 Good morning to this annual press conference on banking supervision. We're providing today simultaneous interpretation into German, French, and Italian. And the press conference is webcast live. Our speakers are Supervisor-E-Board Chair Daniel Nui and Vice-Chair Sabine Lautenschläger. They will make introductory statements, and then we will go to your questions. Daniel, please. Thank you, Connie. Yes, the microphone is open. No, it's not. OK, is it better like that? No, the microphone doesn't work, so I will. Now I hear something different. OK, so good morning, ladies and gentlemen. What does 2018 have in store for banks and their supervisors? That is a very interesting question, but one that is hard to answer unless you have a crystal ball. Two things seem certain sort. One, banks still face a number of challenges. And two, 2018 offers the ideal opportunity to tackle them. There are four reasons for this. First, the euro-euro-economy is doing well. After almost five years of growth, on these growths is broad based across both countries and sectors. Second, technology is evolving, which digitalization being the key word here. It offers banks the opportunity to raise revenues on reduced costs. Third, basaltry has been finalized, so the word has become more stable for banks in terms of regulation too. Let me stress so that basaltry still needs to be implemented. On force, 2018 will be the fourth year of European banking supervision. The construction phase is clearly over. The supervisory framework is now stable, unpredictable, and this should make life a bit easier for banks. So the conditions are good. On banks, I have made great strides and have become more resilient. The CET-1 capital ratio of significant banks has increased by over 270 basis points since the beginning of 2015, at 14.3% by Q3 2017. We can also see that profitability is rising, also from a low level. So things are improving, but more needs to be done. There are two things that I would put at the top of the to-do list for a number of banks, increase profitability, and clean up balance sheets. These two things are connected, of course. Let me start with the broader issue. When it comes to profitability, European banks have been slow to adjust to the impact of the crisis. Look at banks in the United States. Compared with European banks, their profits fell more sharply during the crisis, but they have recovered faster. The return on equity of banks in the euro area has generally improved. For some banks, however, it remains very low, and this raises concerns about their ability to cover their cost of equity in the medium to longer run. The lack of profitability is indeed something to worry about, as only banks that make enough profits will be able to support economic growth and to continue building up capital buffers. But the benign economic conditions and the desire to quickly raise profits should not lead the banks to embark on a search for yield days. It is clear that banks must find ways to become more profitable without taking excessive risk. And of course, when it comes to solutions, one size does not fit all. Each bank has its own history and needs its own strategy, but it does need a strategy. When we look closely at successful and less successful banks, there is one thing that stands out. That thing could be termed strategic steering. In a nutshell, strategic steering refers to the management ability to set a course towards the bank's long-term objectives. It comprises things like efficient processes and good governance. Those banks that master it are, on average, more profitable. Banks have to navigate through difficult territory. They need to have a firm grip on the steering wheel. They need sound strategic processes. And they need strong governance, including on risk management. And here we see a number of issues in the banks we analyzed. Overall, one of the biggest weaknesses we have seen so far relates to the way in which banks put price on loans. They are loan pricing framework. In very general terms, this framework needs to be comprehensive. It has to cover all business lines. It has to cover all relevant costs on risk, including operational costs. And it has to be group-wide. In short, banks need to put themselves in a position to enhance their profitability. But whatever banks do to design, they must strike a balance between risk and return. We therefore expect banks to invest in strong risk management. Bank needs to cut costs, but risk management is definitely not the place to do so. And to restore their profitability, certain banks must do more. And in particular, they must clean up their balance sheets. In the third quarter of 2017, non-performing loans, NPLs stood at $760 billion. True, they have decreased over the past few years by over $200 billion. But clearly, they remain a major problem. NPLs dragged down profits. They divert resources that could be put more productive use. And they keep banks from financing the real economy. They also create uncertainty, which indirectly might also affect stronger banks. Banks should use good times to reduce NPLs, and the good times are now. Carrying over the residual problems of the crisis to the next downturn is not a viable option. When a downturn sets in, it will become much harder to banks to get rid of NPLs. So for us, NPLs are a major issue. That's why last year, we publish guidance for banks on how to reduce their NPLs. Moreover, cleaning up balance sheet after a crisis is one thing. Keeping them clean ahead of the future downturns is another. That's why we are working on an addendum to our guidance