 So good morning, everyone, and welcome to this annual press conference on banking supervision. I'm Connie Lotze from the ECB Communications. Our speakers today are Daniel Nui, the chair of the supervisory board, and Sabine Lautenschläger, the vice chair of the supervisory board, and also member of the executive board. Ms. Nui and Ms. Lautenschläger will make some introductory statements before we will take your questions. And just a reminder, as you know, we released our annual report on supervisory activities last week, which Ms. Nui presented to the European Parliament. So with that, let me give you Ms. Nui the floor, Daniel. Thank you, Connie. Good morning, ladies and gentlemen. It's incredible how time flies. Just five years ago, in June 2012, the leaders of the European Union agreed to take banking supervision from the national to the European level. On here we are already presenting our third annual report. One of the most prominent issues we dealt with in 2016 was non-performing loans, or NPLs, for short, and NPLs will remain a top priority for some time to come. So far, the good news is that NPLs in the euro area declined by 54 billion to a level of 921 billion between the third quarters of 2015 and 2016. As a result, the ratio of NPL shrank from 7.3% to 6.5%. Still in some member states, NPLs remain a big issue. They wait on the profitability of banks and limit their ability to finance the economy. Just one week ago, we published guidance to banks, and now we expect them to deal with NPLs. Banks are required to come up with a clear strategy for reducing NPLs, a strategy which includes setting ambitious and realistic targets, putting in place relevant governance on operational structures. These guidance will ensure that banks take a consistent and effective approach to reducing NPLs. But banks and supervisors are not the only ones who need to act. In some countries, legal and judicial frameworks hamper the speedy resolution of NPLs. National lawmakers should therefore act too. Building on our stocktake of national practices, they could make judicial systems more efficient. They could create fast out-of-court procedures. They could increase access to collateral on the line fiscal incentives. Another major project that we launched is the targeted review of internal models, or TRIM for short. Many banks use internal models to determine how risky their assets are. Risk-weighted assets in turn form the basics for calculating capital requirements. That makes internal models highly relevant from a potential point of view. Over the years, banks have made their models ever more complex in an effort to map their risk as precisely as possible. But the more complex the internal models, the more prone they are to errors or even to manipulation. Thanks to their risk sensitivity, models are good management tools, but their outcome should also be consistent and comparable. Against this backdrop, TRIM will assess how robust and reliable banks' internal models actually are. The goal is to ensure that the calculation of risk-weighted assets is driven by actual risk rather than by modeling choices. To be sure, our goal is not to increase risk-weighted assets across the board. However, we may see risk-weighted assets increase for some banks. Altogether, TRIM will help enhance the sourness of internal models and thereby make them more credible, and it will help to level the playing field for banks in the euro area. At the same time, TRIM will contribute to a more stable banking sector. Banking is not only about stability, but also about profitability. Profits are a weak spot for euro-area banks. Many banks in the euro area don't even earn their cost of capital. This concerns banks and investors and it concerns us supervisors. After all, stability and profitability are the two sides of the same coin. The profitability of banks and the business models have therefore been one of our key priorities for some time now. Of course, we don't tell banks what their business model should be. What we do is to challenge their sustainability on closely monitored issues. And we do see some profitable banks. What is their secret? Well, when featured, these banks share our solid cost structures. This should be a hint to other banks as well. But it is not just about cost. Banks are facing many challenges those days. I already talked about NPLs, but I could also mention political uncertainty on sluggish growth, a difficult interest rate environment, stronger rules on new competitors. The world is changing and banks should embrace that change. They need to adapt their business model to become profitable again. Another issue is that in some countries, banking sectors are still highly fragmented. The resulting overcapacity leads to a strong competition on weak profits. In such a situation, what should expect some banks to be pushed out of the market? In my view, there is a clear case for consolidation, for instance, through mergers and acquisitions. However, we have not seen many mergers and acquisitions so far. And any that we have seen have taken place within one country rather than across borders within the euro area. This is where the banking union comes into play. The aim of the banking union is to provide the foundation for a truly European banking market, one in which we should also see cross-border mergers. Banks would become more European in scope, offer their services throughout the euro area, and benefit from a larger market. At the same time, customers could choose from a wide range of banks that are supervised according to the same high standards. This is our vision for the future. Thank you for your attention. Sabine, please. Our job is to make banks resilient. And in doing so, it helps to create a safe and sound European banking sector, a banking sector that can be a reliable partner for the economy. We can only do this job on the basis of sound regulation since the crisis policy makers have made regulations