CMF approved Resolution No. 4.694 that establishes the transition to a new organizational structure for the supervisory and regulatory areas of CMF. The transition process will begin on January 01, 2021 and end in December 2021. The new "Twin Peaks" regulatory model will be based on two pillars: prudential and market conduct. For the prudential pillar, two new Directorates will be created, one for prudential supervision and the other for prudential regulation. In another development, CMF proposed rules and guidelines as part of the large exposures regime to control the concentration risk at banks, with the consultation period ending on December 20, 2020.
As part of the consultation with respect to the large exposures regime, CMF issued a regulatory proposal to systematize the limit control that banks must comply with when granting financing to corporate groups. The last amendment to Article 84 No. 1 of the General Banking Act, in force since January 12, 2019, sets a limit of 30% of the effective assets of the creditor bank for the total of loans granted to individuals or entities belonging to the same corporate group. This is in accordance with the definition set forth in Article 96 of Law No. 18.045. The regulation proposed for this limit to corporate groups is based on, and considers, the remaining limits stated in Article 84 for individual debtors and related entities. It complements and uses the definitions already stipulated for them in Chapter 12-3 of the Updated Compilation of Rules for Banks. Furthermore, it envisions a file with information to control said limit, which will soon be published for consultation as well.
This consultation report describes the regulations that will allow effective control of this limit, along with the general guidelines for establishment of corporate groups, measurement of exposures, and submission of information to the regulator. The proposal considers the incorporation of a new Chapter to section 12 of the Updated Compilation of Standards (hereinafter RAN) that clarifies and details the way measurement of the limit established in the seventh paragraph of No. 1 of Article 84, together with provide guidelines for the formation of business groups, positioning themselves to These proposals consider the provisions in the large exposures framework of BCBS and the progress in the adoption of best practices at the international level.
Related Links (in Spanish)
- New Organizational Structure
- Press Release on Large Exposures Consultation
- Explanatory Note (PDF)
- Consultation Paper (PDF)
Comment Due Date: December 20, 2020
Keywords: Americas, Chile, Banking, General Banking Act, Banking Supervision, Large Exposures, Concentration Risk, Credit Risk, Regulatory Capital, Basel, CMF
Previous ArticleBoE Corrects Validation Rules for Branch Return Form
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.
EBA published the annual report on asset encumbrance of banks in EU.
MAS revised the guidelines that address technology and cyber risks of financial institutions, in an environment of growing use of cloud technologies, application programming interfaces, and rapid software development.
FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.
EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.
EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.
BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.
HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.