附件七
Supervisory Cooperation, Information Sharing and
Cross Border Issues
OSFI International Advisory Group
3rd SEACEN-OSFI Seminar on Consolidated Supervision
Hosted by the State Bank of Vietnam
May 5 - 9, 2008
Da Nang, Vietnam
Leo Querel
International Advisory Group
www.osfi-bsif.gc.ca
Discussion Points
Benefits of Supervisory Cooperation and
Information Sharing
Reliance
Guidance & Standards
Home-Host Issues/Challenges in Basel II
Questions for Supervisors to Ask
Themselves
2
Benefits of Supervisory Cooperation
and Information Sharing
Benefits are generally beyond dispute
FIs operate worldwide
risks are both local and global in origin
material loss/failure abroad can threaten the
safety/soundness of the entire institution, both
directly and indirectly through a loss of
confidence
3
Benefits of Supervisory Cooperation
and Information Sharing
Supervisors are not only responsible for
FIs based in their own jurisdictions, but
also for protecting local depositors of
foreign FIs
supervisors have neither the time nor budgets
to directly ensure that all operations outside
their jurisdictions are operating in a safe/sound
manner
supervisors must work with and rely on the
help of other supervisors through information
sharing and other forms of supervisory
cooperation
4
Benefits of Supervisory Cooperation
and Information Sharing
Supervisors increasingly being asked for
confidential info
Questions arise about
balancing cross-border information sharing
needs with national confidentiality
requirements
balancing benefits with the practical work
involved
respective roles of home/host supervisors
loss of supervisory control
5
Reliance
Supervisory cooperation raises
question of reliance
6
Reliance
Approaches to supervision vary widely
country to country
Two extremes
supervisors place virtually no reliance on the
work conducted by other supervisors or other
potential allies such as external/internal
auditors, boards, etc.
entire supervisory role turned over to auditors
and boards, supplemented by extensive
disclosure reqmts to encourage markets to
play a supporting role
7
Reliance
Most supervisory regimes operate
somewhere between these two extremes
– a “rely and verify” approach
requires appropriate checking to confirm
information/judgements
supervisors must ask themselves whether/how
often to conduct direct supervision where
another supervisor has primary responsibility
8
Reliance
Information sharing may reduce the direct
supervision work but does not eliminate it
Historically given more prominence in
banking supervision than in insurance
supervision
Unconsolidated balance sheet of the
parent bank cannot be ignored!
9
Guidance & Standards
Guidance comes from many groups
elements/standards overlap to a large degree
Information sharing and cooperation standards
issued by:
Basel Committee on Banking Supervision
eg. - Sharing of financial records between
jurisdictions in connection with the
fight against terrorist financing
(April 2002)
- Essential elements of a statement
of cooperation between banking
supervisors (May 2001)
10
Guidance & Standards
Information sharing and cooperation standards
issued by:
Basel Committee on Banking Supervision
eg.- The supervision of cross-border
banking (October 1996)
- Minimum Standards for the
Supervision of International Banking
Groups and their Cross-border
Establishments (July 1992)
11
Guidance & Standards
Basel Committee on Banking Supervision
(cont’d)
BCP #1(6)
Arrangements for sharing
information between supervisors
and protecting the confidentiality of
such information should be in place
12
Guidance & Standards
BCP #1(6) (cont’d)
• system of cooperation/info sharing:
-between all domestic agencies responsible
for financial sector
-with foreign agencies that have supervisory
responsibilities for banking operations of
mutual interest to domestic supervisor
-evidence that arrangements work in
practice, where necessary
13
Guidance & Standards
BCP #1(6) (cont’d)
• the supervisor:
-may provide confidential info to another
domestic or foreign supervisor
-is required to ensure that receiving
supervisor will keep info confidential
-is required to ensure that confidential
info released to another supervisor will
be used only for supervisory purposes
-is able to deny any demand (other than
a court order/mandate from a legislative
body) for confidential info
14
Guidance & Standards
Basel Committee on Banking Supervision
(cont’d)
BCP # 25
Cross-border consolidated supervision
requires cooperation and information
exchange between home supervisors
and the various other supervisors
involved, primarily host banking
supervisors. Banking supervisors
must require the local operations of
foreign banks to be conducted to the
same standards required of domestic
institutions.
