OREANDA-NEWS. March 17, 2015. Banks should not expect any soft treatment from the European Central Bank's supervisory arm, ECB Executive Board member Sabine Lautenschlaeger said on Monday, saying such an approach would not be a path to sustainable growth.

The ECB took over as supervisor of euro zone banks in November under Europe's new Single Supervisory Mechanism (SSM), which gives the bank wide-ranging powers, including the right to demand that lenders increase their capital buffers.

"Some might suggest restraint on the side of regulators and supervisors as a way of fostering growth - and they may be right regarding some of the many topics that were regulated over the last seven years," Lautenschlaeger, the ECB board member tasked with banking supervision, told the Frankfurt Finance Summit.

"But if you now expect me to provide comfort with a regulatory break or even promise supervisory leniency, I am afraid you are in for a disappointment," she said in the text of a speech for delivery at the conference.

The financial crisis had shown "there is little more damaging for sustainable growth than a malfunctioning banking sector", she added.