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Committees at the Bank for International Settlement (BIS)

The Supervision of Cross-Border Banking

This document reproduces a report prepared by a working group consisting of members of the Basle Committee on Banking Supervision and the Offshore Group of Banking Supervisors which presents a number of proposals for overcoming the impediments experienced by banking supervisors in conducting effective supervision of the cross-border operations of international banks. The working group was established in order to consider a number of problems which had been experienced in the implementation of the Basle Committee's report "Minimum Standards for the Supervision of International Banking Groups and their Cross-border Establishments" (July 1992) and to suggest practical solutions. The resulting report contains twenty-nine recommendations which are set out in Section II. These recommendations are aimed at improving and facilitating prudential supervision of banking risks with a view towards ensuring the soundness of individual credit institutions and the stability of the financial system as a whole.

The Basle Committee and the Offshore Group have endorsed the report and their members have undertaken to use their powers to work towards the implementation of its recommendations. The Basle Committee believes that the working group has made great progress in dealing with a number of difficult issues. The framework designed, if fully implemented as intended, should offer major enhancements in the supervision of multinational banking groups. However, implementation of the programme set forth in the document will have to be closely monitored, and it is possible that further changes may be needed in the future.

In June 1996, the report was discussed at the Ninth International Conference of Banking Supervisors in Stockholm attended by supervisors from one hundred and forty countries. Following detailed discussion of the contents of the report, Conference participants, in their capacity as bank supervisors, endorsed the principles set out in the report and undertook to work towards their implementation in national centres. Regional groups of banking supervisors will carry on the discussions about the implementation of the report. It is intended that a survey should be conducted in advance of the next ICBS in 1998 to monitor the progress made in overcoming obstacles to effective consolidated supervision.

Introduction and Background

Summary of Conclusions and Recommendations

Improving the Access of Home Supervisors to Information Necessary for Effective Consolidated Supervision

Ensuring that All Cross-Border Banking Operations are Subject to Effective Home and Host Supervision

Annex A: Standard Procedures for Cross-Border Inspections

Annex B: Effective Consolidated Supervision

Annex C: Offshore Group of Banking Supervisors: On-site Examination Checklist

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