Principles for effective supervisory colleges
The Basel Committee on Banking Supervision has today issued final Principles for effective supervisory colleges. The guidelines replace the Good practice principles on supervisory colleges, which the Committee published in October 2010 with a commitment to revise them after a period of practical implementation experience.
Supervisory colleges play an important role in the effective supervision of international banking groups. They can enhance information-sharing among supervisors, help the development of a shared agenda for addressing risks and vulnerabilities and provide a platform for communicating key supervisory messages among college members. The Principles aim to promote and strengthen the operation of colleges and have been revised to reflect observations on best practice. The revisions underscore the importance of continuous collaboration and information-sharing outside the formal college meetings. They also incorporate recent supervisory developments, such as the formation of crisis management groups (CMGs) and greater focus on macroprudential considerations.
The key changes include:
- Principle 1 now places greater emphasis on ongoing collaboration and information-sharing.
- Principle 2 reinforces the expectation that a balance be struck between core college effectiveness and host involvement.
- Principle 3 includes the expectation that home and host supervisors will put in place appropriate mechanisms and sufficient resources for effective and timely information exchange.
- Principle 6 encourages home and host supervisors to agree on what types of feedback they provide to banks and how.
- Principle 7 differentiates between banks that have CMGs, eg systemically important banks, and those that do not, and provides guidance on possible communication and coordination between the college and the CMG with respect to crisis preparedness.
- Guidelines for the sharing and use of macroprudential information have been incorporated into Principles 1, 2, 3, 5 and 7.
The Basel Committee released a consultative version of this paper for public comment in January 2014. During the consultation process, the Committee took into account the perspectives of home and host supervisors as well as of internationally active banks, and wishes to thank all those who contributed time and effort to express their views.