 Good morning, everybody. Welcome to this press conference on banking supervision. Let me introduce our main speakers who you know, of course, the chair of the Supervisory Board, Danielle Nui, and to her right, the vice chair, Sabine Lautenschläger. They will both make brief introductory remarks. We're holding this press conference today on the occasion of the release of the annual report on Supervisory activities, which covers our first full year of operations. As you know, the report was presented yesterday to the European Parliament by Miss Nui, who was in Brussels for that occasion. She will say a few words on behalf of all of us on the events that happened there yesterday before we go into the introductory statements. Danielle, please. Thank you, Connie. Good morning, everybody. Let me take this opportunity to express our deep sympathy to the victims and their families of the tragic events yesterday morning in Brussels. I speak on behalf of all of us when I say that we feel great sorrow and also great solidarity with the people of Brussels on Belgium. Such events remind us how important it is to stand together in Europe. Our thoughts are with the victims and their families. With that, let me return to my preparatory preliminary statement. I welcome you to our press conference on the ECB annual report on supervisory activities for 2015. Having already presented the report at the European Parliament in Brussels yesterday, I would like to take the opportunity today to look beyond the annual report on beyond 2015. Early this year, the banking sector took centre stage when volatility increased and bank share prices dropped. In that line, I find it reassuring that European banks have become much more resilient over the past few years by significantly increasing their capital ratios. Since 2012, the CET1 ratio, for instance, has moved from 9% to 13%. Still, the recent episode of volatility revealed uncertainty on the part of investors, not necessarily with regard to banks' resilience, but rather to banks' profitability. Against the backdrop of a continuing period of low interest rates, a weakening global economy ailing emerging markets on plunging oil prices. Many investors worry about the ability of banks to adjust their business model and sustain their profitability. We too see the adjustment of business models as the biggest challenge of the European banking sector. Other challenges include credit risk on a certain levels of non-performing loans, a reversal of the search for yield, conduct on governance risk, sovereign risk, geopolitical risk, growing vulnerabilities in emerging economies, as well as IT on cybercrime. Based on this risk, we have defined five priorities that will guide our supervisory work in 2016. First, we will look at banks' business models on profitability. Second, we will look at credit risk, particularly with regard to non-performing loans. In that connection, we established a dedicated working group last year, which had been tasked with supporting a reduction in the stocks of non-performing loans. Third, we will look at capital adequacy. For example, with regard to bailing capital. Fourth, we will look at risk management on governance. Given the current environment of very low interest rates on abundant liquidity, it is increasingly important that banks manage their risk appropriately. On fifth, we will look at liquidity. That said, I'm certain that banks would add another challenge, namely the need to cope with many changes in the regulatory framework. Yes, there have been a number of changes, and yes, efforts are required in adapting to them. We understand that and we strive for regulatory certainty in order to enable banks to plan accordingly and address risk appropriately. Nevertheless, we should not forget where we have come from, namely a fragmented banking sector in Europe on a global financial crisis. Against that backdrop, regulatory reform was necessary. What has been done had to be done. The new capital on liquidity requirements have increased the resilience of individual banks of the entire banking system. Systemically, we are in a much stronger position that we were before the last crisis. Wherever the next storm blows in from, banks will be more resilient. And if a bank does fail, the new bailing rules will protect taxpayers. That in turn realises incentives for investors. The increase in spreads for certain capital instruments is a sign that markets are adjusting to these new rules. Moreover, Basel Tree, the centrepiece of regulatory reform, is about to be finalised in 2016. There will be no significant further increase in capital requirement. And we are not discussing Basel IV, the regulatory reform is coming to an end. It has paved the way towards a more stable banking system. Granted, it has been a long journey and not an easy one. The crisis has undermined confidence in banks and it will take time and effort to fully restore it. The recent outburst of volatility was a case in point. We as supervisors contribute together with regulators to restoring confidence in the banking system. But the banks themselves need to make sure they have viable business models and the banks themselves have to manage their risk prudently. Acknowledging this and acting accordingly is another necessary step towards the objective of a stable banking system that serves the real economy. Thank you for your attention. Ladies and gentlemen, I also welcome you to our first press conference. Danielle Nui has just pointed at the regulatory reforms as a source of change for the banking system. Nevertheless, there has