that will specify how and when we expect banks to provision for new NPLs. The draft addendum was subject to a public consultation, as you know, which triggered almost 500 comments coming from 36 counterparties. Most of the comments related to the scope of the addendum on its calibration. We have reviewed all the comments very thoroughly. On that basis, we are now finalizing the addendum. Among other things, we will shift the date from which the guidance applies to new NPLs by a few months. We will also make it even clearer that we will follow a case-by-case approach as part of our pillar two framework. And we will publish the final addendum by mid-March about. So banks should get ready for it. Banks should also get ready for the upcoming stress test by the European Banking Authority. It will be another moment of truth for banks, as it will show our resilience, their balance sheets really are. Moreover, as the result of the ABA stress test will be published, markets are not just supervisors. We'll expect banks with capital weaknesses to address them, even if it's not a pass-field exercise. Robust sound balance sheets are crucial for reducing risk and restoring trust in banks. By doing so, it will become easier to decide on the final pillar of the banking union, the European Deposit Insurance Scheme, EDIS. Over the past few years, banks have made some progress in reducing risk. In my view, we could therefore take EDIS a step further. So I welcome the latest proposal by the European Commission with GERS in that direction. What's more, EDIS might be accompanied by another asset quality review, and that will give banks another incentive to further reduce risk. With the single rule book, European Banking Supervision on the European Resolution Mechanism, the banking union is now well advanced. This paves the way towards a truly European banking system. That is our vision for the future. Sooner, rather than later, banks should start to reach more across borders and reap the benefits of a large and largely integrated European market. Coming back to 2018, my message is these conditions are as good as they are going to get. Banks should seize this moment and tackle the challenges they face. I now want to over to Sabine. Many thanks, Daniel. Well, ladies and gentlemen, 2018 will be the fourth year of European banking supervision. And as Daniel said, the construction phase is over. We are in a steady state. In any case, our objective will be the same. Our task is to contribute to the safety and soundness of banks. But the safety and soundness of banks do not only depend on good supervision. It depends on sound regulation, too. And as I have pointed out several times already in a world where significant banks are highly interconnected, where markets are highly interconnected, it is of utmost importance that sound regulation is done globally in scope. And in this regard, 2017 ended on a positive note. Basel III was finalized. And this is good news for banks because it has restored regulatory certainty. And it's good news for the economy because it contributes to a stable banking sector that can finance growth. And it's good news for supervisors, too, because it underpins our work with strong rules. As a global standard, Basel III will be applied to a diverse set of banks with very different business models in very different legal and macroeconomic environments. And against this background, Basel III is a good compromise. It takes into account the differences in banks' business models. And it seeks to strike a balance between sometimes very contradictory interests. Risk sensitivity, simplicity. So on the one hand, banks will be able to take into account bank-specific risk experience they can use for the calculation of capital requirements internal models. And on the other hand, Basel III establishes some safeguards, such as input and output floors, which will prevent capital requirements to fall below a certain capital level. Hence, with Basel III, we are not doing away with risk sensitivity. And in my view, that makes a lot of sense. I am still convinced that risk-based capital requirements are efficient. They set the right incentives for banks' business strategies. And they prompt banks to carefully define, measure, and manage their risk. Let us not forget that the financial crisis of 2007, 2008 was based on Basel I capital requirements and not on Basel II. Sometimes this is forgotten. The next step is now to ensure that Basel III is fully and timely implemented, as only with full implementation, it can contribute to financial stability. So full implementation in all relevant jurisdiction is our message. So a sound risk-based capital framework is an essential part of a stable banking system. But the internal models used by banks to calculate risk must yield adequate risk rates in the first place and here the ECB plays an important role. As you all know, we have launched a major project. It's called the Targeted Review of Internal Models, or in brief, TRIM. And TRIM has three objectives. First, to make sure that internal models used by banks comply with the regulatory standard. Second, to ensure a level playing field regarding the treatment of internal models with regard to the supervisory treatment. And third, to make sure that the results of internal models are driven by actual risk and not just by modeling choices. And as you can imagine, TRIM is a huge effort. We are making progress, I can tell you. So far half of the roughly 200 on-site missions have been successfully launched. The first phase started in 2017 will last until mid of this