The European Central Bank has published the results of the Supervisory Review and Evaluation Process (SREP) for 2025, which covered 105 directly supervised banks. The assessment looked at capital, liquidity, profitability, governance and risk management. The overall picture highlights widespread solidity: in the second quarter of 2025, primary tier 1 capital (CET1) reached an average of 16.1% of risk-weighted assets, while the leverage ratio stood at 5.9%. Total capital is also solid at 20.2%. Liquidity reserves continued to exceed the regulatory minimum, with an LCR of 158%. On the income front, banks benefited from the interest margin and commissions, with a return on capital improving from 9.5% in the fourth quarter of 2024 to 10.1% in the second quarter of 2025. The quality of assets remains high, with an incidence of NPLs equal to 1.9%.
2026 capital requirements and SREP measures
In light of the results, the ECB confirmed overall CET1 requirements stable at 11.2% for 2026, while the second pillar requirements remain at 1.2%. Pillar 2’s non-binding guidance falls from 1.3% to 1.1%, reflecting the recent stress test, which showed smaller losses thanks to banks’ ability to absorb them through higher profits. The quality measures introduced in the new SREP cycle decrease by approximately 30% compared to the previous year. Supervisory requests mainly concern credit risk (40%), governance (17%), capital adequacy (11%) and operational risk (10%), including aspects such as monitoring credit portfolios and improving the ICAAP framework.
Supervisory priorities 2026-2028: resilience and risk management
Looking ahead, the ECB reports that banks operate in a complex context, defined by growing geopolitical risks and rapidly evolving business models due to digitalisation and competition from non-banks. The first supervisory priority for the three-year period 2026-2028 is therefore to strengthen the ability of banks to resist macrofinancial and geopolitical shocks. This requires strong credit criteria, adequate capitalization compliant with CRR3 and prudent management of climate and natural risks.
Technology, data and operational resilience
The second priority indicated by the ECB concerns operational resilience, with particular attention to information systems. Banks are challenged to strengthen operational risk management, address gaps in data reporting and aggregation, and ensure reliable IT infrastructures. Greater technological robustness is considered essential to ensure operational continuity and stability of the European banking system in a scenario characterized by digital threats and growing operational complexities.