stronger and amended it where it was needed. And these reforms have enabled supervisors around the world to do a better job. And they help banks to do a better job as well, after all only well-capitalized and well-governed banks can rely on finance, the economy, only stable banks can finance long-term growth and prosperity. So we need regulation, and it should be based on global standards. And the later point is crucial for us. It is another lesson from the crisis that we should not forget to ensure stability. We need a global approach to regulation. That is why the Basel framework is so important, and that's why we have to finalize the Basel three reforms as quickly as possible. By now, for many issues, the solutions have been put on the table, and at the end of the day, Basel three can only be adopted as a package. The Basel committee is close to reaching an agreement, however. In that context, we welcome the G20's commitment to finalizing Basel three. Going from the global to the European level, we very much welcome the current review of the European legislative framework. The European Commission has made proposals on how to adapt and amend the relevant law. The ECB will publish an official opinion on these proposals in May, and personally, I see many good things in these proposals. First, they are in line with the global approach as they transpose some global standards, such as the leverage ratio into European law. Second, they support the idea of a banking union as they allow for capital and liquidity waivers within a banking group on an EU cross-border basis. And third, they strengthen the principle of proportionality as they seek to reduce the regulatory burden on smaller banks. Of course, there are also things that might need to be reflected on further. First, while supervisors need to be able to act quickly and flexibly, based on their expertise and judgment, some of the proposals seek to put a tight frame around supervisory actions. That would limit our ability to adapt our actions to the ever-changing financial industry, an industry that always looks for the best deal and sizes chances to arbitrage the rules. Rules that cannot be adapted as quickly as banks test their limits. And second, there is still room to further harmonize the rules, for instance, with regard to the national options and discretions. Ladies and gentlemen, we have talked about supervision and we have talked about regulation. And there's one last issue I would like to touch upon and that's Brexit. Over the past weeks, Daniel and I have publicly talked about Brexit and laid out how we will approach the issue and how we expect banks to approach it. So let me just briefly raise a few points. The EU and UK have not started negotiation yet. Still, both banks and supervisors must prepare for any potential scenario. For the banks, it is mostly about market access. Many UK banks rely on the European passport to operate in the single market. The passport gives them access to the entire single market as long as they are established in an EU country. In the event of a hard Brexit, they might lose this passport and would have to seek another path into the single market. The most obvious option would be to obtain a banking license in an EU, a country in order to regain the passport and it's the ECB that grants licenses in the euro area. And to be clear, we will only grant licenses to well-capitalized and well-managed banks. We will not accept empty shell companies. Both of us already said this. Any new entity must have adequate local risk management, sufficient local staff and operational independence. To enable banks to comprehensively comply with our requirements, we will grant bank-specific face-in periods. In doing so, we will take into account the business activities and the risk profile of each bank. We will be cautious of regulatory and supervisory arbitrage and we will not take part in a race to the bottom in that regard. That's why we will keep a close eye on how banking groups structure their euro area entities. Some banks might want to use a complex and diverse setup adapted to the range of activities they plan to pursue in the euro area. And many incoming banks might plan to establish significant or less significant credit institutions or to expand already existing ones. These banks would either be directly supervised by the ECB or by the national competent authority under, and that is the important issue, under the common European supervisory approach of the ECB. Some banking groups might also consider using a third country branch for part of their banking business, even very large in size complexity third country branches. Third country branches are subject to banking supervision, but at a national level and according to national standards and national regime. And these standards can greatly differ from one country to another. Some national supervisors, for instance, oblige third country branches to have capital and liquidity of their own. Others do not. All this runs counter to the idea of a level playing field in the euro area. It is an invitation to engage in regulatory and supervisory arbitrage. Still, there might be a chance to address this topic as part of the current review of the European legislative framework that I have just talked about. Ladies and gentlemen, Brexit will bring major changes. That much is clear. One thing will not change, though. The financial sectors in the UK and the EU will remain closely connected. The ECB banking supervision, the SSM, we are prepared for any outcome of the negotiations and the banks should be too. And let me assure you once again, as supervisors, we will not participate in a race to the bottom. After all, we all share an interest in having a stable banking sector on both sides of the channel. And I thank you too very much for your attention. Thank you both. So we come to questions now. We have roving microphones here somewhere. And we start, yes, here in the second