year. The aim was to review the internal models that banks use for credit risk, specific for retail and SME customers. And we will look until mid of year into the models used for market risk and counterparty risk. The on-site missions conducted so far have been very useful in identifying best practices, good practices, and in spotting shortcomings. The deficiencies we have found are always very bank-specific. But some banks have shown some common patterns. For instance, for internal models used to assess credit risk, we have found some shortcomings with regard to data quality, with regard to the calculation of realized losses, with regard to the treatment of defaulted exposure. But we have also observed that many banks have already invested heavily in relevantly strengthening their internal models, the governance of the internal models, and their validation, especially the last point is a very important topic. At the same time, we are working on an update of our guide to internal models. It is based on the comments received on the first version of the guide, and it is based on insights we gain from the on-site mission of Trim. We intend to seek feedback from the banks again. The first chapter will be published for consultation in the coming month. And this part of the guide will clarify general topics such as the governance framework for and the validation of internal models. Ladies and gentlemen, so far, we haven't touched upon one of the biggest issues in and for Europe. This is an issue that goes far beyond banks, but affects them as well. I'm talking about Brexit. Banks must be ready for Brexit. It will happen. Also, the EU and United Kingdom have agreed to discuss a possible transition period. We cannot be sure whether the transition period will happen. Thus, our expectation have not changed. Banks must continue to prepare for any outcome, including a hard Brexit. Any bank that wishes to relocate from the UK to the euro area should have submitted its license application already. But if it has not, it should do so by the end of the second quarter of 2018 at the latest. So far, aid banks have taken formal steps to seek a new license, and for others are planning to significantly extend the activities in the euro area. But I can tell you, we are in, how can I say this, in many, many meetings with more than 50 banks right now. And many of them are in a pre-application phase. We will continue to closely observe the Brexit negotiations depending on how the discussion on a transition period go. We may discuss with banks whether they might be granted more time to implement their relocation plans. But we will only do so with banks that have already presented high quality and credible plans for the steady state situation. In such a discussion, we'll, of course, only cover those aspects that are within the competence of the supervisory authority. Euro area banks should also get ready for Brexit. They too should submit their license applications in accordance with the requirement of the British supervisor, the Prudential Regulation Authority. We welcome the fact that the PRRA has provided more clarity on its supervisory approach. This will help banks for the post-Brexit work. When preparing for Brexit, banks should be in mind something we keep repeating. We won't tolerate any empty shells. Banks must be real banks if they want to operate in the Euro area. European banking supervision will keep a close eye on how incoming banks will organize their business in the Euro area, how complex their structures will be. In particular, when assessing their resolvability. What counts for us as supervisors is that banks retain full control of the balance sheet risk within the Euro area. Bank needs to establish sufficient local capability in areas such as pricing, trading, hedging, and risk management. Only then can they be deemed able to conduct their European business activities adequately. This includes direct access to financial market infrastructures. Here, they must have business continuity arrangements in place to ensure access to financial market infrastructures for all relevant exposure classes. The bottom line is that banks must remain in control of their own risk. We therefore expect incoming banks to be able to produce complete and accurate data on booking models, hedging strategies, and intragroup exposures. But Euro area banks should also review and disclose any changes to their booking models during the ongoing supervisory process. Ladies and gentlemen, Brexit is just one of the many challenges banks are facing right now. Challenges that they need to address while times are good. Here, I agree and join Danielle Foley. Any thanks for the attention. So we come to your questions now. Any questions? We should start. Let's start in the first row here, please. Yes, hello. Nicholas Comfort from Bloomberg. You both mentioned the fact that the ECB Bank is in its fourth year of active supervision. But it's also Danielle Louise last year. And so I'd like to ask two questions, one looking back and one looking forwards. Looking back over the last four years, you and your team have turned up startup into one of the world's biggest banking supervisors, pushed banks to hold more and more importantly, better quality capital. But how would you respond to the critics who say that national interests are still rife at the SSM, and especially when it comes to big decisions like Montepaschi, and that these national interests have actually delayed and weakened your plans to tackle NPLs? Looking forward, how confident are you that you're setting the right priorities