15
Guidance & Standards
BCP # 25: Essential Criteria
• for material cross-border operations of its
banks, the supervisor identifies all other
relevant supervisors and establishes informal
or formal arrangements (MOU) for appropriate
information sharing, on a confidential basis, on
the financial condition and performance of
such operations in the home or host country
• where MOU exists, their existence should be
communicated to the banks
16
Guidance & Standards
BCP # 25: Essential Criteria (cont’d)
• home supervisor provides info to host
supervisors regarding:
-specific operations in the host country
-the overall framework of supervision in
which banking group operates
-significant problems in head office or group
as a whole
- frequency and scope of information sharing
varies depending on materiality of bank’s
activities in host country
17
Guidance & Standards
BCP # 25 and Essential Criteria (cont’d)
• local branches/subsidiaries of foreign banks
are subject to similar prudential, inspection,
and regulatory reporting requirements as
domestic banks
• for purposes of the licensing process/ongoing
supervision, the host supervisor assesses
whether the home supervisor practices
consolidated global supervision
• the host supervisor, before issuing a licence,
determines that approval (or no objection)
from the home supervisor has been received
18
Guidance & Standards
BCP #25 and Essential Criteria (cont’d)
• home supervisors are given on-site access to
local offices/subsidiaries for safety and
soundness purposes
• the host supervisor advises home supervisors
on a timely basis of any material remedial
action it takes regarding the operations of a
bank from that country
• the host supervisor obtains from home
supervisors sufficient info on the banking
group to allow it to put into proper perspective
the activities conducted within its borders
19
Guidance & Standards
Information sharing and cooperation
standards issued by (cont’d):
Joint Forum on Financial Conglomerates
eg. - Framework for Supervisory Information
Sharing
- Principles for Supervisory Information
Sharing
International Association of Insurance
Supervisors (IAIS)
International Organization of Securities
Commissions (IOSCO)
20
Guidance & Standards
Ten Key Principles on Information Sharing
Issued by G-7 Finance Ministers in May 1998
Published in Financial Stability –Supervision
of Global Financial Institutions
21
Guidance & Standards
1. Authorization to share and gather
information
supervisors should have statutory
authority to share – in response to
requests or when thought beneficial
to do so
supervisors should have power to
gather info sought by a requestor
22
Guidance & Standards
2. Cross-sector information sharing
supervisors from different sectors
should be able to share supervisory
info both internationally and
domestically
23
Guidance & Standards
3. Information about systems and
controls
supervisors should cooperate in
identifying and monitoring the use of
management and information
systems/controls by internationally
active firms
24
Guidance & Standards
4. Information about individuals
supervisors should have authority to
share objective info of supervisory
interest about individuals such as
owners, shareholders, directors,
managers or employees of
supervised firms
25
Guidance & Standards
5. Information sharing between
exchanges
exchanges should be able to share
supervisory info with counterparts in
other jurisdictions including info about
the positions of their members
26
Guidance & Standards
6. Confidentiality
provider should be expected to
provide info to a requestor that is
able to maintain its confidentiality
requestor should be free to use such
info for supervisory purposes across
the range of its duties, subject to
minimum confidentiality standards
requestor should keep confidential
non-public info it receives
27
Guidance & Standards
7. Formal agreements and written
requests
MOU’s often used and can facilitate the
efficient execution of requests.
However, requestor should not have to
enter into a strict formal agreement to
obtain info
written requests can be useful but should
not be a prerequisite to the sharing of
info, particularly in an emergency
28
Guidance & Standards
8. Reciprocity requirements
may be considered but should not be a
precondition for the exchange of info
9. Cases which further supervisory
purposes
provider should permit the requestor to
pass on info to other supervisory and law
enforcement agencies in its jurisdiction
in cases which further supervisory
purposes
29
Guidance & Standards
10. Removal of laws preventing
supervisory information exchange
each jurisdiction should take steps to
remove or modify those laws and
procedures that prevent/impede the
exchange of necessary supervisory
info
30
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
Essential Elements
when a cross-border application is received:
• host supervisor should notify the home
supervisor as soon as the application is
received
31
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
when a cross-border application is received
(cont’d) :
• home supervisor, upon request,
should inform the host supervisor
whether the applicant is in substantial
compliance with applicable laws and
regulations and whether it may be
expected, given its administrative
structure and internal controls, to
manage the cross-border
establishment in an orderly manner
32
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
when a cross-border application is received
(cont’d) :
• home supervisor should also, upon
request, assist the host supervisor with
verifying or supplementing any
information submitted by the applicant
33
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
when a cross-border application is received
(cont’d) :
• home and host supervisors should inform
one another about the nature of their
respective regulatory systems and the
extent to which they will (each) supervise
the cross-border establishment
34
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
when a cross-border application is received
(cont’d) :
• to the extent permitted by law, the home
and host supervisors should share
information on the fitness and properness
of prospective managers of a crossborder establishment
35
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
