating within the SSM

A key role in banking supervision in Europe

French monetary authorities, including the ACPR, quickly learned the lessons from the crisis and acted as a driving force in establishing Europe’s system of banking supervision and determining its operating procedures. The 2008-2010 crisis, and especially the sovereign debt crisis that subsequently hit several European countries, exposed the risks of contagion or confusion between the sovereign sphere and the banking system. With its supranational and independent qualities, the Single Supervisory Mechanism (SSM) was designed to break the vicious circle between banks and national public finances. As a result, the SSM greatly enhanced the credibility and effectiveness of prudential supervision.


France’s monetary authorities played a key role in setting up the European System of Financial Supervision (ESFS) in 2011, and later in swiftly establishing the SSM (2014) and SRM (2015) as part of the Banking Union. French authorities worked hard within Europe and at home, speaking to Parliament, industry and the public to explain the foundations and goals of the European Banking Union. Their efforts, coupled with those of their European partners, enabled political and institutional agreement to be reached and implemented quickly.


At institutional level, the ACPR, alongside the Banque de France, provided precious technical assistance in setting up the central bodies of the SSM and the SRM by leading and actively participating in working groups, seconding staff and engaging in close collaboration to facilitate the organisation and start-up of key structures.


On the technical front, the ACPR provided expertise to the SSM in the main areas of prudential supervision and helped to structure its organisation, particularly by giving on-site inspections a central role in prudential supervision (see below). It also supplied advanced technical expertise in the assessment of internal risk measurement models.


An important part in SSM operations

Since 4 November 2014, the ACPR, like all euro area national competent authorities (NCAs), has been taking part in ECB/SSM decision-making processes. The ACPR is also involved alongside the ECB in the ongoing prudential supervision of euro area banks, supplying the lion’s share of JST personnel.


As regards licensing decisions, applications are, as before, reviewed by the ACPR and, if deemed compliant, passed on to the SSM for a decision. The ACPR has also retained specific licensing powers over investment firms, payment institutions and electronic money institutions, continuing to have exclusive responsibility for licensing and supervising these entities.


With regard to banking supervision specifically, the ACPR continues to play a central role in direct and indirect ECB supervision. ECB direct supervision of the largest, or “significant”, banks sees national authorities work together in Joint Supervisory Teams (JSTs) that report to a coordinator based at the ECB, who is supported by local sub-coordinators at the national authorities. The local sub-coordinator coordinates supervision at the domestic level while liaising with the ECB coordinator on key issues, notably where aspects that go beyond national boundaries are involved. The ACPR therefore participates actively in the JSTs, supplying the majority of their members in fact. These staffmembers provide recognised technical expertise as well as proven knowledge of the operating conditions and environment of supervised entities.


In France, the ACPR’s sub-coordinators play an especially important role, given the importance of specific regulations applicable to certain banks or banking products, such as regulated savings or covered bonds. Similarly, the complexity of public funding provided to certain institutions and the peculiarities of financing for local government require domestic expertise that the ACPR alone can provide within the JSTs.


The ACPR also takes part in discussions within the ECB Supervisory Board regarding prudential decisions pertaining to the largest banks.


The ACPR thus continues to play an essential part in supervising the largest banks; it performs a critical coordination role at domestic level and supplies the lion’s share of JST personnel.


In addition, the ACPR is the sole authority for the entire supervisory cycle of smaller banks, from licensing to resolution, as well as for investment and payment services companies and finance companies.


These powers apply to the entire supervisory cycle and require substantial resources owing to the large and diverse population supervised. The ACPR exercised these powers as it helped the Paris financial community get ready for the challenges presented by Brexit and took steps to welcome institutions looking to set up in France.


The ACPR provides ECB supervision with a broader vision

One effect of establishing the Banking Union was to consolidate the sector-based model of supervision in the euro area, because the ECB cannot be assigned prudential powers in the insurance sector[1]. As a result, the ECB has specialised prudential powers that apply solely to the banking sector. Conversely, national supervisory authorities have been able to adopt a more global approach, typically covering the entire financial sector: of the 19 national authorities represented on the ECB Supervisory Board, 15 have powers that extend to the insurance sector as well.


The vertical nature of ECB supervision is further enhanced by the fact that two major areas of supervision fall under national jurisdiction: customer protection and AML/CFT, which remain under the jurisdiction of Member States and are key areas in effective overall supervision.


The ACPR, like the other NCAs, also retains responsibility for supervising investment firms, including those that are part of banking groups.


NCA participation in the SSM thus offers the benefit of maintaining a link between different levels of supervision, which may interact to a significant degree, for example in the organisation of the compliance function and its inclusion in the overall governance of institutions operating at European level.


In terms of disciplinary sanctions, the ECB may only impose fines and only for breaches of directly applicable European law (CRR and associated regulations). For any other breach, even by the largest institutions, and, as the case may be, their senior managers, the NCAs – including the ACPR for France – open disciplinary proceedings and impose sanctions, at the request of the ECB. The ECB withdraws the licences of significant and non-significant credit institutions, notably following a sanction imposing a total ban on activity imposed by the ACPR and at the latter’s request.


