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31 december 2008

Insufficient progress on banking supervision


The revision of the Capital Requirements Directive (CRD) must be an opportunity to make progress on the supervision of cross-border banking groups. It must also help to strengthen financial stability in Europe and include initial responses to the crisis.

 

The revision of the Capital Requirements Directive (CRD), launched in autumn 2008 by the European Commission, is an opportunity to strengthen prudential supervision of pan-European groups. For the moment, this supervision is mainly organised at a national level, while banking groups manage risks in an integrated and centralised manner. Brought into action by the revision of this directive, the FBF is responding to all consultations carried out over the summer of 2008. The FBF have noted the positive steps taken in the proposed directive published by the European Commission on 1 October 2008. In particular, this directive stipulates the recognition of supervisory colleges and, above all, gives a highly influential role to the supervisor of the parent company.


However, the compromise adopted by the EU Council in December 2008 moves further away from the initial objective of implementing a system of integrated supervision, returning to a system that is increasingly based on the national supervisor. In the FBF's opinion, improving European supervision requires a move from a national to a European system, ncluding:


  • supervision of pan-European groups by supervisory colleges, with a decisionmaking role entrusted to the supervisor of the parent company. The aim of these colleges is to improve cooperation between the supervisors of major subsidiaries and branches and that of the parent company;

  • strengthening the role and powers of the CEBS(1) in order to promote cooperation and the convergence of national supervisors' practices;

  • including a European dimension in the mandates of national supervisors, requiring them to cooperate with their European counterparts.


(1) CEBS: Committee of European Banking Supervisors. A consulting committee made up of high-ranking representatives of national banking authorities and central banks of EU Member States.

 
 
 
 
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