Progress report on the implementation of principles for effective supervisory colleges
The Basel Committee on Banking Supervision has today issued a Progress report on the implementation of principles for effective supervisory colleges.
The Basel Committee first published good practice principles on supervisory colleges in 2010 and issued a revised set of Principles for effective supervisory colleges in 2014. The Committee continues to monitor the implementation of the principles and to review the effectiveness of colleges. This progress report sets out the detailed findings, based on the monitoring initiatives undertaken by the Basel Committee, and highlights challenges faced by supervisors in running effective supervisory colleges as well as the practical approaches taken to address them.
The key findings of the colleges' monitoring can be summarised as follows:
- While there is room for improvement in several areas, the broad sense of supervisors - from both a home and a host perspective - is that the functioning of supervisory colleges has continued to improve and that supervisors have made considerable advances in implementing the college principles.
- Colleges play a key role in assisting supervisors by giving both home and host supervisors a comprehensive view of risks and vulnerabilities to a firm and identifying emerging risks on a timely basis.
- Colleges have evolved into key forums for rigorous discussion of broader issues that enhance supervision of global firms and contribute to the planning of supervisory assessments.
- A wide range of college structures has been developed by home supervisors to reflect the differing size, complexity and global reach of internationally active banks, and home supervisors have a greater sensitivity to host supervisor concerns in developing criteria for college membership.
- Legal and institutional arrangements are important contributors to successful colleges and have been enhanced in recent years, but trust and mutual understanding among members are at least as important.
- The collaborative work among college members contributes to improving the effectiveness of the oversight of cross-border banking groups.
- While supervisors report that interaction with firms has improved in supervisory colleges, particularly in terms of a higher-quality engagement with management, many firms have indicated that they would like to receive more feedback on college discussions.
- Although some progress has been made as regards the role of colleges in crisis preparedness, this principle has also been cited as the area with the most implementation challenges, in part because crisis management groups have assumed some of the responsibilities formerly undertaken in supervisory colleges.