meta_id 2979867

On 18 November 2025, the European Central Bank (ECB) published its Annual Report on supervisory activities for 2025, detailing the supervisory performance and key developments across the euro area banking sector under the Single Supervisory Mechanism (SSM). The report confirms that euro area banks maintained resilience throughout 2025 despite elevated geopolitical uncertainties and macroeconomic pressures. As of the third quarter of 2025, the aggregate Common Equity Tier 1 capital ratio for significant institutions stood at 16.1%, while the liquidity coverage ratio remained robust at 157%, both significantly above regulatory requirements. The 2025 EU-wide stress test, conducted across 96 supervised entities, reaffirmed the banking sector's resilience in weathering severe economic downturns. ECB Banking Supervision established three supervisory priorities for 2026-28: strengthening banks' resilience to geopolitical risks and macro-financial uncertainties; ensuring operational resilience and robust information and communications technology capabilities; and advancing digitalisation strategies with strong governance and risk management. The ECB completed a comprehensive reform of its Supervisory Review and Evaluation Process (SREP) in October 2025, delivering decisions six weeks earlier than previous years and enhancing supervisory efficiency. The report highlights significant supervisory activities, including 163 on-site inspections and 77 internal model investigations conducted in 2025. Key findings identified material deficiencies in credit risk management, risk data aggregation and reporting, and operational resilience frameworks. The ECB imposed six pecuniary penalties totalling €8.8 million for breaches of prudential requirements. The ECB's expenditure on supervisory tasks in 2025 amounted to €689.8 million, with planned expenditure for 2026 estimated at €706.7 million, reflecting continued investment in supervisory technology and new mandates from the Digital Operational Resilience Act (DORA).