CEBS – Achievements to date

1. CEBS –Achievements to date Kerstin af Jochnick | 17 May 2005

2. Outline • Introduction • What is CEBS? • Role and tasks • Lamfalussy framework • Consultation • Work Programme 2005 • Supervisory Review Process (Pillar II) • Reporting requirements • Supervisory Disclosure • Supervisory Disclosure CEBS | May 2005

3. Introduction • Basel II and CEBS • The new paradigm: risk-focused supervision • A window of opportunity for convergence in supervisory practices in the EU: the role of CEBS • Four main challenges in EU implementation • Consistent implementation • Convergence in supervisory practices • Streamlining the supervisory process for cross-border groups • Effective consultations CEBS | May 2005

4. Role and tasks • established in Nov 2003, the first meeting Jan 2004 • high level representatives from the banking supervisory authorities and central banks of the European Union, including the European Central Bank • 25 countries and 46 member organisations, observers from EEA* countries, the European Commission and the Banking Supervision Committee of ESCB (European System for Central Banks) • Chairman Vice Chair Secretary General José María Roldán Danièle Nouy Andrea Enria Banco de España Commission de Bancaire Banca d’Italia * Iceland, Liechtenstein and Norway CEBS | May 2005

5. Role and tasks • to advise the European Commission on banking policy issues, in particular for the preparation of draft measures for the implementation of European legislation • to foster a common day to day implementation and application of Community legislation by issuing guidelines, recommendations and standards • to promote supervisory co-operation and provide for the exchange of supervisory information CEBS | May 2005

6. Council Commission Parliament L1 EBC¹ EIOPC¹ ESC¹ FCC¹ L2 CEBS² CEIOPS³ CESR³ L3 L4 Enforcement Commission Lamfalussy framework Legislation Implementing details Convergence EBC = European Banking Committee EIOPC = European Insurance and Occupational Pensions Committee ESC = European Securities Committee FCC = Financial Conglomerates Committee CEIOPS = Committee of European Insurance and Occupational Pensions Supervisors CESR = Committee of European Securities Regulators ¹ Finance ministries ² Supervisors and Central Banks³ Supervisors CEBS | May 2005

7. ECOFIN Council European Commission European Parliament EFC-FST¹ FSC¹ EBC¹ Economic and Monetary Affairs Committee (ECON) Advice/accountability CEIOPS3 CEBS² European Central Bank (ECB) Level-3 coordination CESR3 Banking Supervision Committee (BSC) Cooperation EBC European Banking Committee EFC Economic and Financial Committee FSC Financial Services Committee FST Financial Stability Table CEIOPS Committee of European Insurance and Occupational Pensions Supervisors CESR Committee of European Securities Regulators ¹Finance ministries ²Supervisors and Central Banks³Supervisors Accountability CEBS | May 2005

8. Expert groups CEBS | May 2005

9. Consultation • Consultation with the industry, market participants and end-users • Objectives: transparency, benefit from expertise of market participants and end-users, dialogue and interaction • Tools: public consultation on CEBS products, hearings, panel • Consultative Panel composed of 19 members with main task of acting as a sounding board in strategic issues The industry,market participantsand end-users CEBS Standards, guidelines and recommendations CEBS | May 2005

10. Consultative Panel • • Expresses views on CEBS’ work programme; • • Comments on the way in which CEBS is exercising its role and, in particular, on the adequacy of consultation with market actors, consumers and end-users; • • Assists CEBS in setting priorities; • • Alerts CEBS to regulatory inconsistencies in the Single Market and suggests areas for Level-3 work; • • Informs CEBS on major financial market developments. CEBS | May 2005

11. Consultative Panel • Freddy van den Spiegel, Fortis (The Chair) • Hugo Banziger, Deutsche Bank • Albertus Bruggink, EBIC (Rabobank) • Riccardo de Lisa, FIN-USE • Richard Desmond, UNICE • Richard Gossage, Royal Bank of Scotland • Carl-Johan Granvik, Nordea • Siegfried Jaschinski, State Bank of Baden-Württemberg • Benoît Jolivet, FIN-USE • Michael Kemmer, EBIC (HVB Group) • Roman Maszczyk, PKO BP SA • José Maria Méndez, Spanish Federation of Savings Banks • João Salgueiro, Portuguese Banking Association • Frédéric Oudea, Societe Generale • Herbert Pichler, Austrian Federal Economic Chamber • Franco Spinelli, Banca Bipop Carire • Antimos Thomopoulos, National Bank of Greece • Manfred Westphal, BEUC • Klaus Willerslev-Olsen, Danish Bankers Association CEBS | May 2005

