Transcript Slide 1

CEBS’ role in the
CRD implementation
José María Roldán | 12 Jan 2006
Outline
• Evolving markets and EU banking supervision
• CEBS - main tasks and challenges
– Consistent implementation of CRD
– Convergence in supervisory practices
• A review of progress made so far
– Supervisory disclosure
– Guidelines related to the CRD implementation
– Harmonisation of reporting requirements
• What next?
– Monitoring and assessing CEBS’ work
– Continued efforts to build European supervisory culture
José María Roldán | 12 Jan 2006
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Evolving markets and the EU banking supervision
• Banking market:
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Cross-border activity
Consolidation
Centralisation of business functions at group level
Outsourcing of activities
Diversity of banking structures
• Regulatory framework:
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Basel II (CRD)
IAS/IFRS
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Post FSAP
risk-focused supervision
new standards, with impact on
supervisory tools
implementation and convergence of
practices
Response: the Lamfalussy process - CEBS
José María Roldán | 12 Jan 2006
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CEBS – main tasks
• Advice to the Commission
• Consistent implementation and application
of directives (especially CRD) and
convergence of supervisory practices
(Lamfalussy level 3)
• Exchange of information
José María Roldán | 12 Jan 2006
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CEBS – main challenges
1) Potential divergence in directive implementation
– National options and discretions
– Additional layers of national rules (“goldplating”)
– Different interpretations
2) Complex and possibly fragmented supervisory
process
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Misalignment of legal and operational structures in banking groups
Risk of overlapping or conflicting supervisory assessments
Validation of models and Art. 129
Supervisory Review Process (Pillar 2)
3) Administrative burden
– Compliance costs
– Differences in supervisory reporting
– Duplication of contacts
José María Roldán | 12 Jan 2006
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A review of progress made so far
1) Potential divergence in implementation
Supervisory disclosure framework
2) Complex and possibly fragmented supervisory
process
Enhanced home-host co-operation, Pillar 2
and validation guidelines
3) Administrative burden
Harmonised reporting requirements
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Supervisory disclosure
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Supervisors are required to publish (CRD Art. 144):
– Rules and guidance
– How options and national discretions are exercised
– Supervisory review and evaluation
– Statistical data on key implementation issues
– Additional information on reporting frameworks
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Easy access and meaningful comparison  peer group
pressure
– Internet access via CEBS website www.c-ebs.org
– Links to national websites
– Comparable information
– Common language - English
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Supervisory disclosure
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Guidelines related to the CRD implementation
• CRD Art. 129 to 132, enhanced co-operation and role
of the consolidating supervisor
• CEBS Guidelines, a practical framework for:
–Co-ordinated planning
–Structured exchange of information
–Avoidance of redundancies
–Optimal use of supervisory resources
• Concrete examples: risk assessment and validation
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Guidelines related to the CRD implementation
• Supervisory Review Process (Pillar 2):
• Ensure institutions have adequate capital to support all risks in their
business
• Encourage institutions to manage risk
• Foster an active dialogue between institutions and supervisors
• Covers the relationship between:
– Supervisor’s SREP (the Supervisory Review and Evaluation Process);
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– Institution’ ICAAP (the Internal Capital Adequacy Assessment Process)
• Proportionality is the key:
– For large complex institutions
– For smaller institutions
José María Roldán | 12 Jan 2006
in-depth and “tailor-made”
likely to be quite standardised
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Harmonisation of reporting requirements
• Common frameworks for:
– Financial data for prudential purposes
– Reporting of the solvency ratio
• CRD and IFRS  window of opportunity for change:
less administrative burden for cross-border groups;
limited impact on small, local banks
• Common templates and possibilities presented by
new technologies (XBRL)
• Consultation: criticisms on size and national
flexibility
• But new rules are complex and supervisors move
from quite different starting points
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What next?
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Compendium of CEBS’ standards, guidelines and
recommendations
– for supervisors and market participants
– flexible, internet-based structure, easy to update
– consistent terminology, definitions
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Inventory of implementation issues: case studies,
surveys
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Networking mechanisms – day-to-day co-operation
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Training programmes and staff exchange
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New tools, if necessary
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Conclusions
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Differences across countries not wiped out, but visible,
so that priorities for further work can be identified
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Not a single supervisory interface, but a more
coordinated and streamlined process
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Not a single compliance process, but greater
commonality of approaches and a process for further
convergence where needed
a structured process for convergence and
common European supervisory culture
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Questions?
Thank you!
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Contact details
Name: José María Roldán
E-mail: [email protected]