now for the future? I'm thinking disruption of bank business models and cybercrime, and also what advice would you give to your successor? Thank you. Well, thank you for reminding me indeed that my mandate will end up by the end of the year. We have such a momentum on supervisory issues that sometimes is it as if we'll last forever or for a long time. Well, I don't agree with the fact that we are burdened or preventing from acting due to national interest or national bias. I think the supervisory board has been a very disciplined supervisory board, really trying to deliver on the European mission and European ideals. Obviously, when a national bank is hit by circumstances or by a measure or is in a difficult situation, our national colleagues explain what are the challenges of the situations and what might be the limits to what can be done if we want to be successful. But this is very, very welcome. In fact, we have the best of two worlds. We have the expertise and experience of national supervisors. And we have the distance in the decision making which is helping us, both elements, to take the good decisions. Well, if I were to give advice to my success source because Sabine also is not so staying for much longer than myself, would be certainly commitment to implement the best supervisory practices wherever they come from within Europe and belong to strongly adhere to the European mandate and European ideals to be ready to fully and totally cooperate with other European institutions that also have a mandate to deliver, which goes in the same direction as we are going, certainly to have enough vigor to handle banks on criticisms that go with the job. That's the way it works. And what else? Well, persistence to make sure that what has been decided is fully implemented. But I think the list is already probably too long. Well, tackling NPL is a journey, a journey that started in 2014 with the accuracy of the comprehensive assessment. Then in 2015, there was the qualitative guidance on how to address them. Then we moved to what should we do to avoid piling up of future NPLs that would turn into the legacy of the next crisis. And that's the addendum. So addendum is close to finalization. We will get it out. And for the stock, we have not stayed without action because at the same moment where the qualitative guidance was published, the supervisory dialogue started with the banks that were overburdened. We took above the average of the banking union as a starting point to make sure that they design their own plan to go out of their legacy issues. Those plans have been challenged by the joint supervisory teams. And now they are going implemented. So let's see what will be possible. But I think a lot will be possible on more than what we expected when we designed, on the banks, design their own plans. Because precisely, gross is there. And we have benign economic conditions. So let's continue in the second row there. Francesco Canepa, Reuters. So my first question is a follow-up on NPLs. So you said that individual plans for NPL reduction are being examined. Some banks have been most recently entered a Sao Paulo yesterday. So that this is resulting effectively in the ECB putting pressure on them to offload NPLs, as opposed to work them out internally. So can you just give us an update on how your assessment of individual plans is going, whether you're happy or unhappy with them and so on? And the second question is about Banco Popular Espanol. Last year, in this same press conference, you praised Banco Popular for being brave and coming out to markets and saying that they need more capital. That didn't quite work, as perhaps people were hoping. And so what lessons can be learned from Banco Popular? Well, regarding the plans, first, of the banks, the plans have been sent about a year ago to the GSTs. They have been challenged. Sometimes, the banks have produced a second plan which was more precise, either more ambitious or more credible or both. So this is work in progress. And indeed, the number of banks are changing their policy, using the good times to do what they can do, more than they had planned to do at the beginning. And this is what, in my view, good supervision is about, make the banks safer and stronger when this can happen. Regarding the press for Banco Popular or others, for getting more capital, in fact, there is a principle. Capital is always music to the ears of supervisors, obviously. More good quality capital for weak banks, obviously, are a positive point. But there is also a risk which is to do too little, too late. And if this is considered by investors too little, too late, it's not necessarily helping the bank through the future. So the advice, again, is for the banks to do what they have to do at the right moment. This being said, if you read the information which is available regarding Banco Popular, there are a number of public elements, like change in the rating, like a need to correct the accounts of the end of the year that were not fully correct, and so on and so forth, all those elements. It's not about just not asking for more capital at a different moment. It's accumulation of a number of elements that were not good ones. I think the second part of the question, the Banco Popular, do you want to answer that? The lessons learned? The lessons learned are always very bank specific. And I beg your understanding that we cannot talk about single cases in a very detailed fashion. But perhaps in an abstract fashion, I can tell you, we again experience that we have very different tools to react as a supervisor. And