Basel Committee on Banking Supervision

Supervisory colleges play a key role in effective consolidated supervision. Supervisory colleges can enhance information-sharing among supervisors, help the development of a common understanding of risk in financial groups, promote a shared agenda for addressing risks and vulnerabilities, and provide a platform for communicating key supervisory messages among college members.

In general, supervisory colleges should be permanent but flexible structures for collaboration, coordination and information-sharing among the authorities responsible for and involved in the supervision of cross-border banks. Colleges are an important component of effective supervisory oversight of an international bank and the G20 has reinforced the significance of colleges in the wake of the great financial crisis.

The following terms are used throughout this chapter and have the meaning given below:

1. Branches: are operating entities which do not have a separate legal status and are therefore integral parts of the foreign parent bank.
2. Consolidated supervision: is a group-wide approach to supervision whereby all the risks run by a bank are considered, wherever they are booked. It is a process by which a supervisor can satisfy themselves about the totality of a bank’s activities, which may include non-bank companies and financial affiliates, as well as direct branches and subsidiaries.
3. Crisis management groups (CMGs): refer to groups of supervisors and other relevant authorities that address issues related to recovery and resolution planning at G-SIBs and other systemically important banks.
4. Home supervisor: refers to the supervisor that is responsible for the supervisory oversight of a bank on a consolidated basis.
5. Host supervisor: refers to the supervisor that oversees specific entities within the bank. Host supervisors may have different interests in relation to the supervision of the group as a whole depending on whether the group has material risk exposures in the host jurisdiction and whether it poses a systemic risk to the host jurisdiction.
6. Solo supervision: refers to the supervision of a single legal entity, as opposed to consolidated supervision, which refers to broader group oversight.
7. Subsidiaries: are legally independent institutions, wholly owned or majority-owned, by a parent bank.
8. Supervisory colleges: are a set of ongoing relationships among supervisors, covering any contact among them (eg physical meetings, teleconferences, videoconferences, letters, e-mails and via secure websites).

The principles which follow are not intended to propose a definitive or exhaustive set of guidelines regarding college functioning. Instead, they are designed to help both home and host supervisors ensure that colleges work as effectively as possible by clearly outlining expectations in relation to college objectives, governance, communication and information-sharing, as well as potential areas for collaborative work. A principles-based approach ensures relevance to a wide range of banks across different jurisdictions and allows adequate flexibility in the way that they are implemented. It is therefore reasonable to expect supervisors to discuss and agree on the most appropriate approach for their specific circumstances.

The principles are designed to assist supervisors in running colleges as effectively as possible. They are not meant to suggest that colleges should replace wider bilateral or multilateral cooperation among supervisors, or to impede existing national, bilateral or multilateral arrangements. Colleges are not a substitute for effective national supervision nor do they undermine the legal and prudential responsibilities of respective supervisors. Colleges generally are not intended to be decision-making bodies but should provide a framework to enhance effective supervision of internationally active banks on a consolidated and solo basis and can inform decision-making in that regard.

Effective microprudential (ie bank-specific) supervision should be complemented by macroprudential supervisory tools aimed at addressing potential risks to the wider financial system. The principles recognise the importance of incorporating macroprudential elements into college discussions, which are primarily microprudential in nature. The discussion of macroprudential elements has been incorporated into several of the principles to align macroprudential considerations with how the principles are applied.

Principle 1: College objectives

Supervisory colleges should enhance, on an ongoing and confidential basis, information exchange and cooperation among supervisors to support the effective supervision of internationally active banks. Colleges should enhance the mutual trust and appreciation of needs and responsibilities on which supervisory relationships are built.

The overarching objective of a supervisory college is to assist its members in developing a better understanding of the risk profile and vulnerabilities of an internationally active bank and to provide a framework for addressing key topics that are relevant to the supervision of the group. Information exchange and cooperation among supervisors are essential for strengthening the supervision of an internationally active bank. This objective should be achieved on an ongoing basis and not just during the meetings of the colleges.

