Banking Supervision and Policy
• Trading environment
• Service Standards
• Risks
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Principal reasons for the banking crisis
• Low Capital
• Weak funding structures
• Poor Lending
• Poor trading investments
• Misguided mergers and
acquisitions
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0
20
40
60
80
100
120
140
160
2005 2006 2007 2008 2009 2010 2011 2012 2013 Q3
Average net capital per subsidiary bank
Number of Subsidiary banks Average net capital per subsidiary bank (£m)
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0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 Q3
Total Assets held by Guernsey banks
Other assets
Swiss fiduciary deposits
£mn
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0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
2004 2005 2006 2007 2008 2009 2010 2011 2012
Pre-tax return on Assets % - all licensees
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0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
2004 2005 2006 2007 2008 2009 2010 2011 2012
Cost / Income Ratio % - all licensees
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Supervision
• ICAAP reviews
• Credit on-site reviews
• Prudential meetings
• AML/CFT reviews
• Colleges
• Tri-party meetings with
Crown Dependencies
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Supervision
• ICAAP reviews • Credit on-site reviews
• Prudential meetings
• AML/CFT reviews
• Colleges
• Tri-party meetings with Crown Dependencies
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20%
47%
13%
20%
ICG up to 130%
ICG 130% to 149%
ICG 150% to 169%
ICG 170% plus
Commission prescribed minimum Individual Capital Guidance
for Guernsey subsidiary banks - December 2012
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Supervision
• ICAAP reviews
• Credit on-site reviews • Prudential meetings
• AML/CFT reviews
• Colleges
• Tri-party meetings with Crown Dependencies
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Bank Credit Reviews
• Collateralised
• Controls
• Managed
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Supervision
• ICAAP reviews
• Credit on-site reviews
• Prudential meetings • AML/CFT reviews
• Colleges
• Tri-party meetings with Crown Dependencies
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Prudential Meetings
• 11 prudential meetings
• Quarterly meetings with
UK clearers
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Supervision
• ICAAP reviews
• Credit on-site reviews
• Prudential meetings
• AML/CFT reviews • Colleges
• Tri-party meetings with Crown Dependencies
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AML/CFT
• Monitoring
remediation activities
• Financial Crime
Division
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Supervision
• ICAAP reviews
• Credit on-site reviews
• Prudential meetings
• AML/CFT reviews
• Colleges • Tri-party meetings with Crown Dependencies
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Supervision
• ICAAP reviews
• Credit on-site reviews
• Prudential meetings
• AML/CFT reviews
• Colleges
• Tri-party meetings with
Crown Dependencies
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Meetings with Crown Dependencies
• Three tri-party meetings in 2013
• Basel III requirements
• UK Banking Reform
• Mini-college meetings
• JFSC home supervisor prudentials
• PRA home supervisor prudential
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Policy
• Large exposures
• Basel III
• Basel Core Principles
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Large Exposures
• Consultation paper – March 2013
• Acceptance that current policy out of date
• Commission has taken note of responses
• Feedback paper imminent
• Effective date July 2014
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Basel III: Capital Adequacy
• Crown Dependency consistent approach
• Discussion Paper September 2012
• General consensus to adopt Basel III
• Timelines
• Transition before end of 2015
• ICAAP
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Basel Core Principles
• Revised core principles
• Gap analysis
• Action plan
• New Corporate Governance core principle
• Financial stability
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Risks
• Upstreaming
• Miss-selling
• Low Interest Rate Environment
• Credit
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Probability Risk and Impact SysteM – PRISM
• Impact
• Change in supervision
• Approach and intensity
• Risk Governance Panels
• Two-way process
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Risks
• Upstreaming
• Miss-selling
• Low Interest rate environment
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Credit
• Concentration risk
• Central London
• LTVs
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