been another reform that brought about major change. I'm of course talking about European banking supervision and bringing banking supervision to a European level was just as necessary as regulatory reform. And like regulatory reform, it will help to restore confidence in the banking system. What are the actual benefits of European banking supervision? First, European banking supervision does not stop at national borders but takes a European perspective. And if I may say so, sometimes it's advantageous when you are a little bit more distant in your decision making. It can therefore compare and benchmark banks across borders in order to identify problems early on. Second, European banking supervision combines the experience and the expertise of 19 national supervisors and the ECP can therefore draw on a huge pool of analytical power. Third, European banking supervision can act when action is called for. Ultimately, European banking supervision ensures that banks across the entire euro area are being supervised according to the same high standards within the scope of national legislation. In 2015, we took important steps in that direction. For instance, with regard to our main instrument of banking supervision, the supervisory review and evaluation process or SREP for short. Capital requirements based on a risk-based and forward-looking analysis and embedded in SREP are essential in safeguarding the stability of the financial system. In 2015, the SREP was for the first time ever conducted according to a harmonized methodology. Banks across the euro area were measured against a common yardstick. Consequently, we now observe a stronger correlation between the risk profile of the institutions and the relevant supervisory capital requirements. In 2016, we will further refine the SREP. In that context, we asked for clarification regarding the legal underpinnings of SREP and received the European Commission's internal discussion paper for comments. We welcome the Commission's objective of creating regulatory certainty as this is crucial for both banks and markets. In 2016, the SREP will be supplemented by two stress tests. A EU-wide stress test conducted by the European Banking Authority, the EBA and a EU-wide stress test conducted by the ECB. The SSM will hence be able to assess all significant institutions in the euro area from a forward-looking perspective. For both stress tests, the provisions of the EBA's methodology will be relevant. The insights gained from the EBA and the ECB stress test will feed into the 2016 SREP and it's therefore not a pass-or-fail exercise. Moreover, any data quality and quality assurance issue that come to light during the exercise will also be incorporated in the 2016 SREP for the institution's concern. European regulation offers a large number of provisions which give supervisors some leeway in deciding on their concrete implementation. When we agreed on exercising these options and descriptions in a harmonized manner across the entire euro area in 2015, we took another step towards harmonizing banking supervision. The relevant regulation and a guide will enter into force in October 2016, so this year. To sum up, during the full year of European banking supervision, we have accomplished much towards the harmonization of banking supervision across the euro area, but there's still a lot of work ahead of us. We are, for instance, preparing a targeted review of banks' internal models. The background for our review is that many significant institutions use internal models to determine regulatory capital requirements. Our review seeks to reduce the non-risk-based variability in model-based capital requirements. Ladies and gentlemen, in our statement today, we have so far focused on the significant institution, those banks that are directly supervised by the ECB. However, we must not forget the around 3,200 less significant institutions, or LSIs, called. In many countries, those small and medium-sized banks are highly important for the regional and national economy. And as a group, they can be also relevant for national financial stability. Those banks are directly supervised by the National Competent Authority, and it is not our ambition to change this and directly supervise them. Rather, the SSM exercises oversight over the overall functioning of the system. And together with the National Supervisor, we are developing common supervisory standards, which take into account regional aspects as well as the size, business activities and risk profiles of individual institutions. Accordingly, we have agreed with the National Supervisors on, for instance, a joint standard on supervisory planning for LSIs. This standard enables the National Supervisors to define supervisory priorities for their LSIs according to a common methodology. In the same way, we have recently agreed on a joint supervisory standard on recovery planning for LSIs. And we are looking into institutional protection schemes, which are particularly relevant for less significant institutions. Under European law, banks may be granted certain privileges regarding capital liquidity requirements, regarding large exposure rules, if they belong to a protection scheme. Given our objective of harmonization of level playing field, there is much to be said for granting these privileges in accordance with uniform criteria. We have now defined the relevant criteria and are currently conducting a public consultation that will run until mid-April. In brief, while regulatory reform is coming to an end, we are still refining the methods and processes of supervision. Ultimately, we