Featured Product

    BCBS Report Examines Global Pillar 2 Supervisory Review Practices

    June 21, 2019

    BCBS published a report that examines the Pillar 2 supervisory review practices and approaches in Basel member jurisdictions. The report concludes that there is a rich range of practices among BCBS member jurisdictions in how they implement Pillar 2 of the Basel Framework. In key areas—such as risk management—all supervisors assess and evaluate banks’ risk frameworks, thresholds, and triggers.

    The report covers key areas of the Pillar 2 supervisory review process, including the risk assessment process, risk appetites, board and senior management roles, and supervisory practices adopted to enhance transparency and bank disclosure practices. The report further describes a number of selected Pillar 2 risks, including business risk and interest rate risk in the banking book (IRRBB). Finally, the report presents a range of actions that are taken under Pillar 2. Case studies are included throughout the report to illustrate supervisory practices. Content from the report should be helpful to BCBS members and non-members alike as well as to the industry at large. 

    The report shows that most supervisors rely on banks' internal capital adequacy assessment process (ICAAP) and other risk reporting. In areas of emerging risks, each supervisor is pursuing the areas that appear to pose the greatest risk to the banks it supervises and to its banking system. Supervisors also tailor and apply rules of proportionality, as they supervise banks with different risk profiles and in different economic and financial environments. As intended under Pillar 2 of the Basel Framework, jurisdictional approaches to developing, implementing, and executing a supervisory review regime are aligned with local needs and expectations. This approach both complements and supports the other two pillars of the Basel Framework. Notwithstanding some differences in supervisory approaches adopted by BCBS members, the Pillar 2 outcomes across these jurisdictions take similar direction. Furthermore, BCBS jurisdictions try to minimize any potential effect on banks from jurisdictional differences through cooperation in supervisory colleges and other forms of collaboration and coordination. The supervisors are expected to continue to develop Pillar 2 practices over time and adjust to new risks and methodologies. 

     

    Related Links

    Keywords: International, Banking, Pillar 2, Basel III, IRRBB, Risk Management, ICAAP Proportionality, Credit Risk, Supervisory Review, Reporting, BCBS

    Featured Experts
    Related Articles
    News

    APRA Publishes Proposal to Increase Transparency of Banking Data

    APRA proposed to substantially increase the volume and breadth of data it makes publicly available on authorized deposit-taking institutions, including banks, credit unions, and building societies.

    December 05, 2019 WebPage Regulatory News
    News

    ESMA Consults on Guide to Internal Controls for Credit Rating Agencies

    ESMA launched a consultation on the guidelines on internal controls for credit rating agencies (CRAs).

    December 05, 2019 WebPage Regulatory News
    News

    EU Finalizes Directive and Prudential Rules for Investment Firms

    EU published, in the Official Journal of the European Union, the Directive (2019/2034) and Regulation (2019/2033) on the prudential requirements and supervision of investment firms.

    December 05, 2019 WebPage Regulatory News
    News

    OSFI Revises Guideline on Principles for Management of Liquidity Risk

    OSFI finalized Guideline B-6 on the principles for the management of liquidity risk.

    December 05, 2019 WebPage Regulatory News
    News

    PRA Consults on Framework to Manage Outsourcing and Third-Party Risk

    PRA published a consultation paper CP30/19 that sets out proposals to modernize the regulatory framework on outsourcing and third-party risk management.

    December 05, 2019 WebPage Regulatory News
    News

    BoE, PRA, and FCA Consult to Strengthen Operational Resilience

    BoE, PRA, and FCA published a shared policy summary and coordinated consultation papers on new requirements to strengthen operational resilience in the financial services sector.

    December 05, 2019 WebPage Regulatory News
    News

    EC Amends Rule on Mapping of External Credit Assessment Institutions

    EC published the implementing regulation (EU) 2019/2028, which amends Regulation 2016/1799, regarding the mapping tables specifying correspondence between the credit risk assessments of external credit assessment institutions (ECAIs) and the credit quality steps set out in the Capital Requirements Regulation.

    December 04, 2019 WebPage Regulatory News
    News

    EBA Issues Second Part of Advice on Implementation of Basel III in EU

    EBA published the second part of its advice on the implementation of Basel III in EU, which complements the report published on August 05, 2019.

    December 04, 2019 WebPage Regulatory News
    News

    EU Approves European Council Proposal on CCP Recovery and Resolution

    EU ambassadors approved the position of European Council on a proposed framework for clearing houses and their authorities to prepare for and deal with financial difficulties.

    December 04, 2019 WebPage Regulatory News
    News

    OSFI Releases Guideline on Foreign Bank Branch Deposit Requirements

    OSFI released the final version of Guideline A-10 on foreign bank branch deposit requirements, along with guideline impact analysis statement.

    December 04, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4268