Overlooking European banking supervision over the past decade, the European banking sector has emerged “stronger and more resilient.”

This point was emphasised by Patrick Amis, Director General of the Directorate General Specialised Institutions and LSIs at the European Central Bank (ECB) during the Malta Financial Services Authority’s recent conference.

Titled ‘Navigating the Reforms in Banking Regulation’, the conference brought together banking industry leaders, regulatory experts, and supervisory authorities to discuss the latest regulatory reforms impacting the sector.

Mr Amis highlighted the achievements of the Single Supervisory Mechanism (SSM) over the past 10 years, emphasising the critical role it played in harmonising supervisory standards across the Eurozone.

The mechanism is a system of banking supervision in the EU, led by the ECB with the goal of ensuring the safety and stability of the European banking sector by monitoring and regulating banks more effectively. It was originally established in response to the 2008 financial crisis as part of the broader European Banking Union.

“The SSM has been essential in fostering stability and trust while upholding the principles of proportionality and a level playing field. This journey has reinforced how collaborative supervision can adapt to the diverse needs of banks across Europe, ensuring a secure financial future that serves all institutions and citizens alike,” he added.

Catherine Galea - Head of Banking Supervision, MFSA

The conference covered a wide range of topics including proportionality in banking supervision, the implementation of the new banking package, cybersecurity resilience, and the role of the Anti-Money Laundering (AMLA) in combating financial crime.

In his opening address, MFSA CEO Kenneth Farrugia, reaffirmed the MFSA’s commitment to supporting banks as they navigate these regulatory reforms.

In her keynote speech, Elizabeth Mc Caul, Member of the European Central Bank’s Supervisory Board, highlighted the opportunities and challenges that the sector will be facing. "Effective banking supervision requires a comprehensive perspective, integrating immediate risks with emerging challenges like technological advancements and geopolitical shifts to ensure a stable, resilient financial system - because stability and resilience form the bedrock of long-term competitiveness," she said.

Additionally, Chief Officer Supervision Christopher P Buttigieg spoke about proportionality proposing a Two-Tier EU Single Rulebook to differentiate between large, complex banks and smaller, less complex ones. The de Larosière approach to financial supervision, based on a Single Rulebook, Centralised Supervision, and Supervisory Convergence, has strengthened the resilience of the European financial system. However, its current implementation may be leading to excessive regulation that hampers competition and innovation.

Considering a Two-Tier Single Rulebook that differentiates between Large Complex Banks and Less Complex Banks could promote a more balanced regulatory framework for Europe’s financial sector.”

Catherine Galea, Head of Banking Supervision at the MFSA, remarked that “the conference aimed to update the industry on regulatory reforms, enhance transparency around our expectations, and encourage preparedness for upcoming regulations.”

Other interventions during the event included representatives from the European Commission, the De Nederlandsche Bank, the National Bank of Belgium, the Malta Bankers’ Association, BNF Bank, as well members from the MFSA’s Banking Supervision team.