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Summary of Deutsche Bank's Response to CEBS Consultation Paper on Colleges' Operational Functioning (CP 34)

Core Content

Deutsche Bank AG has responded positively to the CEBS consultation paper on the operational functioning of supervisory colleges, supporting the proposed guidelines as a foundation for enhancing supervisory convergence and efficiency in Europe. The bank emphasizes the importance of moving towards a more formalized and structured supervisory framework, especially in light of the European Commission's draft Omnibus Directive. Deutsche Bank advocates for greater integration between European and global supervisory arrangements, despite the lack of a unified global legal framework.

Main Views

• Support for CEBS Guidelines: Deutsche Bank aligns with CEBS' thinking on the need for more formalized and efficient supervisory colleges.
• Role of EBA: The bank supports the creation of the European Banking Authority (EBA) and expects it to play a key role in monitoring and promoting supervisory convergence.
• Consolidating Supervisor: The consolidating supervisor should serve as the central leader and point of contact for the college, ensuring streamlined and coordinated supervision.
• Integration of Global and European Frameworks: Deutsche Bank believes that global and European supervisory frameworks must be integrated, with key non-EEA supervisors involved in core college discussions to ensure a comprehensive risk assessment.
• Information Sharing and Confidentiality: While supporting the need for information exchange, the bank raises concerns about the inclusion of CEBS in meetings involving confidential data, emphasizing the need for strict confidentiality protocols.

Key Information

Section 1: Operational Organisation of Colleges

• Core College: Deutsche Bank supports the concept of a core college for complex groups, with clear roles and responsibilities.
• General College: The general college should be used for broader discussions, with the consolidating supervisor presenting core decisions to it.
• Non-EEA Supervisors: The bank suggests that non-EEA supervisors should be included in core college discussions, not just general ones, to avoid risk blind spots and duplication of supervisory actions.

Section 2: Membership and Participation in Colleges

• Host Supervisors: Host supervisors of significant EEA branches should be involved in college discussions, particularly in emergency planning.
• Non-EEA Membership: Membership of non-EEA supervisors should be determined by the consolidating supervisor, considering the relevance of the entity and confidentiality equivalence.
• Bilateral Agreements: The bank proposes that bilateral agreements between the consolidating supervisor and non-EEA supervisors could help address confidentiality concerns.

Section 3: Governance of the Colleges

• Consolidating Supervisor's Role: The consolidating supervisor plays a central role in ensuring governance and coordination of the college.
• Consistency Across Institutions: The guidelines are seen as helpful in promoting consistency in the use and structure of colleges across different institutions.

Section 4: Information to CEBS

• Observer Role: CEBS should be invited as an observer to college meetings, with access to relevant information for supervisory convergence.
• Confidentiality Considerations: The bank raises concerns about the inclusion of CEBS in meetings involving confidential data, suggesting the need for careful handling of such information.

Chapter 2: Exchange of Information and Communication

• Proportionality: The bank supports the proportionate approach to information exchange and the central role of the consolidating supervisor.
• Standardized IT Infrastructure: Deutsche Bank recommends the development of a standardized IT platform at the EU level to support information exchange within colleges.

Chapter 3: Voluntary Sharing and Delegation of Tasks

• Trust and Convergence: The bank supports the idea of voluntary task sharing and delegation as a way to build trust and reduce supervisory duplication.
• Need for Binding Framework: While legal limitations prevent a more binding approach, the bank emphasizes the importance of promoting such practices.

Chapter 4: Joint Decision on Model Validation

• Core College Decision: The core college should make the final decision on model validation, with the consolidating supervisor presenting it to the general college.
• EBA Role in Disputes: Deutsche Bank supports placing the final decision on disputes in the hands of the EBA under the proposed Omnibus Directive.

Chapter 5: Joint Decision on Risk-Based Capital Adequacy

• Seniority of Participants: The bank appreciates CEBS' emphasis on the importance of appropriate seniority in college meetings to ensure effective decision-making.

Chapter 6: Macro-Prudential Risks

• Macroprudential Assessment: Colleges should assess macroeconomic and financial developments, as well as sectoral vulnerabilities, to identify systemic risks.
• Avoiding Duplication: The bank suggests clarifying the process when college assessments conflict with those of the ESRB or other macroprudential bodies.

Chapter 8: Emergency Situations

• Crisis Management Coordination: Colleges should act as central coordinators for crisis management planning.
• Avoiding Unilateral Actions: The bank warns against fragmented supervisory actions that could lead to trapped capital and liquidity, undermining financial stability.

Conclusion

Deutsche Bank believes that the CEBS guidelines provide a solid foundation for improving the operational functioning of supervisory colleges in Europe. The bank supports the integration of global and European frameworks, the role of the consolidating supervisor, and the promotion of information sharing and supervisory convergence. However, it also highlights the need for careful handling of confidentiality, the inclusion of key non-EEA supervisors in core discussions, and the development of a standardized IT infrastructure to support college activities.