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30 March 2010

Basel Committee issues consultative paper on good practice principles for supervisory colleges


The principles give broader guidance on cross-border cooperation and information-sharing by clearly outlining expectations for both home and host supervisors in relation to college objectives, governance, communication and information.

The Basel Committee on Banking Supervision today issued for consultation its paper on Good Practice Principles on Supervisory Colleges.
A key objective of the Basel Committee is to promote supervisory cooperation. Over time and particularly with the introduction of the Basel II capital framework, supervisory colleges have become an important means for strengthening supervisory cooperation and coordination. The recent financial crisis has further emphasized the importance of closer international cooperation among home and host supervisors in effectively supervising international banking groups. These principles support the efforts of the G20 leaders and the Financial Stability Board to strengthen international cooperation and supervision of cross-border financial institutions.
The principles supplement earlier Basel Committee publications governing cross-border supervision. After assessing the current practices of supervisory colleges, the Committee has developed this set of eight principles with the aim of promoting and strengthening the operation of supervisory colleges. Among other things, the principles:
·         emphasise that the main aim of colleges is to enhance information exchange and cooperation among supervisors to support the effective supervision of international banking groups.
·         provide guidance on the types of information to exchange and the different communication channels available. The principles also promote collaborative work among supervisors.
·         acknowledge that no single college structure is suitable for all banks and that a college might have multiple or variable sub-structures. Indeed, the structure of each college should be determined by the characteristics of the banking groups under consideration as well as the particular supervisory needs.
·         take into account the latest developments and policy-making work in response to the financial crisis. For example, colleges should form one of the building blocks for crisis management planning. They should also facilitate the process of identifying and disseminating information relevant to macro-prudential analysis.
Mr Nout Wellink, Chairman of the Basel Committee and President of the Netherlands Bank, noted that "colleges should play a central role in supporting the supervision of international banking groups. While they are not a substitute for effective national supervision, colleges should help ensure that the supervisory intensity for a large, complex, internationally active banking group is tailored to its systemic importance."
Deadline for comments is 30 June 2010




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