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

    OCC Revises Minimum Threshold for Banks to Conduct Stress Tests

    OCC issued the final rule that amends its company-run stress testing requirements under the 12 CFR 46 in Code of Federal Regulations.

    October 10, 2019 WebPage Regulatory News
    News

    US Agencies Update Management Interlock Rules Under DIMIA

    US Agencies (FDIC, FED, and OCC) issued a final rule that increases the thresholds in the major assets prohibition for management interlocks for purposes of the Depository Institution Management Interlocks Act (DIMIA).

    October 10, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Rules to Closely Match Bank Risk Profiles

    US Agencies (OCC, FED, and FDIC) finalized rules that tailor the regulations for domestic and foreign banks to more closely match their risk profiles.

    October 10, 2019 WebPage Regulatory News
    News

    CPMI-IOSCO and FSB on Governance Arrangements for OTC Derivatives

    CPMI and IOSCO published a report that identifies key criteria, functions, and bodies for the governance arrangements.

    October 09, 2019 WebPage Regulatory News
    News

    EIOPA Launches Field Test on Templates Under 2020 Solvency II Review

    EIOPA, as part of the 2020 Solvency II reporting and disclosure review, launched a field test on the revised and newly proposed reporting templates.

    October 09, 2019 WebPage Regulatory News
    News

    US Agencies Adopt Rule on Appraisals for Real Estate Transactions

    US Agencies (FDIC, FED, and OCC) adopted the final rule to amend regulations requiring appraisals of real estate for certain transactions

    October 08, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Amendments to Simplify Volcker Rule

    US Agencies (CFTC, FDIC, FED, OCC, and SEC) finalized amendments to the regulations implementing section 13 of the Bank Holding Company Act, also known as the Volcker Rule.

    October 08, 2019 WebPage Regulatory News
    News

    EC Report Explores Application and Challenges of Blockchain Technology

    The Joint Research Center of EC published a report exploring the challenges and impact of distributed ledger technologies.

    October 08, 2019 WebPage Regulatory News
    News

    BIS and SNB Sign Agreement on Innovation Hub Center in Switzerland

    BIS and SNB signed an operational agreement on the BIS Innovation Hub Center in Switzerland.

    October 08, 2019 WebPage Regulatory News
    News

    ECB Issues Results of Sensitivity Analysis of Liquidity Risk for Banks

    ECB published results of 2019 stress test on sensitivity analysis of liquidity risk.

    October 07, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3958