Less Significant Institutions (LSI) Supervisory Report 2024

Navigating the path ahead – part 2/3

Under part 2 of our Risk & Regulatory Priorities series, we examine the key findings from the Less Significant Institutions (LSI) Supervisory Report 2024. Hereby, we draw practical conclusions and implementation advice for the workprogrammes of institutions with different size and complexity to (LSIs as well as SIs).

For background context, we refer to Part 1 of the series: SREP Results: Risk & Regulatory Priorities and practical Implications for Financial Institutions - BDO

The ECB’s LSI Supervisory Report provides an in-depth analysis of the structural characteristics of the LSI sector, key developments, and major supervisory activities aimed at addressing challenges from a regulatory perspective. When assessing recent trends, while LSIs continue to demonstrate stable profitability and liquidity positions, the outlook for a potential rise in non-performing loans (NPLs) and the increasing impact of idiosyncratic risk drivers highlight the need for prudent risk management.
For the next part, we will present the ECB's supervisory priorities for the years 2025 to 2027 and in particular their implications on institutions.

Our objective: to equip you with actionable insights to navigate an evolving regulatory landscape, where effective risk management remains a key strategic enabler.