08 July 2005

CEBS consultation on supervisory cooperation

The Committee of European Banking Supervisors (CEBS) issued for public consultation its guidelines for greater supervisory cooperation for EU banking and investment firm groups under the Capital Requirements Directive (CRD). The paper sets out CEBS guidelines for establishing an enhanced framework for co-operation between consolidating supervisor and host supervisors. They contain sections on general cooperation, distinguishing between subsidiaries and branches, and guidance more specifically related to the approval process of model validation.

For cross-border groups, all supervisors could be required - depending on the scope of application as defined by the CRD - to undertake the Supervisory Review Process (SREP) within the respective Member States. To be effective, the SREP should be based on the same principles, applying similar procedures. This should result in:
 

• convergence of supervisory practice among EU supervisors, thus offering scope for coordinating supervisory actions and eliminate duplicate tasks; and
   
• a proportionate and risk-based approach to supervisory co-operation, thereby avoiding unnecessary communication and redundant tasks, thus preventing the arrangements between home and host supervisors becoming administratively burdensome.

  The consolidating supervisor and the host supervisor may have different views on the degree of significance or systemic relevance of the various entities and on the risks stemming from these entities for the group. This interaction gives shape to an integrated supervisory framework and relies materially on the exchange of information within the operational networks set up between the relevant consolidating supervisors and host supervisors.

  The outcome will be a practical framework for the Supervisory Review Process, comprising the Internal Capital Adequacy Assessment Process, the Supervisory Review Evaluations Process and the Approval Process for Model Validation. The Guidelines will be further complemented with a practical transposition for specific cases; a section on model validation is therefore part of this paper. One for situations of crisis management is under elaboration.

  A public hearing will be held in October 2005. Deadline for consultation is 8 November 2005.

  Press release
  Executive summary
  Document
   

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