CEBS today publishes its draft guidelines on joint assessment and joint decision regarding the capital adequacy of cross border groups

07 April 2010

 

According to Article 129 (3) of the revised Capital Requirements Directive (CRD)1- which will come into force on 31 December 2010 - consolidating and host supervisors of an EEA cross border banking group shall do everything within their power to reach a joint decision on the application of the Pillar 2 provisions related to the Internal Capital Adequacy Assessment Process (ICAAP) and to the Supervisory Review and Evaluation Process (SREP). The joint decision should cover the adequacy of the consolidated level of own funds held by the group with respect to its financial situation and risk profile, as well as the required level of own funds above the regulatory minimum applied to each entity within the group. The revised CRD also requires CEBS to elaborate guidelines to help facilitate the implementation of these provisions and the convergence of supervisory practices with regard to the joint decision process.

CEBS today publishes for consultation draft Guidelines for the joint assessment of the elements covered by the supervisory review and evaluation process and the joint decision regarding the capital adequacy of cross border groups (CP39).

 These Guidelines should be read in conjunction with th e general framework developed by CEBS for the operational functioning of colleges, which was set out in draft Guidelines released for consultation on 17 December 2009.

The Guidelines published today provide tools to facilitate a common understanding within colleges of the results of assessments of material risks and control factors, the ICAAP processes and methodologies, as well as compliance with various minimum requirements of the CRD performed by national supervisors with reference to CEBS's existing guidance on the Supervisory Review Process (SRP) .  

Giovanni Carosio, chairman of CEBS, said:

"CEBS's work on colleges started in 2006 with the aim of promoting cooperation and convergence in the supervision of cross-border banking groups in Europe. The revised CRD, by providing a legal framework for the establishment and functioning of colleges, confirms their importance in strengthening cooperation and coordination among supervisors. The draft Guidelines we have published for consultation today constitute an essential step forward towards reaching joint assessments and decisions on the risk-based capital adequacy of EEA cross-border banking groups."

CEBS expects its members to implement these Guidelines in conjunction with the implementation of the revised CRD which will come into force on 31 December 2010.

The consultation is open to all interested parties, including supervised institutions and other market participants.

The public consultation starts today and will run until 9 July 2010. Comments received will be published on CEBS's website unless respondents request otherwise. Please send your comments to the following email address: cp39@c-ebs.org.

A public hearing will be held on 3 June 2010 at CEBS's premises in London from 11:00 to 15:00 to allow all interested parties to share their views with CEBS.
 

1) Capital Requirements Directive (CRD) is a technical expression which comprises Directive 2006/48/EC and Directive 2006/49/EC. Please note that in general references to "Directive 2006/48/EC" and "Directive 2006/49/EC" or "CRD" refer to the versions of the Directives as amended in May 2009. The amending Directive can be found under:  http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P6-TA-2009-0367&language=EN&ring=A6-2009-0139

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