here, a part coming back to my request not only for good supervision, but a request for good regulation, I think here some work still needs to be done by the European and the national lawmaker. We do have very different standards being applied to banks, for example, in large exposure rules, because there are still very different national legislation around. We do have different tools as a supervisor. In some countries, we can use a moratorium in order to stop a liquidity drain on a bank. In other countries, we cannot use this, because we do not have a moratorium. So here, we still wait for a lot of work which has to happen on harmonization in regulation. So there's a question in the center here, please. And can I please ask you to just ask one question per question, or because, otherwise, we have a lot of questions here. Hi. Good morning, Nicolas Menendez-Harias from Espansión. Last week, the SRB published a more complete, non-confidential version of the popular evaluation report. According to the resolution authority, it was the ECB who asked not to disclose some points about ELA and liquidity outflows. Do you agree with that statement? And why did you decide not to publish all the information? Thank you. Many thanks for the question. I think I will answer. We do have a very strict confidentiality obligation given to us by the lawmaker. We are allowed to know everything with regard to a bank. This is the one side. And in order to balance this broad information possibility, the lawmaker gave us a confidentiality obligation to meaning that we are not allowed to publish something on a specific bank if we do not have the consent. This is the information I'm talking about with regard to the supervisory process. Coming to the ELA process, let me remind you, and here, again, I'm not allowed to give you individual comments. But let me remind you that ELA is a national task. ELA is given by the National Central Bank. And if ELA moves beyond a certain threshold, then the ECB, the governing council, is asked whether there is any objection to this, objections which have to be based on monetary policy grounds. This decision is a case-by-case decision, this kind of objection or non-objection. And here, the first question I would relate to the National Central Bank because there is the source of a decision. And the second one is then a very, very bank-specific discussion which we do not comment on. Next question. Gentleman in the middle here. Come back. Stefanos Gilgacopoulos, Deutsche Welle. There were some reports in Greek media that the trigger of recapitalization will be 6 to 6.5% under the adverse scenario. Could you confirm that? And my second question, why don't you use the upcoming stress test for another capital increase so that the Greek banks can clean up their balance seats from their huge MPL pile once and for all? Thank you. Well, as you have two questions, we start with the first and let Sabine respond to the second part. It's not a pass-fail stress test exercise, which means that there is no particular trigger and the possible recapitalization, the need for a possible recapitalization for all the banks, the Greek banks, just like the other banks in the EBA stress test will be decided on a case-by-case basis by the supervisory board. So that's the situation. Nothing else, so no need to discuss percentages that may be relevant for one bank and not for the others which do not make sense to be implemented for both space line and adverse maybe for certain banks. Case-by-case basis supervisory board decision. And perhaps may I add just to give you an idea why it is a case-by-case decision. The EBA methodology is a methodology which will be applied to about 50 banks. If I remember correctly, it will be about 37, 38 SSM banks. It has to be a size fits all methodology. The outcome and the question of what do you have to adjust in order to take into account very bank specific facts like restructuring, like already agreed upon contracts to sell this or that, but which were not being able to take which were not to taking into account until the end of last year. This kind of facts we have to take into account when deciding whether a bank needs more capital or not. And that cannot be taken into account in an EBA, one size fits all process. So it is very relevant that you take this kind of case-by-case decision before you move into a very bank specific individual decision as a supervisor. Otherwise, we would set rules, which we do not do. We have bank specific measures. Now the second question, let me be very abstract because we have not yet started the stress test. And you are already asking me about the results and the consequences of the results. I don't have a, I think you call it an English crystal ball. So I do not know the outcome yet. But what we for sure need to do is to ensure equal treatment for all the banks which might need additional capital. And that means that we have to look into the bank specific risk profile. And then we have to see what kind of requirements do we set for the SHREP for the capital add-ons. And then we will see what will happen. So let's take the gentleman over here and then we'll come back to you. Thank you. Bernardo de Miguel from Cinco Dias, a question for Madame Nuit. You said that the addendum on MPL will be a new date for entering into force at the addendum. Does it mean that it's going to be delayed and what is the new date? Thank you. Well, it has already been delayed because it was said in the consultation paper that it will be implemented by 1st of January. So it is delayed. And as soon as it is