LONDON, Sept 24 Citigroup, ING
and other cross-border financial groups will have to assess
risks across their different operations under tougher
supervisory guidelines published by global regulators on Monday,
aiming to plug gaps highlighted by the financial crisis.
Such firms, known as financial conglomerates because they
typically span borders and cover banking and insurance, can be
harder for supervisors to get a clear snapshot of, in terms of
their risks and capital requirements.
Three regulatory bodies on Monday published revised
principles that will require more transparency by conglomerates,
such as giving supervisors more information about any
off-balance sheet vehicles.
The Basel Committee on Banking Supervision, the
International Organisation of Securities Commissions and the
International Association of Insurance Supervisors pledged to
work more closely together to avoid supervisory blind spots.
"The global adoption of these supervisory principles and
their application in proportion to the risks posed will help
strengthen the global financial system," said Therese Vaughan,
who chairs the joint forum which represents the three bodies.
"At a minimum, the principles should be applied to large
internationally active financial conglomerates," said Vaughan,
who is also chief executive of the U.S. National Association of
The revised principles put a stronger emphasis on
supervisors and conglomerates identifying risks, performing
group-wide stress tests and bringing opaque off-balance sheet
activities within the scope of supervision.
A lead group-wide supervisor should also be clearly
identified to make sure the institution's capital buffers are
The bulk of the world's banking, securities and insurance
markets belong to the three regulatory bodies whose membership
is conditional on applying agreed principles.