room. Please, gentleman here. Thanks very much. We're on. Yes, from Emlex, John Riga. Can you maybe just carry on a bit about the third country branches issue? Just maybe you could say what you're seeing, where the concerns might be, and if you have any past experience with this before the Brexit context. Thanks. Well, this is the specificity of the EU that you have legal independent entities, subsidiaries, under the either direct supervision or indirect oversight of the ECB banking supervision. But the third country branches, as they are branches and not legal and independent entities, they are outside of it. So you can book or, you know, you can be active via the branches with banking activities, but you are not then under the ECB banking supervision. This is an important announcement. The list are temporarily out of order, normal service for museums as soon as possible. Thank you for your understanding. It's good that we do not need any lifts right now. Okay. No, the question is not only about who is supervising, but rather what kind of basis, what kind of regulations are going to be applied when supervising. Right now we have this already in the SSM area. Some of the branches are quite big, you know, but when you, we are talking about Brexit, we have many banking groups probably coming in. And then this gets a different, it gets a different dimension. And it gets a question of how might banking groups use this kind of fragmentation in between national regimes and European regimes in order to ensure to get the best deal out of it. And here we do have some concerns, and here one might think about what do you do, for example, with significant, you know, in size significant third country branches. There is one easy correction to that, the intermediate holding company that is on the table in the revision of the CRD4, CRR. The branches should be attached, should be under this intermediate holding company for third countries. So it would be also part of the SSM supervision because otherwise it is far too fragmented, as explained by Sabine. Okay, we have a, here in the front row. We have a microphone here, please. Thank you very much. I've got a question on these phasing periods. You said it's bank specific. So does it really mean you're going to have a plan for each individual bank? Or will you have, you know, look at your different sizes in group banks for phasing periods? And what do you envisage? Are we talking about a couple of months, half a year, quarters? Thank you very much. Well, first of all, it is bank, and it has to be bank specific because it depends on the activities, the scope, the size of activities coming to us. So it depends what kind of risks are related to it, what kind of information we will get with regard to the activities done under the UK PRAA supervision, what kind of information we will get from the PRAA, and then it will be, yes, a plan for each individual bank because when we are talking about very small activities, it might not be as relevant to do it very fast. If somebody wants to, for example, book back to back a lot of activities, we will need to see it more urgent to move into a kind of local risk management with specificities to whatever they book back to back. So it is very bank specific, but nothing what is unknown to us. I mean, every bank here has its own, what we call supervisory examination plan and where we have a kind of Excel sheet with a lot of different activities over the next three years, where we see the banks has to move to. So nothing new. It's just the question of the mass production, you know. Well, some will take months and some might even take one or two years. Here in the front row, we'll go one by one, thanks. Thank you. I've got a question on non-performing loans. The NPL problem has been out there for many years. And I'm wondering why does it take such a long time to solve the problem in my little simple world? I would say, why not just write it off, look at what it will cost, raise fresh capital, and then off you go. Where's the problem? First of all, when the amount is more than 900 billions for the SSM countries, you can imagine that it's a big problem, the magnitude of the amount. We started to address non-performing exposures with the Comprehensive Assessment. It was the first time we had a common definition to identify them, and that was provided by EBA, this definition. Then we made sure there were reasonably well provisioned, and it was a lot of additional provisions that were made after the Comprehensive Assessment that included an asset quality review. So after some work and discussions with the bank, we are now moving to one step forward. On one element which is very important as well is that it's not only an issue for supervisors. It's an issue for national legislators, for example. There are countries where the capacity to repossess collateral is very small. Also, the fast-track solutions, out-of-court fast-track solutions, which are the most efficient ones for certain categories of non-performing exposures, have to be developed. So that's why it takes so much time, but we were on a sound basis precisely because they were well provisioned after the Comprehensive Assessment. So now after the guidance on what is expected from the banks for this management of non-performing exposures, the banks are in the process of receiving letters from us where they will be asked to provide their own plan and we explain what we expect and what we will be challenging. And we have already seen action. A number of banks already are going to the market to clean their balance sheet in one of operations. Well, it has been said for Montepasqui after the stress test. It has... We have seen big equity issuance from Unicredito, for example. And others will follow. Banco Popular Español has mentioned that it will use equity to clean the balance sheet. So we have to start by making denial impossible on gradually but very firmly going to solutions. On