published, you can expect that it will be implementable. But it's a decision to be taken by the supervisory board. I know that the date of first April is a possibility, but not yet decided. So it has already been delayed. It's not a piece of news. It was supposed to be 1st of January. OK, let's continue. Let's go in the front row here, please. Claire Jones, Financial Times. Just to return to Nicholas's point about there being national interests, some people would see this delay on the addendum of how to treat new MPLs as a classic example of those national interests superseding those of the region as a whole. I mean, what would you say to that? And at the time when the addendum was originally discussed, there seemed to be some hints that there were going to be tougher measures taken on the stock. Has that now been shelved, or is that still something that you'll look at once this delay is overcome? Thank you. Well, I will not call national interests but normal human beings' reactions that countries or banks that can be heard by a measure are the more vocal about possible consequences. I think, well, it's almost normal as far as I am concerned. So we are able with all these explanations to do the good thing, including, in particular, explain that the addendum is not binding instruments, that it is the starting point of the supervisory dialogue, that it will be implemented on a case-by-case basis, and so on and so forth. I think this is useful clarification. As far as the stock is concerned, this is work in progress. There was not even a first meeting of the supervisory board on the issue, so let's wait what will be decided. The two documents are at different stages. On one side, we have the addendum that is very advanced in its finalization, known for which the publication can be expected by mid-March. We coordinate this with the European Commission that is also going public by the same time. For the stock, that's still to be discussed and decided by the supervisory board. I have a few more questions here in the middle. Take the lady in the middle there, please. Barbara Steder, Schuttkath-Herzaitung, thank you. Also on NPL, you said yourself the stock is still high, and there's no decision on how to deal with it yet. So how, then, can you convince countries with a relatively low stock that time is ripe for eaters, as you say? Well, just to change the tone of the response, even if the content is the same on the stock, Sabine, please, could you say... No problem, no problem. And first of all, let me tell you very clearly, we are doing a lot of work on the stock. It's not that we are lenient there on the contrary, and I think we can take a little bit of the praise when looking into the reduction of the stock, the last three years, 200 billion, that part of it is a result of our constant pressure and our constant request for working on the stock. And I like to use the chance, perhaps to add something to a former question. We are not pressuring banks to sell NPLs. There are all kinds of different tools, how you can reduce the legacy issue you have. It's not only about loading them off to a third party, and this is sometimes a little bit, how can I say this, forgotten, because everybody only talks about the sale. It is very, very important to have a good workout in a bank. You can earn quite a lot of money by having good strategies. They are competent people, highly qualified people, I can tell you. And very, very essential is too that the governments, that the countries, ensure that they have a legal and judicial environment where you can have a quick workout. Because the quicker the workout is, the higher the value of the NPL. The better the banks can draw upon collateral and have recovery rates which are relevant for their capital, for their provisioning level too. So, just to give you this kind of, working on the NPL to come to your edis question, working on the NPL is one of the major tasks with regard to supervision, when talking about risk reduction. When you hear a discussion about edis, it is always a discussion between risk reduction and risk sharing, which have to be balanced and have to be looked at at the same time. A banking supervisor is part and is supposed to be part of the risk reduction. NPL is one big issue. But there are other issues too. It's not only NPL. I know that this is the most sexiest thing right now for you in the questions and I hear this, but let us not forget that we have many, many banks in the euro area, which do not have to do a lot of work with regard to an NPL stock, but which might need to do work on their business model, on their profitability, on the risk management, on cyber risk. So this is part of our work too. And with our priorities, I think we make a very good kind of rep on all kinds of issues. Thank you. I think we had a question here in this fourth row. We were talking about risk and NPLs. What do you say to those critics who accuse the supervision to focus too much on NPLs and not to take into sufficient account derivatives, for example? Well, we look at all risk. We assess all risk and we try to get mitigants of all risk on the comparison which is made quite often with this level three or level two asset. Let me say that we are conducting rigorous reviews of valuation on pricing models for market risk. We investigate market risk aspects, both in internal models, in off-site supervision, in on-site supervision with missions. Those risks are taken into account in the SREP methodology. We have also horizontal benchmarks that are used for this kind of risk. Also, it is part of the capital