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Chair of the Supervisory Board of the European Central Bank (ECB) Danièle Nouy has arrived for a working visit in Latvia. In discussions with the managerial staff of the Financial and Capital Market Commission (FCMC) and the Chairman of the FCMC Pēters Putniņš, also a member of the ECB Supervisory Board, particular attention is being paid to the supervisory matters: bank management mechanisms, new business lines and strategies as well as risk management in the context of future challenges in the Eurozone.
Since 2014 Latvia is part of the Single Supervisory Mechanism, key pillar of the European banking union, and three most significant banks in Latvia have been supervised within the single mechanism for the Eurozone countries.
FCMC Chairman Pēters Putniņš: "We have been exercising supervision of Latvian banks within the ECB SSM already for the fourth year and it should be noted with satisfaction that this integration is becoming deeper. The SSM encounters different supervisory traditions of various countries, and through discussions these different experiences are gradually turning into a single supervisory approach. Facilitating this process also is a fundamental issue for the further development of SSM. Overall, stability and soundness reign in the Latvian banking sector; however, it is important to share opinions on the application and enhancement of supervisory methods, risk management in view of actual trends in the country, for example, the radical change in the business strategies of part of our banks. Efficiency of supervision depends also on how precisely the current supervisory tasks are chosen, whether the best experience gained in such cooperation has been used. Therefore we also actively work together with other European Union institutions – European Parliament, TAX3 Committee, European Banking Authority (EBA). A closer integration in the European structures provides for greater security, reliance on each other in complicated situations, new solutions to pressing problems, thus promoting overall stability and development of the unified European banking system."
In preparing for the next phase of the FCMC's work, key tasks will be the revaluation of supervisory priorities, stepping up of monitoring methodologies, as well as potential structural changes in the organisation of the institution, incl. giving up inefficient or unnecessary activities, in order to ensure efficient supervision of the Latvian banking sector based on resources available, in view of the developments in the Eurozone and urgent issues in the supervised industry.
Single Supervisory Mechanism (SSM):
The aim of the ECB Single Supervisory Mechanism is to ensure the safety and soundness of the European banking union, as well as balanced and steady progress and closer integration of European banking systems. The ECB has taken over direct supervision of the significant banks within the SSM framework coming into effect on 4 November 2014. The ECB in consistent cooperation with the FCMC oversees banking supervision in joint supervisory teams that are essential for day-to-day supervision. Currently, three largest banks In Latvia in terms of assets - Swedbank, SEB banka and Luminor Bank are under the oversight of the ECB in cooperation with the FCMC. All the Eurozone countries take part in the Single Supervisory Mechanism, currently 19 countries, but the rest of European Union countries have an opt-in option.