will have created a strong supervisory framework which contributes to the safety and soundness of the banking system with full regard and duty of care for the unity and integrity of the internal market. Thank you for your attention. Thank you very much. We will come to questions now. Please, Claire Jones. Claire Jones, Financial Times. There's been a lot of criticism from some of the banks that use supervisor of negative interest rates with quite a few senior bankers saying it's forcing them to take on too much risk now. Ms Noy, you mentioned in your opening statement that it's very important that banks can manage their risks appropriately. Does this mean that you agree with banks' concerns that your colleagues on the governing council are pushing banks to take on too much risk and it may be good for you to talk a little bit about whether some of the new measures such as Teltros address some of those risks that you see to bank profitability. I'd also like to ask about sovereign risk rates. Now you've criticised in the past the zero risk rates on sovereign assets. Now the Basel committee is reviewing this. What are you doing to ensure that this committee comes out with what you believe is the right outcome on this issue? Thank you very much for the questions. Indeed, the profitability of the banks is challenged nowadays, but there are two main reasons for that, the level of interest rate for sure, but also the level of non-performing exposures. Such challenging times are also good opportunities for the banks to review their business model, reassess the sustainability of their business models, and I believe they have room for maneuvering. If we look, for example, at cost to income ratios of the European banks, they are pretty high, so they could go down and the banks could be more efficient and some are already working, many are already working on this efficiency. Also digitalisation is a new possibility for the banks. There are many customers that would like to receive banking services through digitalisation and this is also helping to be more efficient to have lower cost to income ratios. So challenges, but also opportunities. Do you want to add something, Sabine, on this? Well, I think banks need to cope with the macroeconomic environment they find. We had several times in the last 50 years in an interest environment where the real interest rate was negative and I do believe that yes, there is a challenge with regard to the low interest rate environment. Do not forget on the other side and you mentioned that already with the TLTRO that there are some gains with regard to the funding cost too. So it is a challenging environment, but it was a challenging environment already before because, and here I totally agree with Danielle, we need to have viable business models in banks which can cope not only with the macroeconomic environment when there is a low interest rate but which can cope with competition from the digitalisation coming with competition from the shadow banking market with regard to the regulatory reforms which put a burden on banks. So there are many, many issues on the table which calls for demanding business models in some of the banks we supervise. So I wouldn't pick out the low interest rate environment in particular. Regarding sovereign risk, let me say that I am happy that this issue is now addressed. It is addressed at international level within the Basel Committee and it is also addressed at the European level where the progress are good. There is also now an hybrid approach which is discussed where the risk weighted asset could be dependent on the concentration and on the quality of the sovereigns. I think good work is being done so something reasonable will come out of this work on discussions. Next question. Thank you. You mentioned the flexibility in terms of interpreting some of the regulations coming from Brussels. At the end of his last news conference, Mr Draghi referenced an internal commission document on how to interpret some of the capital requirements. I guess the question was is there any difference between the SSM and Mr Draghi on how to interpret the pillar two requirements for banks? My second question was in terms of the Greek banking sector, are there any particular changes? What are your priorities there? What are there any particular changes that you're trying to see implemented in the coming year? Thanks. Well, I doubt very much that there are differences between the president and the SSM. Also, I had no chance to discuss it with the president yet because it came late on recently. This clarification from the commission. Let me say first that we ask for this clarification from the commission. Clarification, certainty, harmonization are a very important concept for us. In order to do harmonize the supervision in the SSM and in Europe, we need to have harmonized regulation and the regulation is unclear. So we ask for the clarification. We have received recently this clarification which is welcome and we are working on this document to see our best use this clarification that has come from the commission. I know the word of flexibility to implement the regulation was employed in the report of the ECON Committee on Banking Union. It's not that easy for supervisors to be flexible with law. I would not recommend that supervisors to be flexible with law. We just want to implement the law so I am very happy that clarification, the flexibility is coming from the persons in charge of interpreting the law, namely the commission. That was a second part of the question on the Greek banking