surcharge for global SIFIs. It's even part in two boxes, two elements, two criteria of the global SIFIs methodology. One is the complexity element and one is the resolvability element. So it is covered in my view and we will certainly not stop covering it because those are important element and important risk. We think that we are looking across all risk for all banks. So in a nutshell, it's a fairytale that we are not looking at derivatives. Thank you for saying simply. Many thanks. Of course, we have plenty of figures regarding the derivative business of all the banks that are in this business. Yes, of course. But you know it's a fairytale too that all derivatives are very risky. There are very plain vanilla derivatives which are more or less alone. And then there are very complex ones where you really need to look at it in detail. And the banks which are doing a business in this perspective, we are monitoring and we are assessing, examining, on-site and off-site thoroughly. So who has a question with the lady here in the middle please? Vaso Angeleto from Insider Grace. I would like to ask you whether you are satisfied with reduction of NPLs in grace, especially through the auctions procedure which seems to be lagging. And my second question, should the prices of collateral sold through auctions are considerably and consistently lower than the value recorded in the books of the banks? Would you ask Greek banks to take provisions? Thank you. Are we satisfied with the efforts made by Greek banks? Well, we are indeed satisfied that the movement has started and that good efforts are made and that they start bringing fruits. But this is not the end of the task and a lot still has to be done. Regarding electronic auction, that is true that it has been well-delayed for some times. But I am told and I believe that is correct that it has already, even before it is used, produced some effects because you have one category of defaultors, unpaid loans, which are what we call in our jargon, strategic defaultors. Strategic defaultors don't want to discover one day that their property is on sale in an electronic auction. So they can pay, they should have paid and they are ready now to pay in more normal conditions. So sometimes start the momentum is already delivering some good developments. Well, whether the prices are too low compared to current provisions, obviously if the solution picked up is sale, indeed we look at to see whether the plan is credible. We look at the level of provision and the level of solvency. You have, when you are selling and to be credible, you have to be able to take the loss. But as Sabine has said very rightfully so, in my view is that sale is only one of the elements. She quoted a number of other possible solutions. I would even add one more, which is restructuring the loans early enough in the life of the loan to make them performance. At this moment, maybe the banks has to give up something, some interest, some, but it's really little compared to what happens when you are not addressing the issue at the beginning. And I would also take this opportunity to say something that has not been said yet regarding non-performing exposures. Non-performing exposures are a problem that goes, is a problem that goes much beyond supervisory action. And there is something which is very important, which is the efficiency of the legal proceedings, the efficiency of the legal framework. And this is a very important element for the price of the NPLs. If there is certainty on the length of the legal proceedings, if there is an efficient legal framework for processing collateral, then the price of the NPLs can go up in significant proportion. And that's why a number of countries, almost all the countries that are burdened, all the countries even that are burdened with NPLs, have taken action to change the legal framework and make it working better. And all those initiatives are going in the same direction, making banks safer and sounder in this respect. But we have to keep on track now. Yes, of course. So doing it one year is not sufficient. We have to move forward and make progress. So we have time for a few more questions. Let the lady in the front here, please. Patricia Kaussman of the Wall Street Journal. You know, given the Basel III's being sort of sorted and aimed at the continued pressure on profitability, is it your expectation or in hope that 2018 is going to be a year we're going to start seeing some cross-border consolidation in the banking system? And based on your conversations with banks, have you getting an impression that that's, you know, something that can possibly happen this year and beginning this year? Thank you. Well, I can start on this one by saying that a number of European banks are not earning the cost of their capital. So obviously something will have to happen. And one of the solutions for that is consolidation of the banking sector. I hope that this will happen sooner than later. Will it be immediately cross-border is to be seen? Sometimes there are also national synergy mergers that are making a lot of sense. And we have seen a few of them already, like Populare Milano and Populare. So I think these will go on. Personally, as a supervisor, I think we have, and this is something I will express and we will express to the legislators, we have to be more open-minded regarding, in my view, waivers, cross-border waivers for liquidity on capital. We've seen the banking union because I think we should be considered. We are a single jurisdiction. So we, all the information regarding the SSM Bank is on the table