12. Priority areas of work Regulatory advice to the Commission Cross-border mergers in banking Deposit guarantee schemes Own funds E-money Convergence of supervisory practice Supervisory Review Process (Pillar 2) Validation of IRB and AMA systems External Credit Assessment Institutions (ECAIs) Harmonisation of reporting requirements Supervisory disclosure Co-operation and information exchange Supervision of cross-border groups (home-host) Crisis management (joint with the BSC) Information exchange Other areas of work Risks to banking stability Outsourcing Internal governance Impact of IFRS on prudential requirements The role of the audit function for prudential supervision Cross-sectoral issues: Supervision of financial conglomerates Off-shore financial centres Delivered products National discretions (work continues 2005)Prudential filters Work Programme 2005 CEBS | May 2005

13. Supervisory Review Process • Objectives of Pillar 2 are to: • Ensure institutions have adequate capital to support all risks in their business • Encourage institutions to manage risk • Foster an active dialogue between institutions and supervisors • Covers the relationship between: • Supervisor’s SREP (the Supervisory Review and Evaluation Process); and • Institution’ ICAAP (the Internal Capital Adequacy Assessment Process). CEBS | May 2005

14. Supervisory Review Process • The first consultation on Pillar 2 finished in August 2004 • In general, responses very positive • Industry supported the main concepts: • ICAAP the responsibility of the institution • Dialogue between the institution and the supervisory authority in the ICAAP/SREP process • Proportionality • Second round of consultation in Q2 2005 CEBS | May 2005

15. Supervisory Review Process CEBS | May 2005

16. Priority areas of work Regulatory advice to the Commission Cross-border mergers in banking E-money Deposit guarantee schemes Own funds Convergence of supervisory practice Supervisory Review Process (Pillar 2) Validation of IRB and AMA systems External Credit Assessment Institutions (ECAIs) Harmonisation of reporting requirements Supervisory disclosure Co-operation and information exchange Supervision of cross-border groups (home-host) Crisis management (joint with the BSC) Information exchange Other areas of work Risks to banking stability Outsourcing Internal governance Impact of IFRS on prudential requirements The role of the audit function for prudential supervision Cross-sectoral issues: Supervision of financial conglomerates Off-shore financial centres Delivered products National discretions (work continues 2005)Prudential filters Work Programme 2005 CEBS | May 2005

17. Supervisory Disclosure • Supervisors are required to publish (CRD Art. 144): • Rules and guidance • How options and national discretions are exercised • Supervisory review and evaluation • Statistical data on national banking sectors • Easy access and meaningful comparison  peer group pressure • Internet access via CEBS website www.c-ebs.org • Links to national websites • Comparable information • Common language - English CEBS | May 2005

18. Consistent implementation - Supervisory Disclosure CEBS | May 2005

19. Consistent implementation - Supervisory Disclosure CEBS | May 2005

20. Consistent implementation - Supervisory Disclosure CEBS | May 2005

21. Priority areas of work Regulatory advice to the Commission Cross-border mergers in banking E-money Deposit guarantee schemes Own funds Convergence of supervisory practice Supervisory Review Process (Pillar 2) Validation of IRB and AMA systems External Credit Assessment Institutions (ECAIs) Harmonisation of reporting requirements Supervisory disclosure Co-operation and information exchange Supervision of cross-border groups (home-host) Crisis management (joint with the BSC) Information exchange Other areas of work Risks to banking stability Outsourcing Internal governance Impact of IFRS on prudential requirements The role of the audit function for prudential supervision Cross-sectoral issues: Supervision of financial conglomerates Off-shore financial centres Delivered products National discretions (work continues 2005)Prudential filters Work Programme 2005 CEBS | May 2005

22. Future Work • Next steps on consistent implementation and convergence of practices: • Compendium or guidebook of standards, guidelines, advice and other work of CEBS • For supervisors and market participants • Flexible, internet based structure, easy to update • Consistent terminology, definitions • Common European “rules and guidance” CEBS | May 2005

23. Contact details: Kerstin af Jochnick: kerstin.jochnick@fi.se