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Case Study

Single Supervisory Mechanism (SSM) Transition

FOCUS ON: Case studies,

SUMMARY

The regulatory classification of banking institutions, concerning their competent authority, is an important aspect that determines a lot about their regulatory obligations. Based on several criteria, a bank may be deemed significant. Banks that are not considered significant are known as “less significant” institutions, meanwhile, banks that are considered significant are known as “significant institutions”. When a bank transitions from a “less significant” institution to a “significant” institution, it will undergo many changes to comply with the increased regulatory requirements.

This bank would trigger the “significant institution” criteria and would therefore fall under the direct supervision of the ECB. In order to comply with the new regulations that apply to the bank, a gap assessment was performed. Avantage Reply Luxembourg was chosen to support the Bank's remediation efforts to comply with the ECB requirements.

CUSTOMER GOALS

The Bank’s CEO Office team required assistance with the overall management of the project, including but not limited to regulatory gaps in the area of credit and risk management such as ECL, NPE, DOD, SREP (ICAAP and ILAAP) etc. The primary goals were the following:

  • Identify areas of improvement if the bank falls under the direct supervision of the ECB
  • Develop corrective action plans to achieve compliance with EU requirements (incl. EBA and ECB)
  • Remediate identified gaps in the given timeframe until the bank triggers one of the direct supervision criteria
  • Assist in the overall management of the project (leading workstreams, managing deliverables, coordinating teams, reporting to senior management)

CHALLENGES

The overarching challenge was the cross-border nature of the project. The authorized executives that were involved in the project were in different locations and worked for different legal entities. Based on their preferences, the remediation work could differ but the overall progress had to be managed centrally. 

Additionally, the remediation work was performed across entities and relevant subject matter experts had to satisfy the business needs of several entities within the project.

SOLUTION

Avantage Reply provided several full-time resources who led the overall project management activities for all gaps and informed the project stakeholders on the overall progress, while at the same time providing technical and regulatory expertise to help address specific elements related to regulatory requirements.

The final delivery consisted of:

  • Project management deliverables (i.e., status updates, meeting minutes, budget estimations, relevant committees’ presentations etc.)
  • Business analysis of the trading set-up and the impact of the regulation (i.e., workflow maps and business requirements)
  • Technical analysis of the required changes in the IT infrastructure

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