EU audit agency casts shadow on ECB crisis management plan

Author: Olly Jackson | Published: 18 Jan 2018

The European Court of Auditors (ECA) has pointed out flaws in the European Central Bank’s (ECB) operational framework for crisis management following an audit into its bank supervision measures.

The ECA said while the process for the assessment of a bank’s recovery plan is positive, there are signs of inefficient implementation in the ECB’s wider crisis framework. In particular, the ECA highlighted the lack of guidance for early intervention assessments and of systematic criteria to determine when a bank enters into a crisis situation. Guidance on failing or likely to fail banks (FOLTF) is also said to have insufficient detail.

The ECB has rejected this recommendation, insisting that it has already developed guidance on FOLTF and objective elements are described in full in European Banking Authority guidelines. The ECB accepted six of the other seven recommendations, including organisational improvements and improved dialogue with the Single Resolution Board (SRB). However, it criticised...