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CEBS Progress Summary

Introduction

2007 marks a significant milestone for the Committee of European Banking Supervisors (CEBS), as it completes the first stage of its work in establishing a new capital regime for EU credit institutions and investment firms. CEBS has now shifted its focus from the design phase to the implementation phase under the Capital Requirements Directive (CRD). This report evaluates CEBS' performance, drawing on feedback from stakeholders and aiming to improve its effectiveness and efficiency in the future.

Core Content and Key Messages

CEBS has received largely positive feedback from the financial services industry and EU authorities regarding its performance and work. The majority of respondents are either happy or fairly satisfied with CEBS' contributions to the EU financial market integration and supervisory convergence.

However, several nuanced issues have emerged:

• Room for Improvement: While CEBS is seen as performing well, there is general agreement that there is scope for enhancement.
• Impact on Convergence: Some stakeholders believe CEBS has not sufficiently influenced EU-wide convergence, though this is acknowledged as an early stage in the committee's development.
• Consultation and Transparency: There is criticism regarding the level of stakeholder engagement in the consultation process and the lack of transparency in decision-making. CEBS is committed to improving these aspects.
• Detail vs. Principles: While the industry is divided on the level of detail in CEBS' guidelines, there is agreement that the level of detail is appropriate for fostering convergence and a level playing field.
• Cross-sectoral Cooperation: CEBS aims to strengthen cooperation with other Level 3 committees (CESR and CEIOPS) to address cross-sectoral issues and promote a unified supervisory culture.

Main Objectives of CEBS

CEBS has three main objectives as set by the European Commission:

1. Contributing to Effective EU Legislation: Advice to the Commission

CEBS has provided technical advice to the European Commission, though the frequency and depth of such input have been limited compared to other committees. The feedback indicates that CEBS' advice is generally well-received, but the consensus-based decision-making process may hinder the development of optimal EU-wide solutions.

Recommendations for Improvement:

• Broaden perspectives to consider broader EU interests.
• Improve impact assessments and coordination with market participants.
• Ensure better alignment between Level 2 advice and Level 3 guidelines.
• Respect the principle of proportionality and avoid overstepping Level 1 and 2 decisions.

2. A Consistent Approach to EU Banking Supervision: Level 3 Guidelines

CEBS has developed a range of Level 3 guidelines to support the implementation of the CRD. These guidelines aim to promote convergence and consistency across national supervisory practices. While many industry respondents believe these guidelines will have a positive impact, others feel that they are too detailed or lack a clear principles-based approach.

Recommendations for Improvement:

• Reconsider the balance between detail and principles in guidelines.
• Focus on ensuring convergence in day-to-day practices.
• Develop a peer review mechanism to assess the implementation of guidelines.
• Improve the clarity and precision of guidelines where necessary.

3. Promoting Cross-sectoral Cooperation

CEBS is actively working to enhance cooperation with other regulatory bodies to address cross-sectoral issues and promote a more integrated supervisory approach. This includes working with CESR and CEIOPS under a joint Protocol.

Recommendations for Improvement:

• Continue to coordinate and cooperate with non-EU supervisors.
• Strengthen dialogue and collaboration with other Level 3 committees.
• Hold annual conferences to foster shared understanding and cooperation.

Areas for Improvement

Communication and Consultation

CEBS has made efforts to communicate effectively with stakeholders, but there is a need for more direct engagement with the industry and trade associations. The committee should also enhance transparency by publishing more information on its processes and decisions.

Work Programme and Timelines

Some respondents believe that CEBS' work programme is too ambitious and that the timelines are too tight, leading to potential quality issues. A more realistic and prioritized approach is needed, with a focus on high-impact activities.

Prioritization of Tasks

There is a call for a more bottom-up approach to task prioritization, involving field supervisors and market practitioners. CEBS should ensure that its priorities align with national priorities to avoid divergent approaches.

Conclusion

CEBS has made significant progress in its first three years, contributing to the development of a new capital regime and promoting supervisory convergence. However, there are areas that require further attention, particularly in improving stakeholder engagement, enhancing transparency, and balancing the principles-based approach with necessary detail. The committee is committed to addressing these concerns and will continue to refine its approach to better meet the needs of the financial sector and EU authorities.