our next step after the guidance, after the plans to address the legacy assets for each bank will be our expectations for the steady state in order to make sure that there are not new non-performing exposures that are created while we are addressing the old ones. But I am confident that the speed will be faster now. But it's a very delicate issue with a lot of stakeholders, not only the supervisors. Thank you very much, Francesco Kanepa from Reuters. You mentioned Montepasqui. Recently the ECB provided information that the Commission had requested about Montepasqui's solvency and about its situation and the context of the capital shortfall that you have identified. So my question is, can you give us that information too? So is Montepasqui solvent? And what happens if a bank situation deteriorates between the stress test and the time when the precautionary realisation is requested? Like in this case. And my second question is, in Brussels, you said that some banks may need to be unwound in Europe. That is an option that is possible. Do you see money in this situation? Do you see any right now in the eurozone in this situation? Thank you. Well, one element is not fully correct in your statement. It's not recently that we have given information to the Commission. Our cooperation with the Commission, which is a sister European institution, has started long before the end of last year. So we have been constantly keeping the Commission posted on the situation, on the evolution of the situation. So this is work that has been going for some time and I'm sure there will be close, soon decision about the situation. For the rest, you mentioned the Solvency Statements. Well, the Solvency Statement is the starting point of precautionary realisation. So obviously, this is something that has been done. Otherwise, we would not even be talking about precautionary realisation. Precautionary realisation is for solvent banks. For the other banks, we are working with the Commission and we have already started sharing information. Well, I am grateful to Andrea and Ria to have put the issue on the table. Because when you have such a large amount of non-performing exposures in the euro area, we need all the tools that are available. On the European asset manager, European fund is another possible tool. This being said, it's not panacea for sure. It will not fix all issues. It's just one of the tools among a few others. Interest of having a European initiative is that it reduces the stigma for the banks and the countries using it. And it is also improving the bargaining powers of the banks that are selling non-performing exposures. Because with the volume that we have, obviously, it's a market that is favouring the buyers, not the sellers. But if we have a strong, centralised seller that is improving the situation. This being said, I do not agree with all elements that are on the project, but it doesn't matter. It can be developed in different ways. For example, I don't think the claw-back concept is a solution because we need certainty in the prices. There's one here in the front row, please. No, no, no, here in the front row, please. Brexit questions again. Is the Brexit also a concern with regard to financial stability or is this issue completely from the table? And how confident you mentioned the possibility of arbitrage. So how confident are you that you can really prevent the entry of a large number of unsupervised third-country branches, which are significant? I'm sure that this thing will be dealt by the EU review. And is the problem only with regard to third-country branches or also with broker-dealers, which are not a bank? Well, first of all, third-country branches are not unsupervised, just to be very precise. They are supervised, but they are supervised via a national regime. And the regimes can be quite different. And there are some countries which oblige banks to have capital and liquidity, to have their own risk management in third-country branches. And in other member states, the same bank with the third-country branch does not need to hold capital and liquidity for the branch activities. They do not look very much into risk management issues on the local basis. And there the divergence and the heterogeneity comes and the fragmentation comes. So that's about the third-country branch. And you are fully correct. I did not want to blur my message, and that's why I deleted yesterday night my sentence about investment banking and broker-dealers. This is the third way. I mean, so you have on the one side the SSM entities, meaning directly or indirectly supervised by ECB banking supervision. Then you have the third-country branches, which are supervised according to a national regime. And then, I'll just speak a little bit louder. And then you have the investment bankers, the broker-dealers, which can include a lot of bank-like business activities, which are not under the supervision of ECB banking supervision or banking supervision, according to the national competent authorities, but for example, under the market authorities, which have a national regime again. And here it depends, too, to be very clear, even in the activities, whether you are a bank or not in Germany, for example, just giving loans means you need to have a banking license and you are under banking supervision in other countries, giving loans outside of the banking supervisory scope. So you have a fragmentation in the supervisory landscape, where you might have a raise to the bottom. So if you want to leave now and want to use the lift, you can use it if you wish to. Yeah. No, we have a fragmented supervisory landscape and it is the EU commission proposal, which here and there reflects on it and might need, perhaps here and there, a little bit of adaptions and amendments to get that concerns with regard to arbitrage opportunities solved. So now, well, I mean, it is so obvious and so clear that there is a certain kind of gap which needs