to all members so they can be actors in the supervision. So I hope that that will develop. I have seen recently a letter from a number of big banks within the SSM asking the legislators to be more open-minded regarding these cross-border waivers. I must say I agree with what they are requesting, but maybe Sabine, you want to... No, no, nothing to add. So I think we have time for maybe two more questions. In the middle? No, sorry, in the center, yeah. I think the gentleman had raising his hand the whole time. Roberto Ozzio of the Italian Press Agency has asked, can you say that you are coordinating with the European Commission on the NPL issue and the addendum? I would like to ask what about the European Parliament and the European Council because of the fact that the legal services in both the institution have said that the SSM has gone beyond its mandate with this addendum. So will the final version of the addendum will give an answer to their complaints or will it be simply a statement that you are within your mandate? And if possible, just a question on the stock market. We have just seen a brute volatility episode. With the information you have available now, do you feel confident that the European banks would be able to cope with a correction similar to the one that is foreseeing the new stress test? Thank you. Regarding the European Parliament that you mentioned, I have regular hearings with the ECON Committee and I am very glad to have this opportunity to listen to what the members of the Parliament have to tell to me and to respond to concerns or explain what we are doing. So the next one will be in March at the occasion of the issuance of the annual report. Regarding the legal concerns that were expressed, well, I can tell you we have put the best legal brains of the SSM on NCB to make sure it's absolutely clear that it's not binding, it's part of the supervisory dialogue, it's case by case. We can even put bigger letters, red. Well, I think all the conditions are met. But let's see whether it is clear. May I add something? Sure. Wonderful. I think we had a misunderstanding here and I think we explained very clearly where our legal basis is, why we are doing what we are doing. There are in the CRR and the CRD4 very clear paragraphs which say that we have to assess not only the credit risk methodology, but also the provisioning methodology too. And the EU Commission confirmed that with this assessment that this assessment can result in deductions, in measures of the supervisor out of prudential perspectives beyond the accounting perspectives if we think that there are additional risks covered out of a prudential perspective. So there is a very clear obligation of the SSM to look into the provisioning methodology. And as we are asked by the European Parliament, by the European Court of Auditors and by many others to explain what is the basis of our assessment we publish, the addendum. This is the basis, the starting point. On this basis we discuss with the banks whether their risks are different from our starting point, from our basis and then we decide case by case. So no automatism, no binding thing, but rather fulfilling and complying with the request of the European Parliament and the European Court of Auditors to be transparent in our assessment methodology used for fulfilling our obligation according to the CRR and the CRD for. So one last question to the lady in the back, please. Hello. I would like to know this. It is proposal that the AQR is this a proposal of the SSM, the ECB, just an idea or a decision. So when with Brexit, if we have a hard Brexit, the banks have to decide if the clearing business has to be shifted to other places than London end of the year or March or what. Well, regarding Edis on this possible AQR and I will let Sabine respond on Brexit, it's in a document published by the European authorities, the Council, if I remember well, that mentioned the possibility of having an AQR, yes. It's not a request from us or we have nothing to do with it. We just found it in the European documents. European authorities document. With regard to Brexit, which was published the document, not... Sorry, Sabine. With regard to Brexit, Mrs. Osman, I did not understand the question fully. I'm sorry. If there's no political decision on clearing and how to supervise it and so on, until when banks have to decide if they shift it to the EU because maybe it's not further allowed to be in London? Well, I mean, let us wait, you know, on the negotiation. We have a little more than one year left and we will see what kind of framework we will have around it and with the next press conference we can come back to your question. Okay. I don't have a crystal ball, you know, with regard to the negotiations. I thought maybe it's end of Q2 or something because you were very decided... No, no, I'm talking about continuity arrangements. Meaning to have a plan, to have looked into what kind of possibilities, what kind of alternatives do I have and what kind of process do I have to look at and to fulfill in order to come to a certain result. The answer to the stock market question is that we do not comment on single fluctuations of the stock market as a central bank as well as a supervisor. I can tell you anyway, I mean, if not the first would... The second would be our principle that first you have to look into the facts and the reasons, et cetera, before you say anything to the public as a supervisor and a central bank. But don't forget the first principle. Well, thank you very much all for coming. We'll close the press conference here.