The EU is preparing the most extensive reform of banking supervision simplification in the last decade.
The reforms proposed by the ECB aim to simplify banking supervision and reduce administrative burdens, without relaxing resilience standards, through a multi-annual SREP model, accelerated procedures, and a more proportional reporting framework.
Brussels, December 11, 2025 - The European Central Bank has presented an extensive agenda for banking supervision reform, aiming to simplify assessments, reduce reporting, and accelerate the decision-making process starting in 2026. The Governing Council has approved a parallel set of legislative recommendations aimed at reorganizing capital buffers and creating a single European reporting system.
In short
The ECB is transforming the SREP process into a multi-annual model focused on material risks.
Supervisory decisions will be adopted more quickly through delegation and automation.
Reporting is simplified by reducing obligations and introducing materiality thresholds.
Stress tests become more proportional and less burdensome.
The ESRB proposes the elimination of about 30 legal obligations without macroprudential relevance.
The Governing Council recommends restructuring capital buffers and a single reporting regime in the EU.
The ECB report "Streamlining supervision, safeguarding resilience" shows that, starting in 2026, the SREP prudential assessment will no longer cover all risks for each bank annually, but will operate on the basis of a multi-annual cycle, with analyses tailored according to the institution's profile and emerging risks. The new approach allows Joint Supervisory Teams to focus on areas with real impact and reduce the volume of administrative measures.
The reformed SREP includes clearer assessments, earlier communication with banks, more stable methodologies, and extensive use of digital tools for automating operational stages. The ECB emphasizes that simplification does not change resilience standards but serves to enhance the capacity to respond to risks such as cyberattacks, market changes, or digitalization.
The ECB will expand the delegation framework so that a larger portion of current decisions — including fit-and-proper assessments and authorizations — can be adopted more quickly, in line with IMF recommendations on European supervision. The new procedures will reduce processing time, supporting more stable governance in supervised institutions.
For low-risk transactions affecting capital, the ECB introduces a "fast-track" process that will allow decisions to be finalized in about two weeks, alongside the implementation of dedicated digital infrastructure. The standardized model of applications and the automation of decision project generation will reduce the administrative burden for both banks and supervisors.
The ECB will reduce the complexity of stress test exercises by increasing proportionality and using more flexible analytics, including exploratory scenarios and internal ICAAP tools when justified. In view of the 2027 EU exercise, the ECB is collaborating with the EBA to simplify templates and better align reporting with actual supervisory needs.
In terms of reporting, the ECB is preparing a significant reduction in obligations, including a decrease in the "Short Term Exercise" package for 2026 by about 18.5%, as well as periodic assessments to eliminate redundant requirements. A new system will introduce materiality thresholds for minor errors, reducing the obligation to resubmit data when the impact is insignificant.
According to the ESRB letter of October 31, 2025, approximately 90 additional obligations are assigned to them by EU legislation, of which about 30 have no systemic relevance and can be eliminated through legislative changes. In many cases, the ESRB is required to provide opinions or consultations in situations with limited impact, which generates unnecessary resource consumption.
The ESRB assessment proposes the abandonment of these obligations and the reorganization of provisions in CRR, CRD, EMIR, or Solvency II, so that its involvement remains focused on preventing systemic risks.
The recommendations sent to the European Commission include reorganizing the structure of capital buffers, reducing the leverage ratio framework, and extending the special regime for small banks, through harmonized criteria and simplified rules. The EU-level reporting system should, in the ECB's vision, allow banks to report once for all relevant authorities, and a complete review of requirements should be conducted every three to five years.
The Governing Council also encourages the completion of the banking union and the transition of key legislation from directives to regulations, to reduce fragmentation in application across member states.