sector. I do have a problem to order banks in countries. We have a European perspective here so we are as a banking supervisor looking at banks in a very institution-specific way and each bank has its peculiarities and need to be supervised individually and aligned with its risk profile, its business model. So for me, to say there are the German banks or there are the Dutch ones or there are the Greek ones, I have a problem with this concept. When you talk about the overall status with regard to Ries, I think it is very important that they come out at the right time when the conditions are fulfilled out of their capital control measures, that the banks go into a usual business again with regard to the capital control measures when they are lifted. We did, I think, a great job with regard to the comprehensive assessment, ensuring that the banks have enough capital for the upcoming years in order to cope even with an adverse scenario, an adverse development and I believe with the rest, it is just very, very important that the macroeconomic environment in Ries aligns. The capital control measures are lifted when they are ready and then we will see what happens with the single banks. Would you like to compliment? I fully agree. The Greek banks were hit by something that had nothing to do with their own situation. It was a very violent stress, more violent and brutal than a supervisor's adverse scenario. They went through. Now they are recovering from this episode and I am pretty certain, like Sabine said, that when they are out of exchange control, thanks to the progress of the country, they will be able to do the job of funding the economy that needs it in Greece just like other SSM banks. I have a question up here. I have a general question to both of you basically. The mandate of the ECB is very clear. It says maintaining price stability comes first. The question is, is it fair to assume that banking supervision comes second for the ECB? Shall I start? As I am the master of separation, being in both areas. We do have clear objectives on the central bank side with, as you mentioned, maintaining price stability and totally independent, totally separated from this. There is no hierarchy. There is our objective in the SSM to contribute to a safe and sound banking system, to work for the customers of the banks to ensure that we have a functioning banking system. There is no first and no second as these are separate objectives done by different staff prepared in the decision with a very protecting rule framework around it in the decision making, separated with the information flows and the decision preparing. For me, no first and second, but totally in parallel and in separate objectives which we have to fulfil. In the second floor, then we will take that first. The commission document that you referred to makes a very concrete proposal when it comes to the SREP process. It proposes to split the capital add-on that is decided on the SREP into a mandatory requirement and guidance as they call it. Is that a distinction or a split that would make sense in your SREP methodologies? Is that something you could think of adopting? What are your thoughts about that possible? Which is similar to what the Bank of England is doing. Secondly, you were saying Madam Nui that the rising spreads on some instruments were showing that investors were waking up to the new reality, those are my words now. Are you saying that the developments we saw on the cocoa market in the first two months of the year were actually the same or are they the new norm? There is a link between the two questions as a matter of fact. Yes, the paper from the commission makes a difference between pilot to requirement and pilot to guidance. It may be useful, frankly, to address the problems that raise from the implementation of the directive on CRR, the stacking order of the different buffers and also the point where maximum distribution amount is getting effect. So yes, we think that it may be useful and we will consider how to implement it. This is the kind of work in progress that we are having now regarding the SREP. Indeed, I believe that the investors are gradually taking into consideration the new word, the new post-BRD directive implementation, full implementation, the new bailing world and they don't like uncertainty, the investors on the markets and if they feel that they are in a situation with uncertainty, they hit the banks for that. So that's why we absolutely need to deliver certainty, clarity, transparency to the market on pilot to on the way it is calculated and on the maximum distribution amount. So on these two we have requested the clarification to the commission and I would even go further, I think clarity regarding the maximum distribution amount on top of the clarification already received should be in legislation to provide full clarity on transparency to the markets. So now we had a question in the second row here, up front here please. There was a case in Latvia, if I'm not mistaken, where the ECB ordered the closing of a small bank. I'm not quite sure if this was the first time you took such an enforcement action, but if it was, maybe you could give a little bit of flavor as to how that came about, did the initiative come from the ECB itself or from the national supervisor and if it was not the first time, could you maybe mention the number of similar cases if there had been some in the past and let's say what is the generic type of action that you would take in such cases? We won't comment on single banks as we do have confidentiality rules with regard