New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Chair Professor at the University of Zurich and Visiting Professor at the University of Hong Kong Supervision of Financial Conglomerates New Approaches in the Aftermath of the Financial Crisis? Prof. Dr. Rolf H. Weber

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 2 1.Phenomenon of the Financial Conglomerates 2.Principles of Financial Conglomerates‘ Regulation Rationale for Regulating Financial Conglomerates Supervisory Backbone 3.International Supervisory Fundaments Organizational Requirements Quantitative Requirements Qualitative Requirements 4.New Supervisory Issues 5.Fundamental Questions for Future Financial Conglomerates‘ Supervision

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 3 Concept Phenomenon of Financial Conglomerates Models for Groups Impact of Financial Crises

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 4 Definitions / Notions Concept Universal Banking / Functional Banking Parent Concept of “Allfinance”

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 5 Integrated Model Group Models Parent-Subsidiary Model Horizontal Group Model Holding Company Model

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 6 Consolidation v. Conglomeration Impact of Finacial Crises Too-big-to-fail Predominant Leg

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 7 Potential Problems Rationale for Regulating Financial Conglomerates Sector-Based Differences Common Characteristics

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 8 Double Gearing / Excessive Leveraging Potential Problems Contagion Systematic Risks Lack of Transparency Conflicts of Interest

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 9 Banking and Securities Dealing Sector-Based Differences Banking and Insurance

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 10 Fitness Tests Common Characteristics Risk Management Compliance

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 11 Types of Supervision Supervisory Backbone Boundaries to Financial Conglomeration

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 12 Stand-alone or Solo-Basis Supervision Types of Supervision Supervision of Homogenous Financial Groups Mixed-Activities Groups Supervision of Financial Conglomerates

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 13 Limits Imposed on the Banking Sector Boundaries to Financial Conglomeration Limits Imposed on the Insurance Sector

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 14 Organizations International Supervisory Fundaments Reaction to Crisis BIS & BCBS IOSCO IAIS Tripartite Goup & Joint Forum Summits: Washington, London, Pittsburgh FSB, BCBS, IAIS

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 15 Accounting and Capital Adequacy Conglomerate-Wide Supervision I Consolidated Risk Supervision Intra-Group Transactions Concept of Economic Unity Liquidity Requirements Quantitative Requirements

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 16 Adequate Group Organization Conglomerate-Wide Supervision II Risk Management Group-wide Reporting Fitness and Propriety Tests Qualitative Requirements

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 17 Lead Supervisor New Supervisory Issues “Too-big-to-fail” Problems International Recommendations Problems International Discussions

New Approaches in the Aftermath of the Financial Crisis? Supervision of Financial Conglomerates Prof. Dr. Rolf H. Weber 18 Is There Anything like a Concept of Convergence? How should the Principle „Same Business, Same Rights, Same Rules“ be Applied? Can Some Entities Remain Unregulated and Unsupervised? To what Extent does Structure Matter? How can Supervisory Cooperation be Increased? Fundamental Questions for Future Financial Conglomerates Supervisions