|
Bank Supervision
 Enhancing corporate governance for banking
organisations
The Basel Committee is
issuing this paper to supervisory authorities and banking organisations
worldwide to help ensure the adoption and implementation of sound corporate
governance practices by banking organisations. This guidance is not intended to
establish a new regulatory framework layered on top of existing national
legislation, regulation or codes, but is rather intended to assist banking
organisations in enhancing their corporate governance frameworks, and to assist
supervisors in assessing the quality of those frameworks. The implementation of
the principles set forth in this paper should be proportionate to the size,
complexity, structure, economic significance and risk profile of the bank and
the group (if any) to which it belongs. The application of corporate governance
standards in any jurisdiction will depend on relevant laws, regulations, codes
and supervisory expectations.
The
Basel Committee on Banking Supervision
-
Basel Committee seeks comments on
updated banking supervision principles
The Basel Core Principles have been used by countries as a benchmark for
assessing the quality of their supervisory systems and for identifying
future work needed to ensure sound supervisory practices. They have also
been used by the International Monetary Fund (IMF) and the World Bank in the
context of the Financial Sector Assessment Program. However, changes have
occurred in banking regulation over the years, and much experience has been
gained with implementing the Core Principles in individual countries.
Updating the Core Principles to reflect these changes and experiences will,
therefore, ensure their continued validity and usefulness.
-
Core Principles for Effective
Banking Supervision
Consultative Document. Issued for comment by 23
June 2006.
This document is the revised version of the Core
Principles for Effective Banking Supervision, which the Basel Committee on
Banking Supervision (the Committee) originally published in September 1997.
Along with the Core Principles Methodology the Core Principles have been
used by countries as a benchmark for assessing the quality of their
supervisory systems and for identifying future work to be done to achieve a
baseline level of sound supervisory practices.
-
Core Principles
Methodology
Consultative Document. Issued for comment by 23
June 2006.
The Core Principles for Effective Banking Supervision, developed by the
Basel Committee on Banking Supervision (the Committee) in cooperation with
fellow supervisors, have become de facto the standard for sound prudential
regulation and supervision of banks. The Core Principles are mainly intended
to help countries assess the quality of their systems and to provide input
into their reform agenda. The vast majority of countries have endorsed the
Core Principles and have declared their intention to implement them.
-
Comparison between the 1999 and 2006
versions of the Core Principles Methodology
Use of Vendor Products in the Basel II IRB
Framework
This Newsletter sets forth the views of the Basel Committee
Accord Implementation Group’s Validation Subgroup (AIGV) relating to the use of
vendor products within internal ratings-based (IRB) approaches of the Basel II
framework. The AIGV developed this Newsletter in response to industry questions
about supervisory expectations for incorporating vendor products into banks’ IRB
processes. The purpose of this note is to further elaborate on supervisory
expectations regarding how banks might satisfy IRB validation requirements when
vendor products, which frequently introduce information transparency issues, are
used within banks’ IRB processes. In drafting this document, the AIGV also
benefited from recent meetings with various vendors.
 Banks
and the compliance challenge
Speech by Professor Arnold Schilder, Chairman of the BCBS
Accounting Task Force and Executive Director of the Governing Board of the
Netherlands Bank, at the Asian Banker Summit, Bangkok, 16 March 2006.
– Compliance risk is becoming one of the major risks banks are facing. The
increasing globalization, issues with the corporate governance of complex
institutions, changing laws and regulations, the understanding of what
constitutes sound risk management, and the continuous evolution of financial
products create complex situations for banks that operate on a cross border
basis. One may wonder whether the compliance framework in place is robust enough
to effectively manage these rapidly changing factors. Creating a “best in class”
compliance framework seems to be the best way forward. The development and
implementation of such framework might well be a challenge equal to the
implementation of Basel II.–
 The
impact of IAS/IFRS on banks’ regulatory capital and main balance sheet items
Committee of European Banking Supervisors
The introduction of International Accounting Standards/International Financial
Reporting Standards (IAS/IFRS) has been a source of concern to supervisory
authorities, notably because of fears that these standards could jeopardise the
criteria that regulatory own funds have to fulfill, namely that they be (i)
permanent, (ii) readily available for absorbing losses, and (iii) reliable as to
their amounts. There were also some concerns that the IAS/IFRS could introduce
volatility into institutions’ financial statements and, more particularly, into
regulatory own funds, in ways which might not reflect the economic substance of
institutions’ financial positions.
 Risk
management challenges in the US financial system
Remarks by Mr Timothy F Geithner, President and Chief
Executive Officer of the Federal Reserve Bank of New York, at the Global
Association of Risk Professionals (GARP) 7th Annual Risk Management Convention &
Exhibition, New York City, 28 February 2006.
– We have seen dramatic changes in the U.S. and global
financial system over the past 25 years, and we are now in the midst of another
wave of innovation in finance. The changes now underway are most dramatic in the
rapid growth in instruments for risk transfer and risk management, the increased
role played by nonbank financial institutions in capital markets around the
world, and the much greater integration of national financial systems. These
developments provide substantial benefits to the financial system. Financial
institutions are able to measure and manage risk much more effectively. Risks
are spread more widely, across a more diverse group of financial intermediaries,
within and across countries.–
 Community
banking and community bank supervision in the twenty-first century
Remarks by Ben S Bernanke, Chairman of the Board of Governors
of the US Federal Reserve System, at the Independent Community Bankers of
America National Convention and Techworld, Las Vegas, 8 March 2006.