Colleges are, effectively, works of supervisors of the parent company and key branches or foreign subsidiaries of an internationally active bank and have been part of the global supervisory framework for many years. Over time, they have played a greater role in facilitating supervisory cooperation and coordination. The introduction of the Basel framework, particularly Basel II, underscored the need for supervisory cooperation, as supervisors worked together on topics such as model review and approval. Supervisory colleges have since played an increasingly important role in sharing information and coordinating supervisory activities related to implementation of Basel standards, especially for large internationally active banks.

Practical experience suggests that college structures are a useful foundation for further collaboration between supervisors and other relevant authorities and should provide a platform for home-host coordination of supervisory activities. Despite not typically being decision-making bodies, supervisory colleges have evolved to be a key forum for discussion of broader issues such as planning of supervisory assessments and sharing information about the overall risk profile and vulnerabilities of an internationally active bank. Some colleges have operated as conduits for information-sharing in relation to contingency planning and crisis management.

Effective and efficient colleges are important, not only for consolidated supervision at the microprudential level, but also for the promotion of financial stability at the macroprudential level. While focusing on the stability of an individual bank, colleges can promote a more coherent approach across different jurisdictions to the consistent and effective implementation of such policy tools as stress tests, which may have macroprudential as well as microprudential objectives.

Clear supervisory understanding and strong levels of mutual trust and confidence between national supervisors on an ongoing basis and through the normal course of supervision are necessary to facilitate the successful implementation of this Principle.

To ensure that there is effective information-sharing and cooperation between relevant supervisors that does not impede existing national requirements or regional arrangements, the actual structure and organisation of colleges will vary depending on the circumstances of the bank. However, it is important that organisation and cooperation processes are clear for all college members.

Principle 2: College structures

Supervisory colleges should be structured in a way that enhances effective oversight of internationally active banks, considering the scale, structure and complexity of the bank, its significance in host jurisdictions and the corresponding needs of its supervisors. While a college is a single forum, multiple or variable substructures may be used given that no single college structure is likely to be suitable for all banks.

In its broadest sense, home supervisors should give due consideration to including in a college those host supervisors who have a relevant foreign subsidiary or a significant branch in their jurisdictions and who, therefore, have a shared interest in the effective supervisory oversight of the bank. One of the challenges of supervisory colleges is that the size of college membership can be inversely proportional to the effective sharing of information among members. Home supervisors, therefore, should aim to strike an appropriate balance between college effectiveness and the involvement of host supervisors in a college.

A college is a single forum even if it meets in different structures to reflect varying supervisory requirements and practices. The structure of a college should reflect supervisors’ different roles and information needs. Therefore, it may be the case that different structures will be required for different banks.

The home supervisor should take overall responsibility for designing college arrangements that reflect the nature, scale and complexity of the bank and the needs of relevant supervisors associated with the group. To meet these objectives, the home supervisor should design the college structures based on the bank’s international operations and in discussion with, where appropriate, host supervisors and the bank. To further advance macroprudential objectives, the significance of a bank’s operations in host jurisdictions should be considered in the design of college structures, in conjunction with the significance of such operations to the overall bank.

Home supervisors may consider including in college arrangements host supervisors from jurisdictions where the group is of particular significance. In doing so, home supervisors could rely on information provided by the bank or could refer to criteria for identifying D-SIBs, as well as relevant communication from host supervisors on the application of those criteria and their assessment of the entity’s significance in local markets. For those host supervisors that are not included in college structures, home supervisors are encouraged to consider the extent to which other information-sharing arrangements are feasible (eg bilateral arrangements or thematic workshops). Home supervisors should be as transparent as possible with host supervisors about the criteria used for determining the structure and membership of a college (recognising that judgmental factors typically apply as well). In addition, home supervisors should be transparent with a host supervisor if asked about the rationale for not including a supervisor in college structures.

