CEBS plans extensive work on convergence of supervisory practices

The Committee of European Banking Supervisors (CEBS) has defined its work programme for 2005, with the assistance of its Consultative Panel. CEBS plans to issue a number of public consultations during the coming year. Most of them will be related to the implementation of the proposed Capital Requirements Directive (CRD) which is expected to be adopted by the European Parliament later this year. The proposed Directive sets out new rules on capital requirements for banks and investment firms with the aim of making sure that financial institutions' capital is more closely aligned with the risks they face.

The implementation of the new Directive and the new International Financial Reporting Standards (IFRS) will require CEBS to take a step forward in the convergence of supervisory practices. Attention will therefore be focused on these issues. Enhanced convergence and co-operation should reduce the regulatory reporting burden of banking industry and contribute to more level playing field in the EU.

CEBS has divided its work into three main priority areas:
(i) regulatory advice to the Commission;

(ii) convergence of supervisory practices; and

(iii) co-operation and information exchange.

Under each work area separate work streams are highlighted as a high priority in 2005.

CEBS is preparing to launch public consultations on issues within the following areas:

Convergence of supervisory practices:

• common reporting for the solvency ratio and financial reporting requirements;
• supervisory disclosure of rules and practices on capital adequacy;
• supervisory review process;
• validation guidelines of advanced approaches for measuring credit and operational risk;
• recognition process for external credit assessment institutions; and
• supervisory guidance for the new IFRS framework.

Co-operation and information exchange:

• consolidated supervision of cross-border banking groups and cooperation between home and host supervisors.

Public consultation on a common reporting framework for the solvency ratio starts in January. It is envisaged that consultation on other financial reporting requirements and supervisory disclosure will start in March. The remaining consultations are scheduled for the second or the third quarter of 2005. These dates are indicative and CEBS is working hard to meet this ambitious timetable.

Apart from these strands of work on convergence of supervisory practices, the Commission has indicated that CEBS will receive requests for advice on several new issues. These include: possible obstacles to cross-border mergers in banking, the definition of regulatory capital and the supervision of liquidity risk.

The work programme is published in full on the CEBS website and a timeline of CEBS work will be continuously updated.

CEBS Work Programme 2005

Timeline for CEBS Work Programme 2005