Although the LSI sector as a whole is overseen by the ECB in matters of risk concentration, the individual institutions continue to be directly supervised by the national competent authorities. The ECB and the national supervisors are currently in the process of developing joint standards for the supervision of these smaller banks.
Here, too, harmonising standards up to a certain degree is a necessary and welcome measure. That said, it is particularly important – as far as LSIs are concerned – to give national supervisors sufficient leeway to allow for the particular characteristics of individual institutions. Supervising LSIs is, and should be, a matter for national supervisors.