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 Sets Out Roadmap for 2023, Updates Reporting Framework 3.2

    The European Banking Authority (EBA) published its work program for 2023 as well as the technical package for phase 3 of version 3.2 of its reporting framework.

    September 30, 2022 WebPage Regulatory News
    News

    FED Announces Launch of Climate Scenario Analysis Exercise in 2023

    The Board of Governors of the Federal Reserve System (FED) announced a pilot climate scenario analysis exercise for six largest banks in the U.S.

    September 29, 2022 WebPage Regulatory News
    News

    BIS Paper Studies Impact of Fintech Lending on Small Businesses in US

    The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.

    September 26, 2022 WebPage Regulatory News
    News

    UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks

    The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).

    September 26, 2022 WebPage Regulatory News
    News

    EBA Launches EU-Wide Transparency Exercise in 2022

    The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.

    September 23, 2022 WebPage Regulatory News
    News

    SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks

    The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."

    September 22, 2022 WebPage Regulatory News
    News

    EC Rule Lists Advanced Economies for Market Risk Capital Calculations

    The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.

    September 21, 2022 WebPage Regulatory News
    News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8523