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

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301