6-8 College Green
Dublin 2
Ireland
16 June 2008
Mr Patrick Pearson
Head of Unit
Banking and Financial Conglomerates
DG Markt
By email:
Re: Public Consultation on possible changes to the Capital Requirements Directive (CRD)
Dear Mr Pearson
The Financial Regulator welcomes the opportunity to comment on the Consultation Paper on the proposed changes to the CRD.
As a member of the Committee of European Banking Supervisors (CEBS), the Financial Regulator supports the comments submitted by CEBS on potential changes to the CRD. However, in addition, the Financial Regulator would like to highlight its concerns in relation to some of the proposed changes in the area of ‘supervisory arrangements.’
Supervisory arrangements
The Financial Regulator welcomes (i) the emphasis on increased supervisory co-operation and information exchange in both ‘normal times’ and ‘times of stress,’ (ii) the explicit introduction of colleges of supervisors, including host supervisors of systemically relevant branches, as a supervisory tool and (iii) the increased role of CEBS as a mediator. However, there are a number of areas, as set out below, where we invite the Commission to provide clarification in order to ensure consistency of interpretation.
- In Article 129(2), fifth subparagraph, the phraseology “the consolidating supervisor shall, at the request of the applicant..…” appears to oblige the consolidating supervisor, on behalf of the applicant bank, to initiate CEBS involvement. The Financial Regulator believes that CEBS involvement as a mediator in relation to applications to use IRB, AMA or IMM approaches should only arise where supervisors believe it is necessary.
- We question the alignment of the proposal that an agreement is required in the colleges on key home-host issues with the objective that the allocation of supervisory authorities responsibilities should not be modified. This is referred to in the Preamble and Article 129(3) which states “The competent authorities participating in the colleges shall agree on the entrustment of tasks and delegation of responsibilities and cooperate closely, havingregard to the obligations in Articles 40(3), 42 and 132”. This leads to a possible interpretation that the role of the college of supervisors goes beyond a facilitating forum for both the consolidating and host supervisors. The Financial Regulator believes that delegation of both tasks and responsibilities between supervisors should remain voluntary.
- We believe that there is a boarder area of concern regarding the envisaged decision making role of colleges given their original intent as vehicles for coordination and cooperation between supervisors with decision making powers resting with competent authorities. Given the significance of the items outlined in Article 129(3) such as specific national disclosure requirements on significant subsidiaries, national reporting of COREP and FINREP, additional own funds requirements and national treatment of intra-group exposures, it is important that the Commission ensure consistency of legislation underlying the obligations of national competent authorities in these areas.
If you require any further information on this response please do not hesitate to contact me or
my colleague Ms. Eida Mullins of this department at
Yours sincerely
[signed]
Mary Burke
Head of Banking Supervision