The structure should facilitate effective contribution by host supervisors to the home supervisor’s overall supervisory assessment of the bank to benefit from host supervisors’ specific knowledge of local banking conditions and operations, their ability to communicate directly with entities within their jurisdiction and their ability to take specific supervisory action. It should also allow home supervisors to monitor, assess and address risks faced by the bank in host jurisdictions more effectively and efficiently. While specific terminology to describe college structures may vary across jurisdictions, such structures include:

1. Single college structure. This is the simplest college structure. Reliance on a single, general college is likely to be appropriate where just a small number of supervisors are involved, each with a material role in the supervisory oversight of the bank. However, there may be instances where such colleges gather a larger number of supervisors.
2. Core and universal college. This is a variant of the single college structure, combining a “core” college of a few key supervisors with responsibility for the primary risk-taking entities within the bank, and a “universal” college representing a wider configuration of other supervisors (but not necessarily all host supervisors) with the aim of broader information-sharing.
3. Variable structures. Additional and variable structures may be appropriate for a college depending on the structure of the bank and the requirements of relevant supervisors. This range of structures – at times with overlapping membership and working arrangements – can be effective in enhancing the flexibility of cooperative work and achieving the overarching aims of colleges. For example, there may be specific risk types relevant to the bank that require more intensive engagement between particular supervisors. In addition, regional issues or business line concerns may merit information-sharing between relevant supervisors in order to identify risks to the bank. Alternative methods of engagement (eg bilateral arrangements) may also be warranted for supervisors who are not included in a college but are responsible for any D-SIBs within the bank.

Where variable college structures are used for a given bank, it is important to ensure that these structures facilitate the work of the overall college and do not impede its overall objectives by unnecessary fragmentation. A consistent approach is important at all levels of the college such that, for example, any increase in the complexity of a college structure does not result in the dilution of good practices on the basic design of college arrangements by the home supervisor.

The home supervisor will typically have a specific interest in the most material parts of the bank and it should identify host supervisors with whom it will have an ongoing dialogue to participate in the single or core college. The single or core college, which may include as few as two supervisors and in practice be a bilateral relationship, is likely to be the key forum for sharing information.

The specific criteria for membership of the various college structures will vary on a case-by-case basis at the discretion of the home supervisor. It may include, for example, the degree to which a host supervisor has responsibility for supervisory oversight of a material part of the bank (eg based on quantitative and qualitative factors such as a significant proportion of total or group risk-weighted assets being in a host jurisdiction, activities in the host jurisdiction representing material risk to the bank, or the bank’s operations in a host jurisdiction functioning as a regional management hub or centralised risk management function).

In determining appropriate structures, the materiality of the bank in the host jurisdiction(s) should also be considered. The assessment of significance in a jurisdiction may include for consideration a broad set of factors, separately or in combination. For example, factors that could be considered when determining membership and the level of participation include the bank’s significance in the local market (eg market share), whether the bank is an integral part of the infrastructure of the financial system, criteria from host supervisors for identifying D-SIBs and information provided by the bank on its materiality in host jurisdictions.

Likewise, there may at times be reason to invite non-banking and non-prudential supervisors to participate in various college structures. This should be considered, on a case-by-case basis, where such participation would significantly help members of the college to supervise the bank and identify potential risks and vulnerabilities with systemic implications. For example, the insurance prudential supervisor may be invited to attend some college meetings if the group has a significant insurance entity, or the college may wish to consider discuss risk issues with securities supervisors if there are significant securities operations. Similarly, the home supervisor may also consider inviting macroprudential authorities to participate or contribute on a case-by-case basis, depending on the college agenda. The home supervisor should consider the merits of including such supervisors in various substructures of the college and agree this with the relevant members of the college bearing in mind legal and confidentiality issues.

