especially in the npl exposure topic we see progress made. the same we had, by the way, with basel committee on banking supervision 239. with this risk aggregation we got a lot of very positive feedback from banks saying because we compared them horizontally, we could then tell the banks : ‘ you are 9 / 11 bis central bankers'speeches below or above the standard ’. this helped the banks quite a lot to push the issue internally. can we ask about the mrel, which you mentioned in relation to recovery and resolution? it seems that the large banks are on track to raise the mrel required. what about the mid - sized and the smaller banks? are you worried about how much they have to contribute? this is a very idiosyncratic question. it depends very much on the individual banks. i cannot tell you that everything is fine, because here and there some homework still needs to be done, and there ’ s some time left so this is not the biggest issue. many banks depend on the national legal environment too. it is very idiosyncratic. just going back to the italian banks again, how comfortable are you? how much progress has been made on the npl issue? is it the case that six months down the line another italian bank is going to be in trouble or do you think progress has been made in this area? the npl issue has dragged on for a while. it ’ s very clear that the npl topic will not be solved in two, three months, or in one year, but this is something that we need to work on in a medium - term perspective. what i think is very important – and we are working on it – is that the solutions are not only with the banks, but with the national governments too. this is also a question of the legal environment : the judicial situation is of utmost importance for the price, for the value of a npl, and how fast a workout can be done. we made a very interesting stocktake last year of eight of the most relevant countries in terms of npls. in the stocktake we asked : ‘ how supportive is the legal environment and the judicial environment for a workout of npls? and how important is it for a country with a lot of npls? ’ we knew that it is important, but we were quite surprised just how important it is and what kind of heterogeneity we found. i ’ m a lawyer. i knew that it is

sabine lautenschlager : interview with the financial times interview by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, with the financial times, conducted by ms claire jones and ms caroline binham and published on 4 july 2017. * * * if i may, if we just start with the big topic of brexit, you ’ ve given a few speeches in the last few months just about what the single supervisory mechanism ’ s ( ssm ) expectations would be for uk institutions looking to establish a base in the eurozone, and you said you don ’ t really want to accept just a brass plate, that you would want something substantial here. could you elaborate a little bit more about what your expectations are for institutions that are looking to come? well, first of all, we do not want to have an empty shell in the euro area where booking is done, but not the risk management ; there ’ s the question of governance, the question of what kind of strategy does the bank have for the euro area entity : is it fully somewhere else where we do not have the contact, where we cannot supervise correctly? so, it is a question of the balance between what kind of risk profile a bank with a licence in the euro area has, what kind of risk exposure, what kind of risk management and what kind of decision - making has to take place in the euro area. our supervisory expectations are that we do not expect the banks not to do some back - to - back booking ; it ’ s not, from our point of view, forbidden. but the euro entity should not be an empty shell where the credit risk stays in the euro area, and all of the market risks are booked and governed and managed outside of the euro area. is the expectation that an institution would actually set up a subsidiary or would some other kind of less onerous requirement, particularly when it comes to capital and liquidity, be okay for you? well, that depends on the legal environment we must have, and, as you know, there ’ s a discussion ongoing at the level of the european commission concerning intermediate parent undertakings. that does not mean that third - country branches would not be allowed, but it depends a on what kind of business there is, and what kind of structure the banks want to have too. it ’ s not always the supervisor saying ‘ i want you to have