In the Francq report, the Financial Services Committee recommended that supervisors develop a framework for delegation of supervisory tasks in the banking sector. The Committee of European Banking Supervisors (CEBS) has now published a paper setting out the results of an in-depth analysis of delegation of supervisory tasks based on practical experience.
CEBS has identified two areas in which delegation of tasks currently takes place:
- On-site examinations, including model validation.
- Liquidity concession models.
The paper states that a liquidity concession model may be described as an intensive form of cooperation involving the delegation of a bundle of tasks from the Host State authority to the Home State authority, and by granting conditionally an exemption or waiver of liquidity requirements to the branch.
From its analysis CEBS concludes that:
- Regarding delegation of on-site examinations including model valuation, where no legal or practical impediments are identified, more frequent use of these types of delegation may be expected in the future of both directions from Home State and Host State supervisors and vice versa, and regarding both subsidiaries and branches.
- National legal or regulatory frameworks have established the conditions for waivers of quantitative requirements. CEBS recommends that CEBS members propose such steps to their national legislators when relevant.
- The paper produced by CEBS is to be regarded as work in progress. It is intended to provide information about the current situation and further possible progress regarding the delegation of tasks in banking supervision.