06.07.2016, 08:57
Regulator Assumes Supervision over Bank Holding Companies
OREANDA-NEWS. The Bank of Russia put forward measures which will allow it to protect financial activities of bank holding companies and financial holdings from risks arising in other activities carried out by these associations. Besides, the regulator will assume supervision over the so-called parallel banks and non-credit financial organisations – associations formally unrelated but having the same owners.
Plans to streamline regulation of bank holding companies and financial holdings, as well as associations of legal entities with participation of non-credit financial organisations are written down in the Consultative Report posted today on the Bank of Russia website for public discussion.
Even now the regulator assumes supervision not only over individual credit organisations, but over banking groups as well. At the same time, the Bank of Russia still lacks the powers to supervise bank holding companies and the so-called parallel banks and parallel non-credit financial organisations.
This creates the environment when the said associations have a possibility (and quite common use it) to structure their businesses in such a way that to bypass certain requirements, for example, to observe required ratios, to organise the internal control and risk management. Now that the regulation is missing, they mask their problems which threatens interests of both creditors and individual consumers of financial services.
The Bank of Russia finds it necessary to create an equal regulatory field and unify approaches to regulation and supervision over credit institutions, banking and financial groups and holdings. For financial groups and holdings which will also include parallel banks there will be established required ratios and requirements to risk and capital management, to business reputation of members of the board of directors and managers of parent organisations. Besides, such structures will have to set up a management company to separate financial activities from non-financial operations.
At the same time, the implementation of effective principles of supervision over associations of cross-border credit and other financial organisations requires regulatory changes.
Initiatives offered in the report are based on the analysis of the current Russian regulation and best international experience in regulation of activities of financial conglomerates and other similar associations. The public discussion is believed to generate an optimal and balanced approach to solution of the problems set.
Plans to streamline regulation of bank holding companies and financial holdings, as well as associations of legal entities with participation of non-credit financial organisations are written down in the Consultative Report posted today on the Bank of Russia website for public discussion.
Even now the regulator assumes supervision not only over individual credit organisations, but over banking groups as well. At the same time, the Bank of Russia still lacks the powers to supervise bank holding companies and the so-called parallel banks and parallel non-credit financial organisations.
This creates the environment when the said associations have a possibility (and quite common use it) to structure their businesses in such a way that to bypass certain requirements, for example, to observe required ratios, to organise the internal control and risk management. Now that the regulation is missing, they mask their problems which threatens interests of both creditors and individual consumers of financial services.
The Bank of Russia finds it necessary to create an equal regulatory field and unify approaches to regulation and supervision over credit institutions, banking and financial groups and holdings. For financial groups and holdings which will also include parallel banks there will be established required ratios and requirements to risk and capital management, to business reputation of members of the board of directors and managers of parent organisations. Besides, such structures will have to set up a management company to separate financial activities from non-financial operations.
At the same time, the implementation of effective principles of supervision over associations of cross-border credit and other financial organisations requires regulatory changes.
Initiatives offered in the report are based on the analysis of the current Russian regulation and best international experience in regulation of activities of financial conglomerates and other similar associations. The public discussion is believed to generate an optimal and balanced approach to solution of the problems set.
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