The ACPR, alongside other European national supervisors, thus wields specific and vital powers under the SSM. It adds to these its own specific powers, which stem from its unique supervisory model.


In the first place, the ACPR has SSM-related powers at the level of the Banking Union to:

  • review licensing applications;
  • take part in supervising the largest banks;
  • supervise banks, except for the largest institutions;
  • gather data and analyse markets;
  • play a role in carrying out comparisons and impact studies to calibrate regulations and supervisory tools such as stress tests.


In the second place, the ACPR has specific cross-cutting powers within the financial sector covering:

  • joint supervision of the banking and insurance sectors;
  • customer protection: cooperation at national level (ACPR-AMF Joint Unit) and international level;
  • AML/CFT : ACPR supervisory assignment / technical cooperation, international and European negotiations ; negotiations;

  • supervision of the separation of market and deposit-taking activities;

  • rules applicable to mortgage credit companies.


With these cross-cutting powers, the ACPR can perform integrated supervision that strengthens the oversight carried out by the ECB, for example in terms of supervising financial conglomerates and bancassurers (see 1.2, above).


The ACPR’s powers to deal with the risk of misconduct also help to boost stakeholder confidence and improve the integrity of the financial sector through better customer protection and AML/CFT supervision (see below).


Europe’s new supervisory model is characterised by strengthened central sector-specific powers, particularly in the case of the Banking Union, and by national-level supervisors, many of which have expanded their powers horizontally.


National authorities wield powers that usefully complement prudential supervision because of their relationship with supervised entities and specifically their:

  • in-depth knowledge of the environment and operating conditions of institutions established on their national territory and
  • experience gained from other functions.



[1] TFEU, Article 127.6.

The ACPR has significant bank resolution powers

Since the Act on the Separation and Regulation of Banking Activities was passed in 2013, the ACPR has been given new resolution powers and a specific college that performs resolution tasks, which are distinct from the ACPR’s supervisory assignments. As part of its responsibilities in this area, the ACPR draws up preventive resolution plans for institutions that are required to prepare recovery plans.


The ACPR’s resolution responsibilities are assigned under the second pillar of the Banking Union, which was defined in 2014 by the Single Resolution Mechanism (SRM) Regulation. In the first stage in 2015, the SRM transferred to the Single Resolution Board the power to draw up resolution plans for banking institutions deemed to be significant or conducting cross-border activities within the Union.


Within the SRM, the ACPR is responsible for implementing the resolution regime, which consists in exercising the powers entrusted by the BRRD to resolution authorities to prevent and manage banking crises. In performing its resolution function, the ACPR is in direct contact with all French banks (including those under direct ECB supervision), which send it individual information and data. As regards resolution, the ACPR also has the power to initiate ongoing supervision, documentary audits and on-site inspections. The ACPR ensures, furthermore, that European resolution decisions are implemented.


The fact that the ACPR brings together supervisory and resolution functions under the same roof enables effective coordination and a smooth flow of information providing equal input to both functions. This makes it possible to ensure continuity and consistency between the preventive recovery plans drawn up by supervised banks and the resolution plans drawn up by the ACPR. This continuity relies in particular on a joint analysis of institutions’ critical functions.


Collaboration between supervision and resolution is especially close in the case of non-significant banks, i.e. those not subject to direct ECB supervision. Notably, it makes it possible to prepare crisis management measures, which may be qualitative (reduce obstacles to restoring the solvency of a credit institution, especially in the case of a group with a complex structure) or quantitative (ensure that the necessary resources are available in a timely fashion to successfully complete the resolution). Preventive measures require ongoing monitoring and action by the resolution authority, necessitating significant interaction with the supervisory function.


The close institutional ties between the central bank and the supervisory and resolution functions also give the ACPR a louder voice in international negotiations, because it has an overall vision of the factors that contribute to financial stability. Accordingly, the ACPR is in a position to assess the required interactions between monetary and prudential factors in crisis prevention and resolution. Last but not least, the ACPR can use its resolution powers to enhance customer protection in the banking sector (see below).


The ACPR is involved in developing the regulatory framework and international cooperation

Since the SSM was established, the ACPR has continued to participate actively in developing the international regulatory framework. Within Europe, the ACPR is represented in EBA bodies and is active in several strategic projects that are being conducted to set European technical standards. The ACPR has provided expertise to assist the French Treasury in transposing and implementing directives and regulations in all of its sectors of activity. And because of its expertise in the area, it recently participated in a European Commission consultation on revising the European Directive on Financial Conglomerates (Ficod).


Internationally, the ACPR represents France on the Basel Committee on Banking Supervision, where it works to forge European positions wherever possible. In particular, the ACPR participated actively in the Committee’s work in response to the 2008 financial crisis, which resulted in an extensive reform of international banking regulations through the Basel II and III frameworks.


All in all, ACPR staff are involved in around 150 international working groups. In addition to these efforts, the ACPR holds regular discussions with banking industry representatives, notably during public consultations.


Updated on: 06/12/2018 10:24