Banking - supervision Flashcards
Who is responsible for the prudential supervision of a CI?
the CA in the home state
If a CA in the home state is responsible for the prudential supervision of a CI, is it just limited to activates in the home state?
No, this includes supervision of:
Services provided directly across borders in the host state
Activates of branches established in the host state
If a home state is supervising is that just enough?
kind of, CAs must cooperate closely in order to supervise the activates of CIs and FIs, in particular activates through branches, if they are in one or more host states
What kind information of should a CAs shear with each other?
all information concerning management and ownership, in particular:
Liquidity
Solvency
Deposit guarantee
Large exposures
What happens if there is a disagreement on measures to be taken by the home state CA?
Host state CA can take appropriate measures :
To prevent further breaches
To protect the interests of depositors, investors and other
To protect stability of the financial systems
To do this they must inform the home state CA and EBA
If a home state CA disagrees with the measures taken by a host state CA what can it do?
It may refer the matter to EBA and request assistance
When can a branch be consider as significant
The jist of it is that a branch is considered significant if the closure of the branch would have effect on the financial system of the host state.
They are listed up in the CRD and, e.g. if if deposits exceeds 2% market share in the host state.
If a German bank has a huge branch in Franc can the CA in the host state do anything about it?
The host state CA can request that a branch of a CI is considered as significant. This means that host and home state try to reach a joint decision and the home state CA sets up a collage of supervisors to facilitate cooperation
how do on the spot inspections work in a cross border situation?
A host state shall allow a home state CA to carry out on the spot checks of information and inspection of branches.
Host state CA has the right to carry out on the spot checks and inspections of branches from other states for reasons of financial stability
tell me about supervisory powers and penalties
CA’s shall be given all necessary supervisory powers to intervene in the activity of an institution, including
- power to withdraw an authorization
- impose requirements and restrictions
- impose penalties
What is the concept behind a consolidated supervision?
Under consolidated supervision, a parent company that owns multiple subsidiaries, such as banks, investment firms, or other financial entities, is subject to oversight by a single regulator or supervisory authority.
banking group called “ABC Financial Group,” which consists of a parent bank (ABC Bank) and several subsidiary banks operating in different countries. Under consolidated supervision, the regulatory authority would assess the overall risk profile of ABC Financial Group, considering the activities and exposures of all its subsidiaries.
