2013 a formal“ladder of actions” for banking supervision
Ladder of actions for banking supervision: BaFin adopted in December 2013 a formal
“ladder of actions” for banking supervision that sets out a series of supervisory actions
and measures when deficiencies are identified in organisational matters, capital
adequacy or liquidity.
Although the ladder includes some forward-looking elements,
its effectiveness could be further enhanced by placing greater emphasis on forward-
looking elements (e.g. Risks to the long-term viability of a bank’s business model or
potential weaknesses stemming from its risk appetite and culture) as well as by
expanding quantitative and qualitative triggers beyond those found in the German
Banking Act and existing guidelines. These triggers should not be set as “hard” or
mechanical thresholds mandating actions to be taken once they are breached.
Rather,they should serve as internal guidance points to prompt further analysis/escalation by
supervisors. They would reduce the degree of subjectivity when implementing the
ladder and, bearing in mind the diversity of institutions, enable greater consistency of
actions across teams or when the need arises to escalate issues.
The introduction of such triggers may in some cases also help to reduce delays in supervisory responses to
bring about corrective action for banks and increase the willingness to act.
EU Forecast
euf:ba.18.j:26/nws-01