Chapter 7: National and International Cooperation
supervising the international bank’s main operations/head office has access to data on all the bank’s operations, both at home and abroad. Conversely, the host supervisor, that is, the government agency supervising at least some of the international bank’s foreign branches or subsidiaries, might require access to information from the head office. The standards on international cooperation, then, concern access to information by both the home and host supervisors, and the conditions in which information is provided. BCP 25 deals more specifically with home-host supervisory relationships. In dealing with material cross-border operations of its banks, a supervisor should identify all other relevant supervisors and should establish informal or formal arrangements (such as memoranda of understanding) with them for appropriate information sharing. The information would concern the financial condition and performance of such operations in the home or host country, and would be shared on a confidential basis. Where agreements are reached on formal cooperation arrangements, the relevant banks and banking groups should be informed. A home supervisor should provide a host supervisor with information about • The bank or banking group, so as to allow a proper perspective of the activities conducted within the host country’s borders, • The specific operations in the host country, and • Significant problems arising in the head office or elsewhere, where appropriate, if these might have a material effect on the safety and soundness of subsidiaries or branches in the host countries concerned. A host supervisor should provide a home supervisor with information about • Material or persistent noncompliance with relevant supervisory requirements, • Adverse or potentially adverse developments in the local operations of a bank regulated by the home supervisor, • Adverse assessments of qualitative aspects of a bank’s operation, such as risk management and controls at the offices in the host country, and • Any material remedial action taken about the operations of a bank regulated by the home supervisor. In most circumstances, it will be necessary to exchange at least a minimum level of information between the home and host supervisors, but its frequency and scope will vary depending on its importance. To this end, the host supervisor will inform the home supervisor when the operations of the banking group are material to the financial sector of its country. Conversely, the home supervisor will inform the host supervisor when the operations of the host country’s banking groups are material to those of the home country. Foreign banks should be subject to prudential, inspection, and regulatory reporting requirements similar to those for domestic banks.
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