CEBS in Brief

The Lamfalussy approach The Lamfalussy approach was first implemented in the securities field following the recommendations of the Committee of Wise Men chaired by Alexandre Lamfalussy (endorsed by the European Council in March 2001). Four level approach to securities markets, aimed at establishing faster and more flexible decision-making for legislation and at ensuring uniform application in Member States: Level 1 Framework principles to be decided by normal legislative procedures (i.e. proposal by the Commission to the Council of Ministers and the European Parliament for co-decision. Level 2 Implementing details to be defined, proposed and decided by the Commission with the assistance of a senior Committee of representative of Member States - the European Securities Committee – based on technical advice received by a committee of national regulators – the Committee of European Securities regulators. Level 3 European regulators working in a network to ensure consistent implementation of Level 1 and 2 acts in the Member States. Level 4, the Commission’s enforcement of Community law.

CEBS position in European structure Lamfalussy Level 3 “Supervisory Committees” Lamfalussy Level 2 “Regulatory Committees” EBC¹ (Banking) CEBS ² (Banking) CEIOPS 3 (Insurance Pensions) CESR 3 (Securities) EIOPC¹ (Insurance, Pensions) ESC¹ ( Securities) ¹ Finance ministries ² Supervisors and Central Banks 3 Supervisors ECOFIN Council EBC European Banking Committee EIOPC European Insurance and Occupational Pensions Committee ESC European Securities Committee FCC Financial Conglomerates Committee CEIOPS Committee of European Insurance and Occupational Pensions Supervisors CESR Committee of European Securities Regulators European Commission European Parliament Economic and Financial Committee Financial Stability Table Financial Services Committee 1 Lamfalussy Level 1 High level strategic advice Level 3 coordination CEBS gives advice to the Commission on level 2 banking policy issues, contributes to a consistent implementation of EU legislation and promotes the convergence of Member States’ supervisory practises as well as co-operation between supervisors FCC¹ (Financial Conglomerates)

History of CEBS The ECOFIN Council agrees to extend the Lamfalussy approach to banking and insurance (3 Dec 2002) The Commission issues a decision to establish the Committee of European Banking Supervisors (5 Nov 2003) and sets its starting date on 1 January 2004 CEBS Charter is adopted in the first meeting of CEBS (29 Jan 2004) The process of establishing the corporate structures and setting up the Secretariat in London is completed and the new offices are officially opened by The Right Honorable Mr. Gordon Brown MP (27 Oct 2004)

Tasks of CEBS to advise the Commission on banking policy issues, in particular for the preparation of draft measures for the implementation of European legislation to foster a common day to day implementation and application of Community legislation by issuing guidelines, recommendations and standards to promote supervisory co-operation and provide for the exchange of supervisory information

Organisation CEBS members are high level representatives from the banking supervisory authorities and central banks of the European Union, including the European Central Bank 25 countries and 46 member organisations, plus observers from EEA countries, the European Commission and the Banking Supervision Committee of ESCB (European System for Central Banks) Chairman - José María Roldán Vice Chair - Danièle Nouy Secretary General - Andrea Enria The Bureau

The Secretariat CEBS Secretariat Ltd. is established as a company limited by guarantee under English law. Its activities are financed by central banks and supervisory authorities participating in CEBS. The Secretariat supports the Committee and its expert groups, acts as a co-ordinator for consultations with members and market participants, coordinates the co- operation with the Commission and other committees, assists the Chair and the Vice Chair in their public relations activities and representation functions The staff is presently composed of 10 members seconded by the national authorities

Consultation Consultation with market participants and end-users Objectives: transparency, benefit from expertise of market participants and end-users, dialogue and interaction Tools: open consultation on CEBS products, hearings Consultative Panel composed of 19 members with main task of acting as a sounding board in strategic issues The first meeting of the Panel on 7 Oct 2004) Standards, guidelines and recommendations CEBS Market participants and end-users

Workprogramme for 2005 Co-operation and information exchange Home/host issues Crisis management Information exchange Convergence of supervisory practice Supervisory review process Validation of IRB and AMA systems External Credit Assessment Institutions (ECAIs) Supervisory and financial reporting Supervisory disclosure Supervisory guidance for the new IFRS framework

Application of the Supervisory Review Process CEBS CP03 | May 2004 Workprogramme 2005, cont. Regulatory advice to the Commission National discretions Possible obstacles to cross-border mergers in banking Definition of regulatory capital Supervision of liquidity risk Other areas of work Risks to banking stability Outsourcing Internal governance Impact of IFRS on prudential requirements The role of the audit function for prudential supervision Cross-sectoral issues Conglomerates

Work in progress CEBS and its substructures Groupe de Contact Risk Based Capital Directive Accounting & Auditing Common Reporting Supervisory Disclosure Envisaged: Crisis Management (joint with BSC) CEBS* Members: Supervisory Authorities, Central Banks & European Central Bank Observers** Bureau*** Market Participants End-users Consultative Panel* Expert Groups* * supported by the CEBS Secretariat ** Observers: European Commission, Banking Supervision Committee, Norway, Iceland, Lichtenstein *** Bureau advises and assists the Chair e.g. in budgetary and administration matters

Application of the Supervisory Review Process CEBS CP03 | May 2004 CEBS January 17 March 28 June 25 October