to the specifics of single banks so we cannot go into the detail of one bank, but I can give you some generic idea. No, it was not the first time that we withdraw a license. And this is exactly the process we have with regard to small banks. The less significant ones, as I mentioned in my introductory statements, are supervised, directly supervised by the national competent authorities, but the question of who gets a license and is a license withdrawn under certain circumstances is something that is answered here and is done here. When do you do this? You do this in general when the national competent authority asks you and applies for withdrawal of the license because the national competent authority as being the one in charge for the less significant ones tells you as ECB, they do not fulfill certain capital requirements, they are other issues which justifies, which makes it necessary to withdraw a license. And that was the case with the bank you were mentioning. It was not the first time that we did this with regard to less significant banks. We had some Italian cases, for example. So this is a way of dealing with small banks who either go into insolvency or where they go via a bridge bank to a new owner. There you have always the question of what do you do with the old license, do you need a new license for the bridge bank, etc. And this is done here with us. So let's move over here, the gentleman in the third row there. Thomas Seidel, Luxembourg Avant. Yesterday the German Finance Minister, Dr. Scheupler, introduced to his audience a kind of regulation for small banks, he called it small banking box. Can you tell us something about details? What is going on in the European Union? How will such a small banking box look like? I'm really sorry. Do you know a little bit more what he meant with a small banking box? Can you give me a little bit more detail and then perhaps with other keywords I can... Yeah, he told in his speech all about regulation and the efforts of the regulation, of the new regulation. And when it comes to the question, what is the burden for smaller banks? He told us they will come up with a small banking box. Okay, now I know what you mean, perhaps probably. I'm not in charge of Mr. Scheupler and commenting and interpreting his words. But I can imagine, I assume that it is the ongoing discussion which we had for 20 years now, whether there should be in regulation a difference between the international active banks and the small and medium sized banks which are only regional active and which more or less do not have interconnectedness, cross-border, which do not have investment banking, etc. And it was always discussed in Germany as we have so many small banks, whether it is totally justified to take the same regulation for the small banks than the big ones. And it comes up always with the Basel Committee because the Basel Committee does standards for international active banks. And there are many countries which only take these standards for the big ones, US America, for example. They ask only the big ones to comply with the Basel standards and then they have an own rule set, an own rule box for the small ones. And we are always, when we are on the Basel Committee, we are always discussing then and saying as a European representative, my French, my Dutch, my Italian colleagues and myself, we always ensure that in the Basel Committee the people acknowledge that what we are talking about and what we are proposing as rules is not only valid for the big ones but that has to fit too with a certain kind of proportionality with a certain kind of justification to the small ones too. And it might be that Mr. Scheupler took this up again and asked himself whether there should be a separate, a different rule box for the small ones. If I may add something, I would like to say that I think the best way forward is a single regulation implemented with proportionality and proportionality is a magic word. Proportionality should be always on the magic tool, should be always used. But I doubt personally that to have two sets of rules when the two categories of banks are competing together domestically would do any good to the small bank. They are probably better off being in the same single European regulatory framework but it has to be implemented with proportionality and I am under tough scrutiny from the European Parliament on this. I got the question several times yesterday in the European Parliament. Are you demonstrating enough proportionality? That is where we have to be convincing. I totally join and I think so too. We discussed this for 20 years in Germany and I think it is very difficult where to put the threshold. When is a bank important enough to justify different rules? And what kind of competition questions do you get in a single market, in a country where the saving banks succeed with the big ones especially in Germany with regard to retail customers, corporate clients, etc. It is a very difficult question to really do two different sets of regulation and yes, proportionality is at the end. What we try to do and I think where we both succeeded because we always said next to each other the Basel Committee for 10 years. France and Germany, exactly. I think where we really succeeded is that we put enough wording and phrasing in the Basel standards that you can apply proportionality and can more or less justify differences. It is a little bit like with the minimum requirements of risk management in Germany where you more or less take stricter standards, much higher standards need to take into account the big ones