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

Evolving markets and the EU banking supervision Banking market: Cross-border activity Consolidation Centralisation of business functions at group level Outsourcing of activities Diversity of banking structures Regulatory framework: Basel II (CRD) risk-focused supervision IAS/IFRS new standards, with impact on supervisory tools Post FSAP implementation and convergence of practices Response: the Lamfalussy process - CEBS José María Roldán | 12 Jan 2006

Advice to the Commission 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

CEBS – main challenges Potential divergence in directive implementation National options and discretions Additional layers of national rules (“goldplating”) Different interpretations Complex and possibly fragmented supervisory process 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) Administrative burden Compliance costs Differences in supervisory reporting Duplication of contacts José María Roldán | 12 Jan 2006

A review of progress made so far Potential divergence in implementation Supervisory disclosure framework Complex and possibly fragmented supervisory process Enhanced home-host co-operation, Pillar 2 and validation guidelines Administrative burden Harmonised reporting requirements José María Roldán | 12 Jan 2006

Supervisory disclosure 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 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 José María Roldán | 12 Jan 2006

Supervisory disclosure José María Roldán | 12 Jan 2006

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 José María Roldán | 12 Jan 2006

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); and Institution’ ICAAP (the Internal Capital Adequacy Assessment Process) Proportionality is the key: For large complex institutions  in-depth and “tailor-made” For smaller institutions  likely to be quite standardised José María Roldán | 12 Jan 2006

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 José María Roldán | 12 Jan 2006

What next? Compendium of CEBS’ standards, guidelines and recommendations for supervisors and market participants flexible, internet-based structure, easy to update consistent terminology, definitions Inventory of implementation issues: case studies, surveys Networking mechanisms – day-to-day co-operation Training programmes and staff exchange New tools, if necessary José María Roldán | 12 Jan 2006

Conclusions Differences across countries not wiped out, but visible, so that priorities for further work can be identified Not a single supervisory interface, but a more coordinated and streamlined process 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 José María Roldán | 12 Jan 2006

Questions? Thank you! 14 José María Roldán | 12 Jan 2006

Contact details Name: José María Roldán E-mail: josemaria.roldan@c-ebs.org