EC proposal for a directive amending the Crd
The EC proposal is aimed to create colleges of supervisors (CoS) for the supervision of cross-border banking groups (article 131a) and puts them in charge of (i) ensuring an effective information sharing; (ii) agreeing on voluntary entrustment of tasks and delegation of responsibilities; (iii) determining examination programmes for the Supervisory Review Process (SREP); (iv) removing unnecessary duplication of supervisory requirements; (v) applying prudential requirements in a consistently way within all the entities of the group and (vi) coordinating with Cross-border Stability Group (CBSB) in case of crisis.
The establishment and functioning of the CoS is based on written arrangements; CoS are chaired by the consolidating supervisor (i.e. the competent authority responsible for the exercise of supervision on a consolidated basis of EU parent credit – new article 4 point 48) and are composed by the competent authorities of host countries where subsidiaries and systemically relevant branches are established.
In the absence of a joint decision between the competent authorities within six months, the consolidating supervisor has the power to make its own decision on the Pillar II matters, namely the assessment of the economic capital (Internal Capital Adequacy Assessment Process – ICAAP) and its review (SREP), and on the capital adds-on.
The consolidating supervisor should make its own decision on the banking group’s common reporting format by 30 June 2011. This is legal way to make binding the ones that should be issued by Committee of European Banking Supervisors (CEBS) by 2012, as stated by the September 2008 Informal ECOFIN.
A mediation mechanism should be provided by CEBS to ensure conflict resolution within the CoSs; the consolidating supervisor is indeed obliged to take into account the CEBS non-binding advice and explain any significant deviation there from (“comply or explain” principle).
The CEBS should play a role in ensuring a level playing field among the different CoSs; therefore the consolidating supervisors are obliged: (i) to inform the CEBS of the activities of the CoSs, including in emergency situations, and (ii) to follow CEBS (non-binding) guidelines for the operational functioning of the CoSs.
As requested by the Financial Stability Forum (FSF) in its recommendations, national authorities of third counties, if appropriate, could join the CoSs as well.
ABI position
The Italian Banking Association (ABI) welcomes the EC proposal of Directive amending the CRD because it acknowledges all the proposals we put forward in our position response to the EC consultation on the supervisory arrangements.
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