and the smaller ones are burdened less. But have the framework the same, you know the pillars, the key features are the same. We have a question here in the front and then we'll go to the middle. No, wait, sorry, the gentleman in the front. Thank you. Questions please. In Germany there is not only a strong criticism on the monetary policy stance but also there is a strong resistance again in European guarantee scheme project which would be the third pillar of the banking union. So my question is how optimistic are you that it is possible to circumvent this German opposition to the project and or it is better to leave it for the next future when other conditions maybe are fulfilled. And second questions in the press. There are some reports regarding the so called KUMX dividend schemes, quite complicated issue involving a lot of financial actors, among them possibly banks and your scrutiny. So I wanted to ask do you have an eye on this KUMX topic which is quite a German issue I guess and in more generally, how do you handle with those kinds of legal risks? Is it something that is on your duty? Thank you. I will start with Edith and a couple of general sentences on conduct rates but I will let Sabine comment this KUMX scheme that I know less than her obviously. Well let me say that we welcomed European Commission proposal for deposit guarantee scheme because this third pillar is the missing pillar of the banking union and we need to have it coming gradually. It is important also for us that bank contributions to deposit insurance funds are risk-based compared to all banks in the banking union and not only to national peers. I know that my German colleagues are also quite keen on risk reduction before moving to risk sharing. Personally I believe that risk sharing and risk reduction have to take place in parallel. The appropriate phasing of fully fledged Edith, the European deposit guarantee scheme is necessary to take into account the different starting positions of national deposit guarantee scheme. Such phasing will also allow making further progress to level the playing field in the banking union and to further reduce risk in the banking sector. So again, risk reduction and risk sharing are mutually reinforcing elements to transcend the banking union and they should not be preconditioned. They should move together. Regarding the second part of the question, I understand that this is about conduct risk which is obviously a matter of concern for supervisors and we are making sure that the governance in the banks, the internal control of the bank including the control of conduct risk is appropriate but I will let Sabine be more precise in the response. Well, it's a very German response. We are not in charge of conduct risk. That's about buffins who work. But we have to take up the results of the investigation of the prosecutor, the results of the findings of buffin and have to ask ourselves what kind of impression and what kind of assessment do we then have with regard to governance and risk management and what kind of impact with regard to the capital, with regard to litigation cost will come to the banks out of it. So we are more or less in what I call second layer of work. So first we have to see what comes out of this investigation and then we will act and assess these outcomes. So what do we do now? We observe this closely and comprehensively and then we will see what kind of impacts this has for the banks. But it's not yet our turn. Perhaps next year's annual press conference. We had a question right here in the middle on the third row please. Thank you. Gerardo Graziolla with RadioCore News Agency. Madame Nuyi, assuming that the first merger between two Italian banks will be successful, which is your vision of the Italian banking system in the next three, four years for instance? Well, as Sabine, I don't look at banking systems frankly. I know about a single banking system which is the SSM banking system with different kinds of banks, different kinds of situations. We believe, and this is the objective we have received, the two of us from the parliament that has approved our nomination, the objective of making sure that banks are safer on sound after the crisis that they went through. So we know that a number of developments have to take place. For example, in countries where the banking system is not very concentrated or not enough concentrated, mergers are desirable. This is my understanding of the legal steps that have been taken by the Italian government to make this important reform of the popular banks is to give them more capacity to address the challenges of the current times and also to be able to have such mergers when it is helpful. And indeed Italy is one of the countries where there is room for mergers in order to have more profitable banks, more sustainable business models. So my vision of the SSM banks in the future, let's say for example in two or the whole years when my mandate will end up is to deliver for the SSM and also for the Italian banking system for sure safer on sound banks thanks to the good work that we are doing with our Italian colleagues to reach this objective. And I think it is a very good perspective to look into the medium and into the long term, not only with regard short term crisis management but to have a kind of vision. What does it need to have a safe and sound bank? What does it need to ensure that the wealth of the customers in the SSM, the banks customers in the SSM, you know that this is safe. And here we need to have banks with a viable business model especially when there are big