The home supervisor is responsible for designing and coordinating the work of the various college structures so that the college focuses on relevant group-wide issues. The home supervisor should design the college structure and coordinate the agenda and action plans of all structures so that they enhance the bank’s consolidated supervision. In this context, the assessment of relevance for non-core entities should be conducted by the home supervisor, possibly considering the factors discussed above.

Promoting appropriate levels of accountability across the college structure should also be considered, particularly regarding agreed follow-up work. The home supervisor may periodically review college membership to assess whether the structure is optimal. The home supervisor should also keep college members sufficiently informed of the different college structures’ activities. This should facilitate effective input to discussions from college members, so that even college members not invited to participate in a particular college structure are able to provide input to the issues under discussion as appropriate. In a similar vein, dialogue and transparency between home and relevant host supervisors are also essential when defining the terms of involvement of non-core host supervisors in a particular college structure.

To ensure the efficiency and effectiveness of the college, the home supervisor should act as a central point of contact for any matter related to the organisation or operation of its structures. The home supervisor should ensure that the following common functions are performed:

1. circulating meeting agendas, materials and attendees in advance of meetings to allow sufficient time for college members to determine the appropriate representation (ie seniority and expertise) and prepare for the meetings;
2. updating contact lists of college members;
3. recording meeting summaries and action points;
4. managing communication channels between supervisors;
5. informing the college of any new regulatory or supervisory developments that could affect cross-border supervision;
6. facilitating communication between the bank, the college structures and other relevant authorities, particularly in emergency situations;1
7. monitoring or implementing outcomes when coordinated supervisory assessments are undertaken (eg risk assessment of the bank); and
8. considering the feasibility of regional outreach meetings to facilitate discussion of regional issues and appropriate access to information for relevant host supervisors.

The home supervisor should notify host supervisors of the structure of the college and its participants, including variable and ad hoc substructures that are used for specific purposes. This should be done periodically or when a change occurs. The home supervisor should likewise inform the bank of the overall college structure and membership.

Host supervisors should inform the home supervisor who their representatives are in relevant college structures. The seniority of representatives and their knowledge of the bank should ensure that the information shared at college meetings is relevant to each member’s high-level supervisory position. Representation at colleges should be appropriate to facilitate their efficient and effective functioning.

College members should do their best to promptly share appropriate information with respect to a bank’s principal risks, vulnerabilities and risk management practices. Mutual trust and willingness to cooperate are key for effective two-way information-sharing. To facilitate this process, supervisory colleges should strive towards confidentiality agreements among college members, such as those contained in memoranda of understanding (MoUs).

Effective consolidated supervision of an international bank requires the home supervisor to have sufficient knowledge of the operations of the group, both domestic and foreign, to monitor and assess risks and vulnerabilities faced by the group. The host supervisor should have corresponding knowledge with respect to the group’s operations within its jurisdiction and the impact of those operations on the group. A successful college outcome entails effective two-way information exchange between home supervisors and host supervisors on a timely basis, both in normal and crisis situations including forward-looking assessments. Home and host supervisors are expected to put in place appropriate mechanisms and sufficient resources for effective information exchange.

Information-sharing mechanisms should be underpinned by mutual trust, willingness to exchange information and a network of relationships, particularly where confidential information is concerned. Agreements to share information generally should cover the types of information that supervisors would wish to share at any level of the college. However, the lack of such agreements should not impede effective information-sharing between members of the college, consistent with applicable law.

The range and detail of information shared will vary between core and universal colleges according to the needs of the particular college structure and may include regular structured agendas, pre-circulated templates, and digital secure platforms.

The information shared should reflect the circumstances and risk profile of the bank, as well as the information needs of college members based on the principles of proportionality and materiality. In addition, college members should endeavour to encourage and contribute to the flow of information. Information-sharing generally should be continuous and timely, as part of an ongoing college process, rather than a discrete one-off or periodic event.

Information shared at universal colleges is likely to focus on areas of information that are widely relevant (eg risk profiles and supervisory processes). The information shared at the core college level is typically more detailed.

