© Copyright 2005 All Rights Reserved Panel 1: Setting out the Issues 3 May 2007 Presentation by: J. P. Sabourin, Chair of Executive Council & President.

Slides:



Advertisements
Similar presentations
The Benefits and Challenges of Implementation of Basel II in Europe José María Roldán | 27 Sept 2005.
Advertisements

EU-China Roundtable on Financial Services and Regulation José María Roldán | 28 Oct 2005.
Banque de France – Secrétariat général de la Commission bancaire Bruxelles, 19 mars 2010 Early intervention – which new tools for supervisors? Banque de.
Deposit insurance in the European Union José María Roldán | 13 Oct 2005.
Fred S. Carns Federal Deposit Insurance Corporation
Financial Stability Roles: Checks and balances Christos Vl. Gortsos Associate Professor of International Economic Law, Secretary General of Hellenic Bank.
Regulating a Single Banking System José María Roldán Chair, Committee of European Banking Supervisors (CEBS) Committee of European Banking Supervisors.
Maximising Recoveries Some observations Andrew Campbell.
Towards a Banking Union - Panel I: Are growth and stability compatible? - Steven Keuning Director General HR, Budget and Organisation 20 March 2013.
Rethinking the supervisory process Kerstin af Jochnick, Chair of CEBS Madrid 15 June 2009.
[Hayes, Dassen, Schilder and Wallage, Principles of Auditing An Introduction to ISAs, edition 2.1] © Pearson Education Limited 2007 Slide 14B.1 Governance.
Corporate Governance Reform Professor Blanaid Clarke Trinity College Dublin Law Reform Commission Annual Conference 11th December 2012.
FSB KEY ATTRIBUTES FOR EFFECTIVE RESOLUTION REGIMES: IMPLICATIONS FOR DEPOSIT INSURERS David Walker: Canada Deposit Insurance Corporation Role of Deposit.
J.P. Sabourin Chair of Executive Council and President of the
Corporate Corruption, Integrity and Governance Symposium IOSCO - Global Standard Setter Jane Diplock AO Chairman New Zealand Securities Commission IOSCO.
The Trade Finance Bank for Africa An overview of Afreximbank’s Approach to Corporate Governance Issues Presentation by Mr. George ELOMBI Executive Secretary.
1. The Global Financial Crisis: Causes, Policy Response, and Outlook Max Alier * Resident Representative in Ukraine * The views expressed herein are those.
Chapter Two Banking Background. Who is in charge of the banks? Germany: Federal Supervisory Authority (BaFin) France: Banking Commission Switzerland:
The Role of Risk Management and Assurance in Effective Organizational Governance Urton Anderson The University of Texas at Austin.
CEBS – The Challenges of Supervisory Convergence José María Roldán | 21 June 2005.
BASEL COMMITTEE ON BANKING SUPERVISION 1 Cross-Border Supervisory Cooperation under the Revised Basel Core Principles and Basel II 6th Annual International.
Chapter 11 Economic Analysis of Banking Regulation © 2005 Pearson Education Canada Inc.
Corporate Governance in Financial Institutions OCDE/IAIS/ASSAL Conference on Insurance Regulation & Supervision in Latin America Punta Cana, Dominican.
1 4 th Annual GCC Regulators’ Summit 22 nd & 23 rd February 2010, Qatar Gulf Monetary Union : Review & Implications on the Banking Sector Presentation.
After the crisis: Changes in Regulation in Europe... - the most important trends and influences upon the insurance market Michaela Koller, director general,
1 Bank for International Settlements (Financial Stability Institute) - Committee of Banking Supervisors of West and Central Africa Khartoum, Sudan, 10.
1 Cross-Border Deposit Insurance: Burden Sharing & System Design.
Global Practices in Bank Resolution David S. Hoelscher Role of Deposit Insurance in Bank Resolution Framework – Lessons from the Financial Crisis November.
U.S. Financial Regulations
Comments on: Financial Stability in a World of Cross-Border Banking: Nordic and Antipodean Solutions to the Problem of Responsibility Without Power By.
Section 12-2-Regulatory Agencies and Laws.   These agencies make or enforce rules and regulations  Agencies provide oversight or supervision of activities.
Michael Mackey and John RichardsLaurence Crowley Discussant - Joe Pasquariello.
Consolidated Supervision: Managing the Risks in a Diversified Financial Services Industry Barbara Baldwin June 2001.