to be closed via regulation that I'm positive when thinking about it. But I'm not the lawmaker, the European lawmaker. We can just hint on issues and topics and that's what we try to do today. With regard to financial stability, I think everybody is quite aware what needs to be done on both sides of the channel with regard to the potential transfer of activities. And you can see quite clearly here now, we listed in the last month our views on back-to-back booking on local risk management and governance on the question of third-country branches, et cetera, et cetera. I'm pretty sure that the PRRA does it on the other side, so we are very active. You will find the overall concept in a kind of modular way in April on our website, so we will publish our positions and we prepare for the worst case scenario, all these under the assumption of a worst case for heart Brexit. And here, Mrs. Trig, I forgot in your answer when you asked about the timing. It depends, the phase in depends quite a lot on what kind of actual regime will we have after the end of the negotiations. So to ask now about exact numbers of days, weeks, months, or years might be a little bit premature. So everybody's working on it as quite aware. I would like to make one additional comment on the broker-dealer status. Right now, the PRRA is deciding based on its own judgment that broker-dealers, certain of them that are systemic, can be supervised as banks. This is exactly what we need in the regulation, the possibility to decide that certain broker-dealers are systemic enough to be supervised exactly like banks. So as it is something clear, simple to do, we are quite optimistic that we will get it. And it's so obvious that otherwise, it would be a weakening of the supervision. Claire Jones here. Yes. Just to come back to Brexit, could you just clarify what you mean by a hard Brexit please? Would you be happy with some sort of regulatory equivalence or would the banks need to stay under the jurisdiction of the ECJ for you to be comfortable with them still being regulated outside the Eurozone and still able to conduct activities within the Eurozone? And just to follow up on that, is the position the same as what you've laid out already for clearing what's the stance on that? On the issue of banking union, it seems that there's still quite a lot of elements of banking union that are incomplete. How does that complicate what the SSM is trying to do? Thank you. Let me start for once with Brexit. Well, it's not up to us to say whether it should be hard, soft or in between Brexit. That's a political decision to be taken. What is sure for us is that the UK will always be important. We will always have a very important and intense relationship with our colleagues on the other side of the channel. We have banks that are working in the UK, they will go on working in the UK and we will receive probably a number of London-based current activities. So for us, what is important is continuity in the operation and I'm sure it's the same for British colleagues and it is the safety and soundness of the framework that will take place after the Brexit. So banking union maybe now to make a change for you Sabine if you wish so, otherwise I go on. Well, I mean perhaps to the clearing question and the part of the central bank activities you ask about, I mean we are here in the press conference of the banking supervisors so only a very short answer. I think it is for the politicians to decide in their negotiations what kind of equivalence assessment they see fit and how the UK will move out of the European Union. We just have to prepare for the worst case scenario and hard Brexit means no passport for UK banks anymore. With regard to your clearing questions, you know that at the end it is very, very important with regard to the clearing to keep a standard with regard to the regulatory and supervisory perspectives which is equivalent to what we have now and that is the minimum. Everything else is not yet discussed and there is not yet an official opinion, legal opinion of the ECB and thus I will not say anything about the internal discussions. The incomplete banking union we have I think a well functioning resolution mechanism. We have a well functioning supervision. The third leg with regard to the deposit guarantee scheme has to come in order to fulfill and to have the full set what is possible in the banking union but I think with the two legs we already have now we made huge steps forward in addressing issues with regard to level playing field, with regard to European perspective taking into account a perspective with high standards in supervision and in resolution activities and I will hope and would hope that we move forward very quickly with the third leg too. Would you like to say something to the deposit guarantee scheme? Why not? Yes indeed, there is a good package on the table put by the commission on reducing risk because it has been decided rightfully so in my view that reduction of risk and increase of solidarity should go together and now we have this package that can be implemented fast. We have already started with SSM to reduce risk, reducing fragmentation, reducing national options, having consistent threat but it's time to go on indeed and risk reduction on the third leg that is missing will leverage each other to deliver this safer and sound banking system in the euro area. So we had a question, there's a question all the way in the back there please. From your point of view as European supervisors, how satisfied are you with the capital resources of Germany's biggest banks? Do you still see a need for further improvement? And the second question is again from your point as supervisors, do we really need systemic relevant banks, the so-called too big to fail banks for a well-functioning banking system? Thank you. Well, are we satisfied with the level of capital? Well, it has significantly improved and we believe that indeed taking also