The information that is shared by a bank or its supervisors at a college meeting will vary on a case-by-case basis. However, the following list of examples illustrates information that home and host supervisors should consider exchanging in colleges, subject to availability and any relevant legal or confidentiality constraints, particularly with regard to market-sensitive information. In the case of colleges with variable structures, it is up to the home supervisors to decide the information that should be shared with each layer of members. However, the outcome of supervisory activities or decisions taken in specific college structures should be communicated by the home supervisor to other members of the college in a timely manner if those outcomes affect – or may affect – host supervisors. In practice, it may be that some information (eg capital and liquidity plans) may only be appropriate to exchange at the core college level. However, the aspiration for colleges should continue to be greater exchange of information wherever feasible.

The following represents a set of non-exhaustive illustrative examples of information that may be shared within a college:

1. detailed supervisory risk assessments and significant findings from relevant supervisory reviews (which may include primary risks across businesses and geographic lines);
2. analysis of the impact of the operating environment in material/relevant jurisdictions or markets on the bank, and results of stress tests, as appropriate;
3. analysis of gaps or shortfalls in management information systems capabilities;
4. supervisory plans;
5. detailed organisational charts and key supervisory contact lists for both day-to-day supervisory and crisis management purposes;
6. key financial reports/statements of financial position and prospects;
7. capital and liquidity position/plans;
8. supervisory and/or regulatory actions taken against a banking institution that may significantly affect the bank’s operations;
9. crisis preparedness plans;
10. supervisory assessments of risk governance and risk culture;
11. group-wide and subsidiary strategic plans;
12. supervisory assessment of anti-money laundering (AML) programmes and practices;
13. information on systemically important banks' exposures, funding dependencies, cross-border fund flows and use of risk transfers vis-a-vis their respective key host jurisdictions (including data collected under global initiatives where feasible);
14. highlights of relevant material reports from sources such as internal audit, compliance, external audit and external consultants; and
15. information about other relevant exogenous factors that may be useful for college members, such as regulatory developments and macroprudential information.

Information-sharing mechanisms may be established primarily through MoUs, which outline procedures and provisions for the confidentiality, use and sharing of information, typically on a bilateral basis. It may be the case that some college members do not have an MoU in place with all attending college supervisors. In these cases, further information gateways may be created through amendments to existing MoUs or college-specific confidentiality agreements.

Communication channels within a college should ensure the efficiency, ease of use, integrity and confidentiality of information exchange. The home supervisor should make sound communication channels available to the college and host supervisors should use them appropriately and regularly.

Supervisors have found that a range of communication channels are required for effective functioning of colleges. These include physical meetings, video and/or audio conferences, secure online communication tools, e-mail infrastructure and official letters. Some home supervisors have developed secure web- based communication channels, including secure websites, in order to keep all college members informed of college matters. Communication channels should be sufficiently secure. Alternative channels not only enhance ongoing communication, but also facilitate participation by host supervisors who may be unable to travel to physical meetings.

Supervisory colleges are encouraged to make use of all relevant communication channels to facilitate effective information-sharing. The choice of communication channels should be based on improving cooperation between supervisors and should take account of differences in geography and language. Communication channels should make exchange of information easy, fast and reliable while maintaining confidentiality. In this context, secure websites have been extensively developed and used by home supervisors as an efficient tool for facilitating communication within colleges while ensuring confidentiality, and their establishment should be considered by relevant home supervisors as appropriate. Physical or hybrid meetings should be held regularly as agreed by members of relevant college structures and at least annually for the core colleges of the largest banks.

Between physical meetings, use of video and/or audio conferences should be considered as a means of facilitating the exchange of supervisory assessments and should be arranged on a case-by- case basis when specific items and objectives need to be discussed. Contact lists should be established containing up-to-date names, responsibilities and contact data for all representatives of the supervisors in the college.

