Basel Committee Report Endorses Reg Burden Relief
Volume 8, Number 3
March 26, 2019
Basel Committee Report Endorses Reg Burden Relief
The Basel Committee on Banking Supervision has issued a new survey report on proportionality in regulation that should help reduce compliance burdens on credit unions and other community-based financial institutions. Proportionality in regulation allows safety and soundness regulators to adopt less stringent regulatory requirements, such as simplified regulatory capital rules or liquidity rules, for less complex depository institutions such as credit unions.
This new Basel Committee report responds to World Council of Credit Unions’ advocacy in favor of greater proportionality in regulation by surveying 45 jurisdictions on how they have deviated from international standards to promote regulatory burden relief. The Basel Committee found that regulators had adopted some form of less burdensome regulations in 85 percent of Basel Committee jurisdictions and 75 percent of the total jurisdictions surveyed.
These examples of regulatory proportionality can be cited by advocates as examples of how to reduce regulatory burdens on credit unions in their home jurisdictions.
World Council and representatives from its members will be meeting with Basel Committee Deputy Secretary General Neil Esho on March 29th at the Bank for International Settlements in Basel, Switzerland to urge the Committee to follow up its regulatory proportionality survey report with further guidance on how regulators can implement proportional regulations for credit unions and other less-complex financial institutions.
Canadian CU Regulator Appointed Basel Committee Secretary General
The Basel Committee on Banking Supervision has appointed Carolyn Rogers as its next Secretary General effective August 14, 2019. Ms. Rogers currently serves as Assistant Superintendent of the Regulation Sector at the Office of the Superintendent of Financial Institutions (OSFI) of Canada, which regulates federal credit unions. Prior to joining OSFI, she served as Superintendent and Chief Executive Officer of the Financial Institutions Commission (FICOM), the credit union regulatory agency for British Columbia.
She is the first Canadian to be appointed to the position of Basel Committee Secretary General. Ms. Rogers will replace William Coen who has served as Secretary General of the Basel Committee for the past five years.
World Council Urges Proportional Regs to Increase SME Lending
World Council of Credit Unions has urged the Financial Stability Board (FSB) to continue efforts to reduce regulatory burdens on lending to small and medium-enterprises (SMEs). World Council’s comments came in response to the FSB’s request for Feedback on the Effects of Financial Regulatory Reforms on SME Financing as part of the agency’s evaluation of how post-financial crisis regulatory reforms have affected SME lending.
World Council’s comments argued that the additional compliance burdens created by post-crisis regulations designed for large, internationally active banks have often filtered down to smaller, less-complex institutions such as credit unions. Our comments also presented data showing that SME lending by credit unions has been negatively impacted by these rules.
World Council Urges Basel Committee to Limit Disclosure Reporting Burdens
World Council of Credit Unions has urged the Basel Committee on Banking Supervision to make the use of daily averages in disclosures optional for non-complex depository institutions such as credit unions. World Council’s comments came in response to the Committee’s consultative document Revisions to Leverage Ratio Disclosure Requirements that seeks to address the issue of “window dressing.” Window dressing occurs when banks reduce their balance sheets for end-quarter disclosure purposes so that they can present higher-looking capital ratios to regulators and investors.
World Council’s comments argued that credit unions do not typically engage in this “window dressing” behavior and that requiring community-based financial institutions to use daily averages may result in disproportionate reporting burdens. We also noted that the Australian Prudential Regulation Authority (APRA) has proposed exempting community-based depository institutions from calculating daily averages for disclosure purposes.
Our comments did urge the Committee, however, to give credit unions and other community-based depository institutions the option of using daily averages for reporting purposes. Credit unions using daily averages typically results in their reporting higher leverage ratios compared to end-quarter figures because many of their members make large deposits at the end of the financial quarter.
Michael S. Edwards
Sr. VP & General Counsel
World Council of Credit Unions (WOCCU)
99 M St., SE, Washington, DC 20003 USA
Office: +1-202-508-6755 | Mobile: +1-215-668-5240
email@example.com | www.woccu.org
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