into account pilot two the SREP requirements or the SREP demand now to take into account both requirements and guidance we are in the steady state. So that's a good move forward. The second part of your question, sorry I miss it, I write it very poorly, I cannot read again what I... So do we really need systemic relevant banks the so-called too big to fail banks? Well, we need consolidation of the banking system and it can take place within a country or across borders and I think it would make sense in certain cases to have cross border consolidation. Obviously we have to take into account these too big to fail issue, we don't want to create problems that would not be solvable considering too big to fail issue. But there are now international standards, in particular the ones adopted by the financial stability board, TILAC, capital requirements, the additional regulation for global SIFI. So we are well equipped also to have bigger banks. But obviously we need to be ready to supervise and we are ready to supervise these possibly large internationally active banks. So yes we need consolidation but obviously not to the extent that we create additional too big to fail problems but we are well equipped now to address the possibility of such problem and not increase the risk. May I add something? I'll ask back. Do you think that the export driven industry of Germany is able to get all the financial services they need abroad in Asia, in the US, in South America, in Africa without systemically relevant banks? Because for these kind of services you need a broad network, you need different expertise, you need economy of scales in order to give well, not only well functioning but priestly services to the industry. So what do you think? We are ready to supervise such banks and we have eight global SIFIs. We've seen the SSM which in my view, just like Sabine said, is good for the German industry or not fully for the other industries as well when they're recovered from the crisis. We have a question here in the middle in the center. Good morning. Domenico Conti for Answer News Agency. One question on Italian banks. There are two Italian banks from Benito, that is Benito Banca and Vicenza that have submitted initially a plan for private restructuring and then, as far as we know, they have come up with a precautionary capitalization plan. Can you clarify a little bit what the state of the art is as regards to these two banks? And my second question is on your recent statement about consolidation that in specific cases could take the form of unwinding banks if they become unviable. Does this mean in some way that the ECB supervision is intended to be a little less indulgent in dealing with future cases? Thank you very much. Well indeed, it's known that these two banks have asked for precautionary recapitalization. It's public news. And we have already, to be very clear, let me say that we are already sharing the information needed with the European Commission. You mentioned the plan they had, they have of possibly merging. After a precautionary recapitalization or part of a precautionary recapitalization, there is a plan to be discussed unaccepted by the Commission. So it may be that what they have developed for private initiatives is also the way it will go forward in the context of the precautionary recapitalization. But this has to be discussed with the Commission. There is one more actor in a precautionary recapitalization which is the Commission that is in the driving seat for the resulting restructuring plan. And the fact that we see, well, some comments about unwinding of banks or, well, let's put it in a broader context. There is a need for consolidation of the banking systems within the Euroria. It's not the case in each country. There are some countries where the banking systems are already pretty concentrated. But globally, there is room for consolidation in the SSM countries, in the SSM Euroria. And this can take many different ways. Hopefully volunteering, mergers or concentration will be the way used to do that. But if it was happening that there was a need to use the tools that we have been entrusted to act in certain cases, we will not be shy in using these possibilities. There's a question, yeah, right. Alessandro Speciale, Bloomberg News. I have a question on the Basel talks. You said that we are close to a deal and that the deal can only be adopted as a package. Did you get a bit more visibility on what the US position on the whole Basel talks are? Why, I mean, why, what is the reason for your optimism? And secondly, as you mentioned, Brexit concerns, are you concerned that there may be a regulatory race to the bottom as a consequence of it? Thank you. Well, first, no, I have not yet gotten any news from the US American colleagues. But I do see that all of us are very aware that global standards in an industry where interconnectedness is playing a huge and important role, that this awareness is there everywhere. And that's why we welcome the G20 commitment so much as they, it even found one sentence in the declaration in order to ensure that everybody knows we need to move forward here. And that's why I'm optimistic and positive. And as I know, I mean, that all of the compromises are on the table and we just need to have a final meeting where we think about how we can do the one or the other thing. I just hope and I'm positive. But I cannot promise you about Brexit. The second question was, I'm sorry again. Ah, the race to the bottom. Well, I mean, here and there, we hear from banks that the one or the other stakeholder promises a fast delivery of licenses. And we are always very cautious. And one should be cautious because you do not know yet in what kind of range and what kind of activities which banking group will come with what kind of structure. So from our point of view, it is at the core to have many, many different interviews, getting the business plan, the plans for several years