Host supervisors should inform the home supervisor of any specific confidentiality arrangements that will impact the use of the communication channels, so that these can be resolved on a best-efforts basis.

Supervisory colleges should promote collaborative work among members, as appropriate, to improve the effectiveness of the oversight of international banks. Collaborative work should be by agreement among supervisors and should recognise national legal constraints.

Home and host supervisors may seek to coordinate the planning and execution of supervisory activities or undertake joint work amongst college members to increase the efficiency of the college and the individual supervisors. Supervisory colleges are expected to focus on their key functions of facilitating information exchange and the development and maintenance of a sound network of supervisors while promoting specific areas of collaborative work. College members should therefore recognise that there are likely to be specific work streams that could be undertaken collaboratively to improve the effectiveness of the consolidated supervision of international banks. To this end, college members should ensure they can, where appropriate, share and allocate work in the pursuit of college objectives.

When designing the role and functions of a college, the potential for collaborative work should be considered according to the nature, scale and complexity of the bank.

Collaborative work may be undertaken at various levels of a college. It is likely to occur in a core college but some areas of work may be identified in substructures and in the universal college structure. This should not necessarily replace existing bilateral arrangements. College members are encouraged to coordinate work, as long this does not conflict with any legal requirements.

Principles for establishing statements of cooperation between supervisors for the sharing of confidential supervisory information

1. Statements of cooperation are not necessarily legally binding but act as a promise of intent.
2. Statements of cooperation represent a shared understanding of a process by which information flows can be enabled and cross-border supervisory cooperation can be facilitated.
3. Statements of cooperation can be specifically tailored to detail, for example, actions to be taken in crises or with respect to supervision arrangements for specific banks.
4. Supervisory statements of cooperation must meet appropriate criteria for maintaining standards, protecting confidential information and using supervisory resources efficiently. These criteria include:
   1. materiality: refers to the existence or expectation of reasonable and/or sufficient cross- border business;
   2. equivalence: refers to one counterparty's legal treatment of information meeting confidentiality requirements equivalent to those imposed in the other counterpart jurisdiction; and
   3. reliability: refers to an assessment of the counterparty's ability in practice to protect and share information, such as judicial and political credibility and regulatory track record.

Collaboration should improve the quality of the supervisory assessment of the bank (eg with respect to its risk exposures, capital adequacy and governance). In general, therefore, it should lead to a better overview and understanding of the bank’s risk profile.

Collaborative work should seek to reduce the burden on supervisors and banks by avoiding duplication of effort and enhancing the quality of supervision through better information- sharing and allocation of expertise. Collaboration may also serve as a conduit to develop supervisory work programmes or improve coordination of supervisory approaches.

The home supervisor generally should lead any coordination of work between supervisors. College members who agree to undertake collaborative work should be aware of any legal and regulatory restrictions or confidentiality constraints that may impact the extent of collaboration. In addition, they should agree the roles of each supervisor involved in the work and communicate these clearly to the bank. Supervisors involved in collaborative work should also agree on the extent to which other college members should have access to the results of collaborative work, subject to any legal requirements or confidentiality constraints.

Sharing and allocation of tasks does not absolve supervisors of their obligations. In particular, collaborative work should not imply delegation of an individual supervisor’s responsibilities or of joint decision-making responsibilities.

Collaborative work may focus on one or more group entities (domestic and foreign), the bank as a whole, or specific aspects of the group’s or an entity’s functions.