banks with a sound capital basis in order to cope with potential adverse scenario for a longer time period. A question here in the second row, AFP please. Good morning, Benoitoussaint, Agence France-Presse. Two questions for me, one on Italy, quick follow up from the previous question. Some Italian agencies reported yesterday that the ECB gave its green light to the merger between the two banks and some other agencies reported that the ECB asked only for further clarifications. Could you please give us an idea of the state of discussions and how you satisfied with what the banks announced and where do you see still some room for improvement? And a second question on interest rates. Mr. Pret said last week that the interest rates of the ECB could still go lower. I would like to know if you have a better idea now on the threshold on which it would be unbearable for banks even if they adjust their business models and they work on their business models. Regarding the Italian merger, I will not commend the situation regarding individual banks. I will just tell you that mergers are delicate operations for banks. We all know, I am sure, mergers that in the past made in all the countries, not Italian specifically, banks weaker than they were before a merger. So we want to make sure for all mergers that the new entity is strong from the very beginning. In the present case, we are talking about a bank that would be the third Italian bank. So it's quite important and significant to make it successful, to have a successful merger. This being said, I understand also through the Italian newspaper that are speaking a lot about this operation that the conditions that we have put that would have been exactly the same for any bank in any country of the SSM have been understood by the Italian banks and authorities and that they will be complied with. So it seems that quite fast now there will be possible if I am well informed through what I read and I believe I am, the things will move. Let's wait until they really move to declare that. No interest rate? Shella, no problem with regard to the... No, no. Where is the threshold? Well, I mean, you always can go lower. I would not... We have the other way around. We are here in the SSM talking about banking supervision and not so much about low interest rate and what kind of monetary policy instruments are there. They can always go lower, but you have to balance between the costs and the benefits of monetary policy measures. Might they be standard monetary policy measures or non-standard monetary policy measures? But this is my personal opinion. One might doubt about the balances if you were to go lower, but as I said, this is my personal opinion and it might not be the opinion of the governing council. So, looking into the cost-benefit analysis, the side effects, the question of what kind of risks do come with what kind of measures is a very important issue. And then, for me, very important is too if the conditions change, if the macroeconomic environment change when growth is coming back in a sufficient manner to go out as fast as possible when the conditions are met is the most important thing. So, you can count on me that I will be the first one asking for an exit when the conditions are changing. There's a question by Yasmin Osman in the back here and then further up. I had two questions to the commission note or proposal to the pillar two requirements. If you use this proposal, so what share of the SREP, surcharge or add-on you impose now would be in the guidance part and what in the requirements part? So, how would the MDA develop if you would follow those proposals? And what value will the guidance part of a SREP add-on have if it doesn't limit banks' ability to pay dividends or bonuses or cocoa bonds? So, isn't it very useless if banks don't have to fulfill it to pay any dividends? Well, very easy to respond to you because this is work in progress. I have no response yet when we have responses, when we have had a chance to discuss it in the supervisory board, we will inform you. Just to add this note, is a working paper which was sent to us because we asked for clarification on the stacking order, etc. as there seems to be different approaches in the European Union, not in the SSM, in the SSM we harmonized over the SREP, but there are different approaches in the European Union, so we asked for it. Now we got a working paper back with the request, please tell us where do you still need for clarification, what is your opinion, etc. And as Daniel said, it's work in progress. We do not have yet a draft answer to this note. I think last week it came last week and we are still making a list of questions, you know, for the commission too. So a little bit too early your question, but a very good one. So the gentleman goes up. Good morning, Lucadavi, for the 74-hour. Two questions about the consolidation process that we hope is going to start. First of all, as far as we understood, the SSM wants to receive a business plan when two different banks are going to merge. Is it possible that the SSM board could give his preliminary approval to the merger before or even without having all details about the business plan that is due to arrive, but just knowing the main details about capital actions or governance. Second question is about the capital actions that apparently you are going to ask to one of these two banks involved in Italy in this possible merger. Do you think that these actions could be considered as a benchmark for the future for next mergers in an SSM framework? Thank you. Well, it's interesting