Featured Product

    ECB and UK Authorities Agree on Post-Brexit Supervisory Cooperation

    February 19, 2021

    ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities. The MoU on post-Brexit supervisory cooperation with the UK authorities becomes effective from January 01, 2021. The ECB MoU with BoE and FCA contains several general and specific provisions, with the specific provisions covering topics such as implementation of internal models, recovery plans, macro-prudential measures, and proportionality. The MoU also addresses cooperation with respect to on-site visits and inspections of cross-border institutions and exchange of supervisory information.

    The MoU with UK authorities is aimed at ensuring effective cooperation and exchange of supervisory information for the performance of the authorities' respective supervisory powers over supervised entities, to the extent permitted by their applicable legal framework and in accordance with the highest standards for international supervision. The key relevant provisions in the MoU include the following:

    • Cooperation in relation to internal models or advanced approaches. Subject to proportionality considerations, the authorities (ECB, BoE, and FCA) intend to share views and information on the supervised entities’ design and use of internal models, information on data and IT frameworks to ensure that all relevant information is properly reflected into the internal models, and controls and governance of approved internal models.
    • Cooperation on ongoing supervision, including sharing of risk assessments. Subject to proportionality considerations, the authorities intend to share information on their risk assessments of supervised entities and their cross-border establishments, where the information is relevant and material to the other authority in the performance of the ongoing supervision. The authorities may invite each other to participate in, and contribute to, an overall group risk assessment.
    • Cooperation in relation to on-site visits or inspections to cross-border establishments. The authorities intend to facilitate as far as practicable, and subject to applicable legislation, the conduct of on-site visits or inspections of the cross-border establishments situated in the other authority’s jurisdiction, or, where relevant for such cross-border establishments of the supervised entity, to the latter.
    • Collection and exchange of supervisory and other information from the institutions and sharing such information between authorities. Subject to proportionality considerations, the authorities intend to share further information needed for the performance of their ongoing supervisory tasks and responsibilities in relation to the specific supervised entities and their cross-border establishments. Where it is agreed by the Authorities to be relevant and proportionate, such information may include, but is not limited to, capital and liquidity positions; significant failures in a supervised entity’s prudential governance or control arrangements; and material findings from a supervised entity’s internal risk or audit functions relevant to the cross-border establishment.
    • Macro-prudential measures. The authorities intend to communicate with each other to exchange relevant information assessments and to facilitate discussions in respect of planned measures where this may assist in assessing and mitigating risks to financial stability in the concerned jurisdictions.
    • Assessment of recovery plan. The authorities intend to assist each other in an assessment of the group recovery plan prepared by the supervised entities and, where relevant, their cross-border establishments insofar as it is relevant to the entities or cross-border establishments under their supervision. To facilitate such assessment, the authorities intend to share, in accordance with the applicable legal framework, parts of the recovery plans prepared by the supervised entities or their cross-border establishments that are relevant for the other Authorities. 

    The agreement with BoE and FCA is one of more than 20 MoUs that ECB Banking Supervision has concluded with banking and market supervisory authorities in Europe and beyond. ECB is published the first group of agreements, including an MoU with the Swedish Financial Supervisory Authority (FI), the Financial Supervisory Authority of Norway (Finanstilsynet), DFSA, and FIN-FSA. Among the non-European authority MoUs, MoUs with Abu Dhabi Global Market’s Financial Services Regulatory Authority, National Bank of Moldova, and Netherlands Authority for the Financial Markets have ben also published. The Governing Council of ECB aims to publish the second group of supervisory MoUs (already signed) by the end of April 2021. These MoUs are a part of the ECB efforts, wherein it negotiates MoUs with national and international authorities to establish stable cooperation and information-sharing frameworks for the coordinated supervision of banks and their cross-border subsidiaries and branches.

     

    Related Links

    Keywords: Europe, EU, UK, Sweden, Denmark, Netherlands, Banking, Supervisory Cooperation, MoU, Post-Brexit, Proportionality, Recovery Planning, Internal Models, BoE, FCA, ECB

    Related Articles
    News

    BCBS Consults on Guidelines for Counterparty Credit Risk Management

    The Basel Committee on Banking Supervision (BCBS) is seeking comments, until August 28, 2024, on guidelines for counterparty credit risk management of banks.

    May 21, 2024 WebPage Regulatory News
    News

    ISSB Releases Digital Sustainability Disclosures Taxonomy

    The themes of the harmonization and interoperability of sustainability disclosure standards among various jurisdictions remain at the top-of-mind for international standard-setting bodies.

    May 21, 2024 WebPage Regulatory News
    News

    BCBS Report Studies Implications of Digitalization of Finance

    The Basel Committee on Banking Supervision (BCBS) published a report that examines the implications of the digitalization of finance for banks and supervisors.

    May 21, 2024 WebPage Regulatory News
    News

    HKMA Publishes Hong Kong Taxonomy for Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) published the Hong Kong Taxonomy for Sustainable Finance.

    May 21, 2024 WebPage Regulatory News
    News

    EU Taking Steps to Set Out and Enforce AI Regulations

    Many believe that the transformative power of generative artificial intelligence (GenAI) has potential to reshape the financial sector in the time to come.

    May 21, 2024 WebPage Regulatory News
    News

    BIS Paper Outlines Vision for Future Financial System

    In a recent paper, the General Manager of Bank for International Settlements (BIS) and the Indian entrepreneur (Infosys co-founder) Nandan Nilekani have laid out a vision for the Finternet, which is proposed to be a network of multiple financial ecosystems, much like the internet.

    April 29, 2024 WebPage Regulatory News
    News

    NGFS Outlines Options for Supervisory Review of Transition Plans

    The Network for Greening the Financial System (NGFS) recently published three reports on the use of transition plans to boost sustainable finance and manage climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    BCBS Issues Discussion Paper on Climate Scenario Analysis

    The Basel Committee on Banking Supervision (BCBS) issued a discussion paper on the use of climate scenario analysis to strengthen the management and supervision of climate-related financial risks.

    April 29, 2024 WebPage Regulatory News
    News

    OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.

    April 25, 2024 WebPage Regulatory News
    News

    CFIT to Chair Open Finance Taskforce Announced by UK Government

    The UK government announced the formation of an industry-led Open Finance Taskforce, chaired by the Center for Finance, Innovation, and Technology (CFIT).

    April 25, 2024 WebPage Regulatory News
    RESULTS 1 - 10 OF 8967