re: the ongoing supervision of the crossborder establishments, the home/host
supervisors should:
• provide relevant info to their counterpart
regarding material developments or
supervisory concerns in respect of the
operations of a cross-border
establishment
36
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
re: the ongoing supervision of the crossborder establishments, the home/host
supervisors should (cont’d):
• respond to requests for info on their
respective national regulatory
systems and inform each other about
major changes, in particular those
which have a significant bearing on
the activities of cross-border
establishments
37
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
re: the ongoing supervision of the crossborder establishments, the home/host
supervisors should (cont’d):
• inform their counterpart (in advance if
possible) of material administrative
penalties imposed, or other formal
enforcement action taken, against a
cross border establishment
38
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
re: the ongoing supervision of the crossborder establishments, the home/host
supervisors should (cont’d):
• facilitate the transmission of any other
relevant information that might be
required to assist with the supervisory
process
39
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
re: on-site inspections by home supervisor of
a cross-border establishment located in a
host jurisdiction
• host supervisor should allow home
supervisor to conduct on-site inspections
• prior to deciding whether an on-site
inspection is necessary, home supervisor
should review any relevant examination
or other supervisory reports prepared by
host supervisor
40
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
re: on-site inspections by home supervisor of
a cross-border establishment located in a
host jurisdiction (cont’d)
• home supervisor should undertake to
notify host supervisor of plans to examine
a cross-border establishment or to
appoint a third party to conduct an
examination on its behalf, and to indicate
the purposes and scope of the visit
41
Guidance & Standards
Basel Committee’s Statement of
Mutual Cooperation
re: on-site inspections by home supervisor of
a cross-border establishment located in a
host jurisdiction (cont’d)
• as may be mutually agreed between the
parties, examinations may be carried out
by the home supervisor alone, or
accompanied by the host supervisor
• following the examination, an exchange
of views should take place between the
examination team and host supervisor
42
Guidance & Standards
Some Grey Areas
Guidance is not specific in some areas
info provided by home supervisor to host
supervisor on the parent
• reluctance especially where the parent is
experiencing difficulties
• could precipitate action by host
supervisor to protect local depositors –
result in a loss of confidence which may
complicate the efforts of the home
supervisor
43
Guidance & Standards
Some Grey Areas
Guidance is not specific in some areas
(cont’d)
differences in info sharing practices
depending on whether a branch or
subsidiary?
• in theory the host jurisdiction needs more
info on parent in the case of a branch
44
Home-Host Issues/Challenges
in Basel II
Basel II will require a heightened level of
supervisory cooperation/coordination
because:
applied at each level of a banking group need for multiple supervisory approvals
rigorous technical requirements will require
substantial amounts of info to be available at
all levels of the banking organisation
45
Home-Host Issues/Challenges
in Basel II
Basel II will require a heightened level of
supervisory cooperation/coordination because
(cont’d):
substantial flexibility for banks/supervisors in
satisfying the minimum capital requirements for
Pillar I - not a one-size-fits-all approach
the supervisory review process in Pillar 2
introduces another element of flexibility for
supervisors beyond what exists in the current
capital framework. Pillar 2 also raises expectations
for banks/supervisors
46
Home-Host Issues/Challenges
in Basel II
Basel II capital framework will require a
heightened level of supervisory
cooperation/coordination because (cont’d):
bank systems and processes, some of which are
highly centralised and others of which are
predominately local, must be validated initially and
on an ongoing basis.
internationally active banks increasingly operate on
a business-line basis, using risk management and
other techniques that apply across legal entities
supervisors will retain their legal responsibilities visà-vis banking institutions in their jurisdictions
47
Home-Host Issues/Challenges
in Basel II
In absence of greater communication/cooperation,
there is a risk that different or inconsistent
supervisory processes will be burdensome or
redundant for both banks and supervisors
Successful implementation of Basel II will depend
to a large extent on the ability of home/host
supervisors to work together efficiently/effectively
48
Home-Host Issues/Challenges
in Basel II
No strict guidelines on how to achieve
greater supervisory
coordination/communication because:
home/host arrangements need to reflect their
own supervisory needs
structure/organisation of the banks
banks’ specific plans for adopting Basel II
49
Home-Host Issues/Challenges
in Basel II
To address the need for greater home/host
cooperation, Basel Committee issued (August
2003) a set of principles:
Principle 1: Basel II will not change the legal
responsibilities of national supervisors for the
regulation of their domestic institutions or the
arrangements for consolidated supervision already
put in place by the Basel Committee
Principle 2: the home supervisor is responsible for
the oversight of the implementation of Basel II for a
banking group on a consolidated basis
Principle 3: host supervisors, particularly where
banks operate in subsidiary form, have
requirements that need to be understood and
recognised
50
Home-Host Issues/Challenges
in Basel II
To address the need for greater
home/host cooperation, Basel Committee
issued (August 2003) a set of principles
(cont’d):
Principle 4: will need to be enhanced and
pragmatic cooperation among supervisors with
legitimate interests. The home country
supervisor should lead this coordination effort.
