Banking Supervision and Policy - GFSC · Banking Supervision and Policy Jeremy Quick, ... Number of Subsidiary banks Average net capital per subsidiary bank ... • New Corporate

Banking Supervision and Policy

Jeremy Quick, Director

John Dunford, Deputy Director


• Trading environment

• Service Standards

• Risks

copyright of Guernsey Financial Services Commission


John Dunford, Deputy Director

Principal reasons for the banking crisis

• Low Capital

• Weak funding structures

• Poor Lending

• Poor trading investments

• Misguided mergers and

acquisitions



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Number of banking licensees


Staff numbers in Guernsey banks


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)


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


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


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


Supervision

• ICAAP reviews

• Credit on-site reviews

• Prudential meetings

• AML/CFT reviews

• Colleges

• Tri-party meetings with

Crown Dependencies


Supervision

• ICAAP reviews • Credit on-site reviews


• AML/CFT reviews

• Colleges

• Tri-party meetings with Crown Dependencies



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


Supervision

• ICAAP reviews

• Credit on-site reviews • Prudential meetings

• AML/CFT reviews

• Colleges



Bank Credit Reviews

• Collateralised

• Controls

• Managed


Supervision

• ICAAP reviews


• Prudential meetings • AML/CFT reviews

• Colleges



Prudential Meetings

• 11 prudential meetings

• Quarterly meetings with

UK clearers


Supervision

• ICAAP reviews



• AML/CFT reviews • Colleges



AML/CFT

• Monitoring

remediation activities

• Financial Crime

Division


Supervision

• ICAAP reviews



• AML/CFT reviews

• Colleges • Tri-party meetings with Crown Dependencies


Supervision

• ICAAP reviews



• AML/CFT reviews

• Colleges

• Tri-party meetings with

Crown Dependencies


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


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


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


Basel Core Principles

• Revised core principles

• Gap analysis

• Action plan

• New Corporate Governance core principle

• Financial stability


Risks

• Upstreaming

• Miss-selling

• Low Interest Rate Environment

• Credit


Probability Risk and Impact SysteM – PRISM

• Impact

• Change in supervision

• Approach and intensity

• Risk Governance Panels

• Two-way process


Risks

• Upstreaming

• Miss-selling

• Low Interest rate environment


Credit

• Concentration risk

• Central London

• LTVs


Conduct Unit


Documents

Banking Supervision and Policy - GFSC · Banking Supervision and Policy Jeremy Quick, ... Number of Subsidiary banks Average net capital per subsidiary bank ... • New Corporate