to come, how banks want to structure their activities, how they want to grow, what kind of booking and they want to do what kind of risk management and it's nothing what you can do in a few weeks but where you need an in-depth analysis from our point of view. I would add one quick point. DSSM is an asset for the Brexit precisely because there is no competition on pure banking supervision. We can be neutral on the cities that will welcome these London-based banks. Obviously, fragmentation through broker dealers' status or through national, well, branches from certain countries would be an incentive to rise to the bottom. So that's why this fragmentation should not take place and the intermediate holding company that is on the table is the obvious solution. I have two more questions, one here and one in the back there. Alessandro Merlio, with only 24h. Can I ask you again about the banks that you mentioned, maybe necessary to unwind? Are you just stating a principle or are you talking from knowledge of the situation of individual banks? Talk about concrete case and if so, how many? I'm talking about principles. The question in the back there, please. The gentleman is raising his hand there, yes. Thank you very much, Dan Michaels, Wall Street Journal. If you look at the health of the Eurozone banking system, it's pretty striking how it seems to have improved over the past year or two. To what degree would you credit that to the broader economic recovery and to what degree would you credit tighter supervision? Thank you. Well, I guess it's both. And I hope recovery will help us to have even more success in the future. But consistent supervision, level playing field across the 19 countries is obviously a big asset. We have the benefit of the two words. We have the experience and expertise of national supervisor that is joining the efforts with ourselves to deliver supervision. And we have distance in the decision-making process which is a big benefit. And we mentioned discussions with the European Commission before. We are sister European institutions. So we can promote the best interests of the Union more than if we were national competent authorities or ministries of finance in different countries. We may so bold to say that on average, we raised the expectation of a supervisor how high the amount of capital, how high the capital ratio should be in the banking system the last three years. So it is both, yes? It's not only capital. It's also much more easy to benchmark ourselves with the big supervisors of the planet. We benchmark our global cities with the U.K. ones, with the U.S. ones, for example. So we have a better visibility as well. I think I had one more. Do you have questions though? Yeah? Yes? One more. I think that's the time for one more. Thank you very much. I'm Stefan Schaaf from Bresden. Just an additional question on the Basel 3 negotiations. What do you expect or could you give us an insight where it could lead to? Because most of the discussion was about output florals. It was about use of internal models. Where could be a compromise and what would be your wish for a compromise? I hope for your full understanding that I will not do so. Yeah? You know that many, many different topics are on the table. We have operational risk. We have the standardized approach for credit risk. We have the question of the IRBA and the input floors, LGDs. We have the leverage ratio and the G subfactor. We have the output floor. So there are many floating topics and now it depends how the whole picture looks like and we will see what will come out of the discussions of the next six months, let us say. I will not share. I'm sorry. Okay. I think there's one last question now. Yes, over there, the gentleman over there. Thank you. Michael Rasche answered that. Why is the ECB so keen on banking consolidation? High competition in the market is good for the customers. So don't like the ECB to have customers low prices. Overcapacity and the competition is constraining the profits of the banks. There are a lot of new development that are putting pressure on the profits of the bank and overcapacity is one of them. Each, on average, euro-aurea banks need to spend 65 cents to earn one euro. That's a lot. And there is something to be done. And again, not everywhere. We need enough competition. But globally and in certain countries, there is an overcapacity of offering of banking services. And that is not helping the profitability and hence the solvency of the banks because those are the two sides of the coin. The business of the ECB is to make sure that business models are sustainable enough. And sustainable means the banks are solvent, unprofitable. You cannot go on like it is the case now not earning the cost of your capital for long. That's an issue, yes. It is not our task to structure a banking system. But our task is to identify weaknesses and deficiencies. And the core of banking supervision is to have an assessment. Is the business model of a specific bank viable? And not only viable at the current status today, but forward-looking for the next years. What kind of earnings can they have? What kind of risks are they taking in? And are they able to cover with their earnings the risks they are taking in? And if they are not able to do so, then the business model is not viable. So from our perspective, it is not a question of does the one or the other bank have to consolidate. But it is rather the question of do we have via the overcapacity in some of the national markets a raise to the bottom with regard to the margins where the margins might not always cover the risks which the banks take in. And where at the end the question of can they cover not only the risk but the capital cost too is at least at stake. These are the two issues. So we've run out of time. Thank you very much for coming everybody. And now that you can leave on taking the lifts again since they seem to be working. Thank you very much.