the SSM because the cultural differences are popping up from time to time, coming from my former capacity. The very first thing that banks would put on the table when discussing a merger would be a business plan of the new entity before everything else. But I have been explained by my Italian colleagues that it's not the way it's done in Italy so far and that it comes a bit later. So granted, we took that. The supervisory board asked for a business plan and still wants to receive one, but it's not a precondition for moving forward on the discussions. This is what we are doing. So, yes, probably there will be a response before receiving this business plan regarding capital actions that we are asking from the banks. Again, we are asking to those banks exactly what we would be asking to any other SSM bank in any other countries provided it presents the same size and same risk profile. For example, we don't ask the same thing to a future third bank in the big country that is Italy that we would require from a merger creating the 15th largest bank in Italy. Obviously the bigger the bank, the most important it is for the SSM and for the Italian banking system that was mentioned earlier. So it's case by case basis outcome of the implementation of the same criteria. So that's the situation. We compare the possible future third Italian banking bank with the Italian banks and SSM banks that are in the same situation, but mostly Italian banks. So watching the time we have about time for one more question. Yes, in the back there please. Balash Karani from Reuters. A couple of questions there. What can and should the ECB do to expedite the resolution of NPRs? Madam Nui, you mentioned yesterday that it will take years to get the NPRs to a reasonable level. Could you venture a guess? You know how many years are you talking about? The second question is somewhat theoretical question about settlement of euro derivative trade. Do you think it is appropriate for such trade to be settled outside the European Union? Currently it is settled inside the EU, but should things change? Would it be appropriate to be for settlement outside the EU? Well, regarding non-performing exposures, we have quite diverse situations in Europe. It's not a problem in all countries of the SSM, for example. When we consider the countries that face this issue, there are different situations based on the loans themselves. Are there loans to retailers, mortgages, for example, or are there loans to SMEs or loans to big corporate? Also, differences are what is the situation of the legal and judicial system in the country? How long it takes to repossess collateral when you try to recover the loan? So how long it takes will depend on these circumstances, obviously. But at the end of the day, it's still always the same solutions. First of all, when we have a problem of this magnitude, we need to use all kinds of tools. All the tools that are available and all the good advice that we could receive, for example, to work with the IMF on this issue of non-performing exposure because there is a lot of expertise in the IMF regarding this issue. And also, the situation is always the same because it means to fix objectives to banks to review their portfolios, to sort out the portfolios between the loans that can be restructured and that will become performing again. And the loans that has already been restructured or cannot be restructured and transformed into performing loans have to be considered as default loans. So, obviously, depending on the magnitude of the problem, it may take more years for certain countries. But this being said, let me remind you that this is precisely why we had this asset quality review, a comprehensive assessment in the beginning of the SSM. We used for the first time a single definition of non-performing exposure, which was a big step in the good direction. And we have identified now the non-performing exposures in all countries using the same definition. We have reviewed the valuation of those assets and we have asked for provisions, all the possible accounting provisions. And when the accounting system was not permitting to have such additional provisions, we had asked for prudential provisions. So, we are in good shape on this ground having identified the problem of having a reasonable level of provision to take the needed time to make it a success. Obviously, when the problem is of a little magnitude, it will be fixed fast. When it is bigger, it will take a bit more time. But as I say quite often, when you have a long journey to do, you have to start as early as possible, this is what we have done, and be very committed. And through the working group that we have established shared by an Irish deputy governor, lady deputy governor of the Irish central bank, because we use the best supervisory practices on this country, Ireland has done a good job with the non-performing exposures. We are moving in the right direction with a lot of momentum. I am surprised of what is achieved by the starting of this journey. Oh, the derivative. Do you want to respond? I mean, when you are talking about settlement of derivatives inside or outside of the euro area. European Union, yes. Is there a hint on the discussion of the referendum? Possibly, I thought so without saying. Well, I mean, we have to see what comes out of the referendum on the 23rd of June, and then we will discuss what kind of location policy is needed or not. So this is a question which comes a little bit too early. Okay, thank you very much for coming. We are closing the press conference here. Thank you.