Principles for the supervision of banks' foreign establishments (Concordat)

Introduction

This report sets out certain principles which the Committee believes should govern the supervision of banks' foreign establishments by parent and host authorities. It replaces the 1975 "Concordat" and reformulates some of its provisions, most particularly to take account of the subsequent acceptance by the Governors of the principle that banking supervisory authorities cannot be fully satisfied about the soundness of individual banks unless they can examine the totality of each bank's business worldwide through the technique of consolidation.

The report deals exclusively with the responsibilities of banking supervisory authorities for monitoring the prudential conduct and soundness of the business of banks' foreign establishments. It does not address itself to lender-of-last-resort aspects of the role of central banks.

The principles set out in the report are not necessarily embodied in the laws of the countries represented on the Committee. Rather they are recommended guidelines of best practices in this area, which all members have undertaken to work towards implementing, according to the means available to them.