Bank Supervision. Presented by Vince Polizatto Overview of Financial Sector Issues and Analysis Workshop May 28, 2002. Why Do Banks Fail?. Bad management!!! Frequently evidenced by: Poor lending practices Concentrations of credit Insider abuse and lending to connected parties
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Presented by Vince Polizatto
Overview of Financial Sector Issues and Analysis Workshop
May 28, 2002
Prompt corrective action:
25 Basic Principles:
Suitable legal framework:
Other banking risks
Minimum capital requirements consist of:
The Accord will clarify the application of the capital standard and capture risks at every tier within a banking group:
The Accord will also clarify capital treatments for banks’ investments in:
For some sophisticated banks
Credit risk mitigation
Existing risks covered
Supervisors must identify and intervene in banks when falling capital levels raise concerns about the bank’s ability to withstand business shocks.
Banks should disclose all key features of the capital held as a cushion against losses, and the risk exposures that may lead to losses.
An effective supervisor, sound legal system, and strong accounting and auditing framework are essential to healthy banking systems and a robust economy.