resolution actions have direct consequences for financial stability, which is a public good that the ssm seeks to protect, and they turn on the more vulnerable banks, which are precisely those that require greater attention from the prudential supervisor. accordingly, the defining of effective information and analysis co - operation and exchange procedures between the supervisory and resolution boards is crucial for preventing dysfunctions, overlaps and frictions that hamper the proper functioning of the banking union. a memorandum of understanding between both agencies is currently being drawn up and will, i hope, contribute to achieving the necessary coordination. lastly, we should sustain our efforts in order to achieve the degree of cohesion between the various components of the ssm that effective supervision requires. the ssm directly supervises 122 european banking groups, encompassing some 1, 200 institutions. this is done with supervisory teams that draw on staff from various institutions, with highly diverse skill sets, seniority, experience and working conditions. evidently, we must strive to fully develop a sense of mission to which all the component parts must contribute, under the leadership of the ecb and its supervisory board, without exclusions or unnecessary subordination. that is vital for maintaining the motivation and commitment of all ssm supervisory staff, irrespective of the authority to which they are attached. indeed, they have to date shown exceptional professionalism. final remarks in concluding, i will say that the past year has seen major headway in setting the banking union in place, but we still have some way to go. we must move ahead in a setting that will be complex for the european banking industry. specifically, economic activity remains relatively sluggish, price stability is subject to significant risks and, as a result of this, interest rates are holding at very low levels. against this background, banking business is feeling the effects of the difficulties in reactivating credit, of modest net interest income and of the impaired assets still on their balance sheets. and compounding this are growing regulatory demands which, though they should be conducive to the industry ’ s stability in the medium term, are raising the pressure in the short term on profitability. it is essential in this setting for managers and supervisors to revise the soundness of banks ’ business model and, in particular, their capacity to generate resources in a stable manner that will ensure satisfactory levels of profitability and solvency in the medium term. that may require a correction of the european banking industry ’ s excess capacity apparently prevailing at

the singleness of the relevant legal framework for banking activity throughout the eu may become firmly anchored. to wrap up this first part of my speech, allow me to highlight certain relevant decisions taken by the supervisory board during this first year. among the most important are those relating to the supervisory review and evaluation process ( srep ), which has for the first time been carried out with a common methodology for all ssm banks. this process, which includes both quantitative and qualitative aspects, determines the risk profile of each significant institution, the sufficiency of its liquidity and solvency in terms of this profile and, finally, it sets the minimum capital levels to be maintained. the decisions on capital, the adoption of which for 2016 will be shortly formalised, will, for all the ssm ’ s significant institutions, entail average capital requirements somewhat higher than those of the previous year : around 30 basis points ( bp ), rising to 50 bp if the impact of the phasing - in of the capital buffers envisaged in european legislation is taken into account. bis central bankers ’ speeches as you will recall, in january this year a recommendation on dividend distribution policy was adopted in which banks were urged to keep conservative dividend distribution arrangements so as to preserve their solvency. this recommendation will be shortly reassessed. in turn, common criteria have been laid down for recurring decisions such as authorisations for the acquisition of qualifying holdings in credit institutions, assessment of fitness and properness of board members, or the requirements to be made in capital reductions and issuances. finally, i must highlight the relevant role played by the ssm in the management of the greek crisis. the ssm not only monitored the situation of the banks continuously, but, once agreement was reached between the european and greek authorities last summer, it was entrusted with determining the recapitalisation requirements of greece ’ s four significant institutions on the basis of a specific comprehensive assessment exercise, whose results were recently published. in the coming months, the ssm must ensure that the recapitalisation of these banks goes ahead as stipulated. 3. some challenges that said, and as i stated at the outset, the ssm has numerous challenges to face in the near future. i would like to mention four in particular. firstly, the microprudential policy stance sought must be clearly defined. the ssm, despite its exemplary start - up, is still under construction and its criteria, practices and