Risk assessment and stress testing: One of the objectives of supervisory colleges is to enable college participants to develop a common understanding of the bank’s risk profile and vulnerabilities. Evaluation of the main risks in banks is an important stage of the supervisory review and evaluation process (eg institution-specific Pillar 2 approaches under the Basel Framework). The focus of such assessments within colleges should be on bank-specific risks, although in many instances they will be useful for macroprudential purposes too. The high-level issues colleges may consider include:

1. For large, complex and internationally active banks, the home supervisor should take account of local supervisory risk assessments when performing risk assessments at the consolidated level. Likewise, where local supervisory review and evaluation processes rely on central inputs, host supervisors should consider consolidated analysis and insight on group-wide processes. Colleges should facilitate a mutual understanding of different risk assessments undertaken by home and host supervisors.
2. As a result of the risk assessment process, the members of a supervisory college should be satisfied that the bank has an adequate risk management framework in place aligned with the size and complexity of the bank’s operations and governed by policies and procedures that identify, assess, monitor and mitigate relevant risks and vulnerabilities.
3. The scope of a risk assessment may vary with the size, business lines, products and systemic importance of the bank and its individual entities. The home supervisor should determine the timeframes for the contributions of college members to the risk assessment on a case-by-case basis.
4. As part of this assessment, the college members may also identify emerging risks specific to the group that may have an impact on other financial institutions, or on the market liquidity or financial stability of the markets where the group is present.
5. Stress-testing results of the group and material entities may be considered as part of the college’s risk assessment. Colleges may consider whether to coordinate a stress-testing exercise across the bank.
6. The college should discuss the bank’s forward-looking capital and liquidity plans under stressed conditions, as well as measures to ensure effective governance, in the context of relevant and credible management actions to ensure solvency in a stress event.
7. A discussion of minimum capital adequacy and liquidity requirements (eg Pillar 1 approaches under the Basel Framework) in home and host jurisdictions, possibly in coordination with the macroprudential authority where appropriate.

Model review and approval: the home and host supervisors may work together in the college to reach a view on use of internal models.2 The high-level issues they would consider are:

1. the allocation of tasks taking into account the organisation of the group as well as the type and characteristics of the models, to avoid duplication of work and unnecessary supervisory burden;
2. the structure of any application forms and the details of the review and validation plan;
3. coordination and review of the supervisory action plan. The college may discuss the draft assessment prepared by the home supervisor; and
4. coordination and ongoing review of the model’s compliance with requirements. College members may discuss the consequences of non-compliance with the requirements.

Interaction between the college members and the bank should complement the interaction that individual supervisors (both home and host) have with the specific entity they supervise.

In the context of a bank with multiple supervisors and banking operations in different jurisdictions, routine interaction between relevant supervisors and entities within the bank will remain in place but the college structure may assist in enhancing the coordination of information requests and other work.

The college should agree on the type of feedback and consistency of specific supervisory messages related to the college that should be communicated to the bank (eg purpose and findings of the college, sharing/delegation of tasks agreed, planned supervisory activities, supervisory risk assessment findings, etc).

While the home supervisor should take responsibility for communication with the bank and host supervisors should take responsibility for communication with the bank’s operations in their local jurisdictions, the messages should be as consistent and timely as possible. However, for specific issues, the college may agree on other channels of communication.

Sharing information with the bank should be consistent with individual jurisdictions’ legal requirements regarding confidentiality.

Information requests from the bank in connection with the college should be coordinated by the home supervisor (eg a list of information should be established covering strategy, future business plans, etc) to avoid duplication.

For the purpose of ongoing supervision, it is likely that host supervisors will request information from the bank’s operations in host jurisdictions3 and that the home supervisor will request information from the parent. In addition, host supervisors may require relevant information on the bank as a whole that may have a significant impact on the banking operations in their jurisdiction. In the unlikely event that host supervisors are unable to obtain relevant information from local management, they should address information requests about the bank to the home supervisor. Home supervisors will endeavour to accommodate information requests from host supervisors promptly, subject to legal constraints and the general principles of relevance, materiality and proportionality.

The bank may be invited to attend some college meetings to provide forward-looking information on its strategy, risk appetite, risk profile and vulnerabilities, and financial outlook. Home supervisors should endeavour to communicate clear expectations to the bank in advance of meetings to facilitate effective preparation and participation by bank management. Discussions between the bank and the college may take place at different levels of seniority depending on the topics being discussed.

