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Cross-Border Supervisory Cooperation: Regional Developments. Delia Cárdenas Superintendent of Banks of Panama Washington, D.C. June 7, 2006. Contents. Regional Initiatives Cooperation in Cross-Border Supervision Panamanian Perspective Regional Progress. -2-.

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Cross-Border Supervisory Cooperation: Regional Developments

Delia Cárdenas

Superintendent of Banks of Panama

Washington, D.C. June 7, 2006

  • Regional Initiatives
  • Cooperation in Cross-Border Supervision Panamanian Perspective
  • Regional Progress


Cross-Border Banking Supervisory Cooperation:Regional Initiatives
  • Central American Council of Superintendents of Banks, Insurance and Other Financial Institutions (CCS):
    • Honduras, Guatemala, El Salvador, Nicaragua, Costa Rica DominicanRepublic and Panama.

- 3 -

Strengthening Cooperation among its Members - Council's Objectives-
  • Encourage signing of MOUs
  • Periodic Meetings
  • Technical Committees
  • Technical Assistance and execution of Internships in current topics

- 4 -

Strengthening Cooperation among its Members - Council's Objectives-

Work Meetings among Superintendents of the Region and Financial Groups that have a significant presence in the region.

- 5 -

Cooperation in Cross-Border SupervisionPanamanian Perspective

2000 Cross-Border Inspections began

Central America, Cayman Islands, Bahamas andColombia.

At this time, the Financial System has the presence of five (5) regional groups,

Whereof four (4) are the main ones in

the region by asset size in the Region.


Cross-Border SupervisionPanama : Resolution 1-2005

Home Country Supervision: Panamanian banks and the economic groups of which they are part, which perform the consolidation of their economic group in the Republic of Panama.

Host Country Supervision: Foreign

bank branches and subsidiaries.

- 7 -

Supervision Process -On Site-
  • Annual Programming
  • Planningand Pre-Inspection Meeting
  • Field Work
  • Post-Inspection Meeting
  • Producing, signing and delivering the reportto the bank
  • In case of supervision as host country and in light of the existing MOUs, the report is sent to the home country supervisor


Supervision Process-Home Country Supervisor visits Host Country-
  • Coordination between both regulators to set probable visit date.
  • Note requesting information.
  • Liaison staff appointed.
  • On site Supervision.
  • Preparing executive report that will be sent to the Home Country Supervisor.


Supervision Process - Special Situations that require Cooperation between Supervisors -

Requests on site Supervision

Home Country Supervisor

Host Country Supervisor

on site Supervision

Supervised Bank


Regional Cooperation in the Cross-Border Supervision Process
  • Cooperation between supervisors, through notes, faxes, phone calls, e-mails
  • Queries about Banks' Status
  • Opinion regarding new bank applications
  • Non-objection to perform the Cross-Border Inspection


Regional Cooperation in the Cross-Border Supervision Process
  • Cross information requirements in cases that could affect the region
  • Delivery of Inspection Reports
  • Work Visits
  • Certification of certain bank information with the purpose of complying with the acquisition procedures (stocks).


Regional Cooperation in Cross-Border Supervision-Requested by Panama-
  • Composition of the Financial Group
  • Financial Indicators
  • Investments classified by category
  • Loan Portfolio
  • Notice of substantial changes in business strategies


Difficulties foundOn Site Banking Supervision Process
  • In cases when the Home Country Supervisor fails to establish prudential limits on the parent bank concerning the financing they could receive from the branch or subsidiary located abroad, the Host Country Supervisor could have difficulties acquiring the operative part.

- 15 -

Difficulties found - On site Banking Supervision Process-
  • Obtaining the compliance certification
  • Documentation of banking operations facing the on site non-availability thereof
  • Obtaining information from banking groups
  • Technological platform located in the home country or in a third jurisdiction

- 16 -

Difficulties found- Inquiry to Basel Committee-
  • Situations of greater risk of a banking group in the host country and not in the home country.
  • We have raised the inquiry regarding the position of the Home Country Supervisor in those cases, and of the need for a Leader Supervisor, and of which would be his role within the Cross-Border Supervision.

- 17 -

Cooperation in Cross-Border SupervisionTechnical Assistance 2005
  • Banking Executive Forum (Balance Scorecard) for the Consolidated and Cross-Border Supervision (Toronto International Leadership Centre)
  • Comparative Study of the Regional Financial Sector of Central America, Panama and the Dominican Republic (International Monetary Fund)

- 18 -

Cooperation in Cross-Border Supervision Technical Assistance 2006
  • Financial Instruments, Fair Value and Credit Risk Seminar, with the Technical Assistance of Bank of Spain and the Inter-American Development Bank (IDB)

- 19 -

Cooperation in Cross-Border SupervisionTechnical Assistance 2006
  • Comparative Study of the Legislations of the Council member countries, emphasizing the Resolution of Banks in Crisis (World Bank)
  • Consolidated and Cross-Border Supervision Project coordinated by the International Monetary Fund with Spanish Cooperation Agency funds.

- 20 -

Basel II Technical Committee- 2003 Central American Council-
  • Technical forum for studies and assessment on the main issues of the New Capital Agreement
  • Work Schedule
  • Implementation Matrix
  • The progress degree is different for each country

- 21 -


A regional consolidated supervision framework, with prudential attributes and measures for an effective supervision, with international standards, where dialog and communication are applied as the initial premise, while developing the international cooperation between the Home Country Supervisor and the Host Country Supervisor is fundamental to ensure the health of the regional financial systems.