tailieunhanh - Lecture Legal and regulatory aspects of banking supervision – Chapter 17

The following will be discussed in this chapter: Supervisory methodologies, off site surveillance, organization issues, staffing and compensation, career path, training, inaction in restructuring banks. | MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION OSMAN BIN SAIF Session: SEVENTEEN Summary of last session SECTION 4 Banking Supervision Bank Supervision Models Harmonization and Convergence of Bank Supervision Supervisory Methodologies On site Examination 2 Agenda of this session Supervisory Methodologies Off site Surveillance Organization Issues Staffing and Compensation Career Path Training Inaction in Restructuring Banks 3 OFF-SITE SURVEILLANCE An off-site surveillance capability provides an important complement to on-site examinations by providing early warning of actual or potential problems and a means for monitoring and comparing financial performance. 4 OFF-SITE SURVEILLANCE (Contd.) However, off-site surveillance should not be viewed as a means to replace on-site examination as the primary form of supervision in a developing country. The quality of information and integrity of data provided by banks in all countries must be verified. 5 OFF-SITE SURVEILLANCE . | MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION OSMAN BIN SAIF Session: SEVENTEEN Summary of last session SECTION 4 Banking Supervision Bank Supervision Models Harmonization and Convergence of Bank Supervision Supervisory Methodologies On site Examination 2 Agenda of this session Supervisory Methodologies Off site Surveillance Organization Issues Staffing and Compensation Career Path Training Inaction in Restructuring Banks 3 OFF-SITE SURVEILLANCE An off-site surveillance capability provides an important complement to on-site examinations by providing early warning of actual or potential problems and a means for monitoring and comparing financial performance. 4 OFF-SITE SURVEILLANCE (Contd.) However, off-site surveillance should not be viewed as a means to replace on-site examination as the primary form of supervision in a developing country. The quality of information and integrity of data provided by banks in all countries must be verified. 5 OFF-SITE SURVEILLANCE (Contd.) In developing countries, the quality of information is frequently incomplete and inaccurate. Often, banks do not have the internal accounting and control systems to ensure timely and accurate preparation of information. 6 OFF-SITE SURVEILLANCE (Contd.) Therefore, in most cases, it would be inappropriate to rely on off-site surveillance as more than a complement to on-site examinations. 7 OFF-SITE SURVEILLANCE (Contd.) In most developing countries, prudential reports, which form the basis for most off-site surveillance activities, are frequently limited to those concerning liquidity, reserve requirement computations, and credit guidelines. 8 OFF-SITE SURVEILLANCE (Contd.) Analysis often consists of simply checking compliance with certain balance sheet ratios. Rarely is information gathered to meaningfully appraise risk. 9 OFF-SITE SURVEILLANCE (Contd.) For off-site surveillance and early warning analysis to be effective, prudential reports must move away from statistical inputs, .