Two EU Level 3 committees have jointly issued principles for colleges of supervisors' functionality, including cross-border crisis managementLONDON & FRANKFURT - Ten common principles for the operation of supervisory colleges have been jointly released by the Committee of European Banking Supervisors (Cebs), the Committee of European Insurance and Occupational Pensions Supervisors (Ceiops) and their Interim Working Committee on Financial Conglomerates.
London-based Cebs and Frankfurt-based Ceiops say the shared principles for European banking and insurance groups are based on experience and are applicable for functioning in a crisis situation.
Principle five in particular refers to emergency functioning:
"The colleges of supervisors shall have agreements in place, laying out the basis for the co-operation between the involved authorities and the practical organisation of the supervisory activities of the group on an ongoing basis and in a crisis situation, including engagement with cross border stability groups.
"In emergency situations, the frequency of contacts between supervisors will rise in general. While preserving a high degree of flexibility, procedures should aim at helping supervisors in considering which authorities to inform, and when, in a crisis situation."
Principle seven also concerns emergency arrangements:
"The colleges of supervisors provide an efficient platform for the gathering and dissemination of relevant or essential information in going-concern and emergency situations, developing a common understanding of the risk profile of the group, achieving co-ordination of supervisory review and risk assessment at group level, as well as establishing supervisory plans for the mitigation of risks at group level."
Cross-border crisis supervision is the subject of ongoing debate in Europe. European Central Bank chairman Jean-Claude Trichet says his institution "stands ready" for supervisory responsibility, rather than supporting the Level 3 committees' pursuit of the supervisory college strategy, which Cebs, for example, embarked on in 2006.
The principles may be downloaded in full by clicking here.
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