– Community banks have long played a critical role in
the U.S. economy, and this is no less true in the twenty-first century. Today, I
will begin by making some observations, based in part on research done at the
Federal Reserve and elsewhere, about the health of community banks and their
evolving role in our economy. Community banks are generally doing quite well,
and I expect that good performance to continue. But community banks also face a
changing business environment that presents a number of important long-run
challenges. In the second portion of my remarks, I will speak a bit about how
the Federal Reserve, as the supervisor of many community banks, is also
adjusting to a changing environment, and I will review some of the key financial
risks facing community banks.–
Top
Recommended Readings
 Latin
America: Structural reforms and competitiveness Speech of
the IMF’s Managing Director, Rodrigo de Rato at the 69 Convention of the
Association of Banks of Mexico held in Acapulco, Mexico in March of 2006.
-It is an honor to participate in this important conference, which gives me the
opportunity to analyze, from the IMF’s perspective, challenges and opportunities
with which Latin America is confronted today. It is very pertinent that I can
address these issues in Mexico, a country that has evolved politically and
economically in the last decade, in a vibrant multiparty democracy, and in a
model of sound macroeconomic management. Certainly, transformations of this type
are happening in other emerging economies of the world.-
 Perspective
of the world economy
(Note available only in Spanish)
The development of the institutions, International Monetary Fund In Latin
America, the growth had been moderate and has taken regularity more sustainable,
after the fort begins of 2004. The vigour of the exports of basic products and
raw materials, joint with the ample improvement of the terms of interchange in
the major part of the great economies, continues nourishing the impetus of the
growth, although the export of manufactures has been weakened slightly, like the
manufacturing world activity. After to have initiated during the second semester
of the 2004, inflation has become stabilized, but it continues being volatile,
because of the intense variability of the prices of basic products has not been
calmed. Facing the future, it is forecasted that the expansion will follow its
constant movement and the growth will keep over the average of the last decade
in 2005-06, propelled by the increase of the external and internal demand.
Architects
of stability? International cooperation among financial supervisors
Ethan B Kapstein; Monetary and Economic Department; BIS
Working Papers
The objective of this paper is to provide a balanced assessment of international
cooperation among financial regulators, with a focus on banking supervision.
While recognizing the undeniable – and even unexpected – achievements of these
regulators in building a cooperative framework for financial supervision, we
also suggest that this remains a work in progress, given the contemporary
financial risk environment. Briefly, we argue that this environment – to the
extent we understand it, for it remains opaque in important respects – has an
almost paradoxical quality, in that risk has become both more consolidated and
more atomized at the same time. On the one hand, large and complex financial
institutions (LCFIs) which may be “too big to fail”, increasingly dominate the
banking landscape; on the other, these same institutions have shifted at least a
portion of their risks onto other firms and households, whose absorptive
capacity has yet to be severely tested. It is the effectiveness of the
international supervisory architecture in the face of this risk environment that
we consider, and we then provide some suggestions for future policy reforms.
 Latin
America's Resurgence. Region has fresh chance to entrench growth and break
cycle of crises.
Anoop Singh is Director of the IMF's Western Hemisphere
Department and Charles Collyns is Deputy Director.
Latin America often appears to lurch from the cusp of success to the depths of
crisis, so to talk about resurgence invites skepticism. Nevertheless, much of
the region has witnessed a swift and robust recovery from the successive
financial crises of 2001–02. Within two years, the region's economic growth
reached 5.6 percent in 2004, a 24-year high. Growth rates of about 4 percent in
2005 and 3¾ percent projected for 2006 are well above historical averages.
 Challenges
for financial institutions today Notes for remarks
Malcolm D Knight, General Manager of the BIS, at a European
Financial Services
Roundtable meeting, Zurich, 7 February 2006
Many observers and analysts see major macroeconomic risks present in the global
economy – large and widening external current account imbalances, large
structural fiscal deficits in key countries, etc. Yet financial markets
are not reflecting such risks in prices: a strong US dollar, very low long-term
nominal and real interest rates, subdued volatility, etc. Hence there is a
disconnect between
Top
Institutional
Calendar 2006
-
April 24-29
Course "Analysis and Examination of Banks”
FED, Port Spain, Trinidad & Tobago
-
May 15-18
Course: "Supervision Focused in Risk"
OSFI, Asuncion, Paraguay
-
June 12-16
Course “Supervision Focused in Risk and Risk
Evaluation”
FED, Santo Domingo, DominicanRepublic .
-
July 11-13
Seminary "Operational Risk in Basel II"
FSI, México, D.F.
-
July 17 to 20
Course: "Supervision Focused in Risk"
OSFI, Caracas, Venezuela
-
August 21-23
Seminary “Core Principles”
México FMI (To confirm the place)
-
August
28-September 1st
Course "Foundations of Risk Administration of
Interest rates"
FED, Mexico, D.F.
Top |
In
March 2006, after 30 years at the Federal Reserve Board, including nearly 15 as
Director of Banking Supervision and Regulation for the U.S. Federal Reserve
System, I announced that I will be retiring at the end of June of this year. I
am looking forward to the next chapter in my life and am grateful for the
opportunity to have made so many friends over the years in the international
supervisory community, including members of ASBA. It has been an honor and a
pleasure to serve as Chairman of the Association and to work with you over the
past three years and I greatly appreciate all of your contributions to the work
of the Association during this time.