Principle 5: wherever possible, supervisors
should avoid performing redundant and
uncoordinated approval and validation work in
order to reduce the implementation burden on
the banks, and conserve supervisory
resources.
51
Home-Host Issues/Challenges
in Basel II
To address the need for greater
home/host cooperation, Basel Committee
issued (August 2003) a set of principles
(cont’d):
Principle 6: in implementing Basel II,
supervisors should communicate the
respective roles of home and host supervisors
as clearly as possible to banking groups with
significant cross-border operations in multiple
jurisdictions. The home supervisor would lead
this coordination effort in cooperation with the
host
52
Home-Host Issues/Challenges
in Basel II
May 2004 Basle Committee press release
elaborated further on principles:
members seeking detailed information about Basel
II implementation and roll-out plans from
subsidiaries of foreign banks in their jurisdictions
would request such information from the home
country supervisors before going directly to the
banks
should be interpreted in practical manner, however,
and should not impede host country supervisors
from conducting routine supervisory activities
home supervisors should play a leading role in
approving and validating many elements of the
advanced approaches
53
Home-Host Issues/Challenges
in Basel II
May 2004 Basle Committee press release
elaborated further on principles (cont’d):
expectation that initial validation work for most
advanced IRB approaches for larger corporate
exposures will be led by the home supervisor,
with appropriate input from host country
supervisors and material reliance by host
countries on the home regulator
detailed guidance issued related to the homehost issues in determining capital
requirements for operational risk under the
advanced measurement approaches (AMA)
54
Home-Host Issues/Challenges in
Basel II
February 2007 Consultative Paper on “Home-host
supervisory cooperation and allocation mechanisms in an
AMA context”
The paper sets out principles related to two important
topics in the implementation of the Advanced Measurement
Approaches for operational risk under Basel II. The first set
of principles focuses specifically on supervisory
cooperation in the context of banks implementing an AMA.
These principles are intended as a supplement to the paper
Home-host information sharing for effective Basel II
implementation issued by the Committee in June 2006. The
second set of principles builds on the 2004 paper Principles
for the home-host recognition of AMA operational risk
capital and specifically addresses allocation mechanisms
developed as part of a hybrid AMA.
55
Home-Host Issues/Challenges
in Basel II
Home/host and banks all have an interest
in supervisory coordination/cooperation
financial/human resource constraints
overlapping supervisory activities impose
costs
Home Supervisors
responsible for assessing capital adequacy of
banking organisations on a consolidated basis
have an interest in taking a lead role in
coordinating supervisory activities and
communicating with head office of bank
56
Home-Host Issues/Challenges
in Basel II
Home Supervisors (cont’d)
primary responsibility for validating bank
systems on a consolidated basis and because
they may lack detailed knowledge of local
conditions in foreign markets
• they may need a fairly wide range of
info/feedback from host supervisors in
order to make well reasoned assessments
(especially where foreign subs are material
in context of the consolidated banking
organization)
57
Home-Host Issues/Challenges
in Basel II
Host Supervisors (cont’d)
responsible for the capital requirements of
subsidiaries on a solo basis (less concerned
with capitalization of group)
because subs may rely to a certain extent on
data, systems and resources that originate at
parent, host may need info from home to
enable host to assess sub’s capital adequacy
58
Home-Host Issues/Challenges
in Basel II
Home/host must be mindful of minimising
the burden (cost) placed on banking
organizations in qualifying/validating their
processes/systems
banks have an interest in being able to use
processes and/or data from one part of
organization in determining capital in other
parts
supervisors must be comfortable with
reasonableness of these approaches
59
Questions for Supervisors to
Ask Themselves
Have you the authority to share
supervisory information, at your
discretion, with other supervisors under
appropriate confidentiality safeguards?
Can you adequately protect the
confidentiality of information obtained in
confidence from other supervisors?
60
Questions for Supervisors to
Ask Themselves
As a home supervisor responsible for
consolidated or group-wide supervision, have you
arranged to receive appropriate information from
supervisors of material branches or subsidiaries in
other jurisdictions, and are these arrangements
being used effectively?
As a home supervisor, are you taking all
reasonable steps to inform relevant host
supervisors of material supervisory findings
relevant to the branch or subsidiary?
61
Questions for Supervisors to
Ask Themselves
As a host supervisor, are you confident that you
have appropriate access to the home supervisor in
situations where there may be problems in the
branch or subsidiary, or where problems in the
parent institution may be spilling over to the
branch/subsidiary?
As a host supervisor, are you able to cooperate to
the satisfaction of the home supervisor as and
when they conduct an on-site examination of a
branch or subsidiary?
62
Thank - you
63