Supervisory colleges are distinct from but complementary to crisis management and resolution structures. The work of a bank’s supervisory college should contribute to effective crisis management planning.

Supervisors and other relevant authorities should ensure that work is done in advance to reduce the likelihood that a systemically important bank will fail and to mitigate the potential systemic impact if such an institution were to fail. In this regard, a key development has been the establishment of crisis management groups (CMGs).4 In addition to CMGs, some jurisdictions have adopted so-called “resolution colleges” to address recovery and resolution planning issues at banks for which CMGs have not been established. CMGs and resolution colleges typically serve similar purposes, at least with respect to resolution planning; as such, for the sake of brevity, this Principle will refer primarily to CMGs.

The supervisory college is primarily responsible for supervisory information-sharing and cooperation among supervisors regarding a bank when it is operating as a going concern, and the CMG is responsible for managing supervisory relationships when a bank’s condition deteriorates to the extent that it may reach a point of non-viability. As a practical matter, however, even though the roles and responsibilities of supervisory colleges and CMGs are relatively well defined, the point at which the home supervisor determines that responsibility should shift from the supervisory college to the CMG is not necessarily clear. This timing will likely depend on the relevant facts and circumstances of a bank’s condition. As a result, both colleges and CMGs have a key role to play in crisis preparedness,5 which broadly includes any steps taken to limit the risk of significant problems at a bank and to facilitate rapid action by supervisors, other relevant authorities and the bank if such problems arise.

Effective crisis preparedness requires several key elements, including for example business continuity and contingency plans, as well as the development of viable recovery and resolution plans that identify systemically important operations and provide a clear understanding of the bank’s legal entity and operating structure. While CMGs are typically responsible for coordinating resolution plans, responsibility for coordination of recovery plans varies across jurisdictions and may be the responsibility of the CMG, the supervisory college, a third body (eg a resolution college) or responsibility may be shared. Timely and frequent communication among supervisors about a bank’s condition, risks and vulnerabilities should facilitate effective crisis preparedness well in advance of any specific issues the institution may encounter.

For a G-SIB, or for other systemically important banks where the relevant authorities have established a CMG, detailed crisis management and resolution planning will typically be undertaken in CMGs rather than in supervisory colleges, although supervisory colleges still have a role to play vis-à-vis CMGs.

For banks that are not G-SIBs or that have not otherwise established CMGs, supervisory colleges should provide a framework for the planning and coordination of supervisory activities in preparation for and during emergency situations. For such banks, colleges should develop a crisis preparedness plan which sets out the functions and priorities of home and host supervisors in a crisis, as well as of other relevant authorities (eg central banks, finance ministries, deposit guarantee schemes).

Colleges, as part of ongoing crisis preparedness planning and led by the home supervisor, should maintain a pre-defined set of information that is updated and distributed among supervisors periodically. For example, the home supervisor should maintain an emergency contact list that could be used to brief non-CMG supervisors who could be impacted in a crisis scenario (recognising that home supervisors may have legal impediments to information sharing in the event of a crisis). Moreover, colleges may maintain an up-to-date chart of the bank’s legal entity structure and may share business continuity and contingency funding and capital plans, which will be beneficial not only for crisis preparedness purposes but also for ongoing supervision.

Where CMGs have been established they should lead the development, maintenance and assessment of resolution plans, and if applicable, recovery plans. Nevertheless, a broader group of supervisors, in particular those that are members of supervisory colleges, will have an interest in possible impacts to the bank in an extreme stress or resolution scenario, and thus in the nature of resolution plans. The home supervisor should, in consultation with the home resolution authority (to the extent that the parties are different), provide updates to non-CMG supervisors who could be significantly impacted in a crisis situation. This communication should cover both the process that the CMG is taking to ensure that adequate recovery and resolution plans are in place and, to the extent possible, provide an overview of the key components of these plans.