Financial Conglomerates, What are the Inherent Risks? 2006 CIAB Conference Port-of-Spain, Trinidad & Tobago November 16, 2006 Thordur Olafsson, CARTAC.
Islamic Finance : Opportunities & Challenges Corporate Governance Issues W orld Bank Seminar, Washington DC, April Simon Archer Professor, University.
Cross-Border Supervisory Cooperation: Regional Developments Delia Cárdenas Superintendent of Banks of Panama Washington, D.C. June 7, 2006.
Copyright © 2002 Pearson Education, Inc. Slide 16-1.
Aligning Supervisory Structure with Country Needs - Issues in Unification of Supervisory Agencies Stefan Ingves Director Monetary & Financial Systems Department.
Impact of the Financial Crisis and Lessons Learnt Impact of the Financial Crisis and Lessons Learnt Rob Curtis Regional Information Session, Cape Town.
BY: DALAL ALARBEED Effective Monetary Policy in a Low Interest Rate Environment.
Lessons from 2008 Financial Crisis for Bank Resolution – Malaysian Experience Lim Kong Kuan, November 2011, Jodhpur, India.
THE BENEFITS OF DEPOSIT INSURANCE IN AFRICA - ZIMBABWE EXPERIENCE. INTRODUCTION BANK FAILURES IN ZIMBABWE.  UNITED MERCHANT BANK  UNIVERSAL MERCHANT.
Finance Banking regulation and supervision.
6. Problem Bank Resolution 1. Some basic terms  Resolution;  reorganization;  administration;  insolvency;  liquidation  problem bank 2.
The Changing Financial Landscape and the regulatory response Eddy Wymeersch Chairman of the Committee of European Securities Supervisors Committee of European.
Chapter 11 Economic Analysis of Banking Regulation.
Challenges in Overseeing Cross- Border and Multicurrency Payment and Settlement Systems 11 September 2008 Lawrence M. Sweet Senior Vice President.
Three pillars of effective cross-border stability framework Stanisław Kluza, Ph.D. Chairman Komisja Nadzoru Finansowego – Polish Financial Supervision.
Overview of Foreign Banking Organization Supervision Program Lisa DeFerrari Manager, International Supervision Federal Reserve Board July 2007.
„Position of Monetary Institution in the Regional Cooperation“ Kemal Kozarić, Ph.D. Governor of the Central Bank of Bosnia and Herzegovina Workshop“The.
PRESENTATION TO THE COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS OF THE EUROPEAN PARLIAMENT Brussels, 16 th March 2010 CARMINE LAMANDA SENIOR EXECUTIVE VICE-PRESIDENT,
Senate Finance Committee Budget Hearing Texas Department of Banking Testimony of: Randall S. James – Commissioner January 25, 2005.
Symposium on Cross-Border Deposit Insurance Issues Symposium on Cross-Border Deposit Insurance Issues Presentation at the Bank for International Settlements.
© Copyright Allianz IIS Redefining the industry: Regulation, Risk & Global Strategy July 9, 2007 Berlin Helmut Perlet, Allianz SE The Emergence of Solvency.
Cross-Border Supervisory Cooperation under Basel II and the Revised Basel Core Principles 6th Annual International Seminar on Policy Challenges for the.
Governor Stefan Ingves 15 March 2012 Financial stability from a consumer perspective Riksdag Committee on Finance.
Task Force on Banking Crisis Resolution Procedures Assonime-CEPS-Unicredit Task Force on Banking Crisis Resolution Procedures Key issues in bank crisis.
1 OSFI’s Approach to Consolidated Supervision OSFI International Advisory Group 3rd SEACEN-OSFI Seminar on Consolidated Supervision Hosted by the State.
Trends in International Regulation Regulation of the Dubai International Financial Centre Ian Johnston Deputy Chief Executive & Managing Director Dubai.
Compliance Risk Management
Preconditions for Deposit Insurance
EU-China Roundtable on Financial Services and Regulation
Financial Liberalization and its Impact on Financial Stability in Guyana by Debra Roberts.
CEBS – The Challenges of Supervisory Convergence
Ulatory Reform Presentation to the INTOSAI Committee on Knowledge Sharing and Knowledge Services Bali, Indonesia August 23-25,
The Federal Insurance Office & Dodd-Frank
Governance and Audit Oversight for Capital Market
Ulatory Reform Presentation to the INTOSAI Committee on Knowledge Sharing and Knowledge Services Bali, Indonesia August 23-25,
EU-China Roundtable on Financial Services and Regulation
Cross-border Insolvency: The FSB Key Attributes of Effective Resolution Regimes Eva Hüpkes Role of Deposit Insurance in Bank Resolution Framework – Lessons.
Presentation transcript:

© Copyright 2005 All Rights Reserved Panel 1: Setting out the Issues 3 May 2007 Presentation by: J. P. Sabourin, Chair of Executive Council & President of the International Association of Deposit Insurers, and Chief Executive Officer of the Malaysia Deposit Insurance Corporation

© Copyright 2005 All Rights Reserved Bank failures  Wide-ranging adverse implications but none as damaging if the failure involves an internationally active bank.  Spill-over effects expose financial safety net players to various insolvency regimes.  Collapse of BCCI was a wake up call. Responses include –  Mechanisms for consolidated supervisory oversight & cross border exchange of information.  Reviews done on different insolvency regimes in the hope of finding commonality.

© Copyright 2005 All Rights Reserved BCCI What helped BCCI to hide the true state of its financial affairs for so long?  Complex corporate structure  Environment of weak supervision  Regulatory loopholes

© Copyright 2005 All Rights Reserved BCCI So where were the auditors?  BCCI’s operations were divided between 2 auditors neither of whom audited all of BCCI’s operations therefore, no full & clear picture of its operations  Assurance by the Bank of England that the auditors should continue to certify BCCI’s books, reinforced by an agreement that the Abu Dhabi government, supervisor and BCCI would work with the auditors to restructure the bank & avoid its collapse

© Copyright 2005 All Rights Reserved BCCI And where were the regulators & supervisors?  Luxembourg & U.K. The Luxembourg Monetary Commission did not want to take the role of lead regulator as the operational headquarters was in London. But Bank of England did not want to accept the responsibility of supervising the global operations of a bank that it did not charter.

© Copyright 2005 All Rights Reserved BCCI What were the costs of BCCI’s failure to the global financial system?  Financial markets Little impact as most sophisticated market participants had cut lines to BCCI long before its collapse.  Retail depositors Felt most acutely over 380 banking offices in 73 countries.

© Copyright 2005 All Rights Reserved BCCI What were the regulators’ & supervisors’ responses?  Realisation that there was no consolidated oversight of the global activities of BCCI. Response – Formation of the “Regulatory College” comprising supervisory authorities from 8 countries to provide a cooperative oversight structure & share information.  Realisation that there was a lack of power to deal with international banking groups. Response – Strengthening of the Concordat by the Basel Committee whereby a bank is required to obtain the consent of both its home country regulator & host country regulator to establish a branch in a jurisdiction outside its home country.

© Copyright 2005 All Rights Reserved BCCI Changes in U.K. & Canada  Canada – Following the closure of 2 banks in the 1980s led to a substantial overhaul of the Canadian prudential regulatory system.

© Copyright 2005 All Rights Reserved Post BCCI lessons 4 main areas of concern:  Different insolvency regimes in different countries.  Liquidators in different jurisdictions have different objectives.  Different right of set-off across bankruptcy regimes.  Uncertainty in some jurisdictions where assets are paid out to creditors may be traced & reclaimed by liquidator. This can upset the finality of transactions.

© Copyright 2005 All Rights Reserved Post BCCI lessons Are these responses enough?  Should there be a super regulator that maintains a global repository of information on internationally active banks?  Availability & sharing of information regarding emerging problems that may have implications on stability of global financial system would assist in the monitoring & implementation of appropriate pre- emptive or corrective actions promptly & in a coordinated manner.

© Copyright 2005 All Rights Reserved Post BCCI lessons Do regulators & deposit insurers have a duty of care?  During 1990/91, Abu Dhabi, the auditors, BCCI & Bank of England reorganised BCCI.  However, the public knew nothing of the fraud & criminal activities that had perpetuated within BCCI, & continued to do business with BCCI. And this certainly caused substantial damage to innocent depositors & customers of BCCI who would have discontinued their dealings with BCCI.

© Copyright 2005 All Rights Reserved Concluding thoughts  Should the regulator be responsible for the broader good of the financial system at the detriment of the public?  If yes, then at what stage of the deterioration of a problem bank should the regulator make such an announcement?  How should one structure public awareness efforts under such circumstances without creating undue panic or instability in the financial system?

© Copyright 2005 All Rights Reserved Thank you