this project was funded by the european union

This project was funded by the European Union

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BANK SUPERVISION AND ACCOUNTING

Bank Supervision and Accounting

An overview of Project results and

possible recommendations

XVth International 9 June 2006 Richard Gregson Banking Congress

MAIN CHARACTERISTICS OF THE PROJECT

Country – beneficiary: Russian Federation; Partner of the Project – Central Bank of the Russian Federation; Funded by: European Union; Project Duration – 2 years to September 2005 (extended until 31 December 2005).

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

THE PROJECT CONSORTIUM

•PricewaterhouseCoopers•The Institute of Chartered Accountants in Ireland•Credit Agricole Consultants

THE PROJECT BENEFICIARY

The Central Bank of the Russian Federation, specifically, the Banking Regulation and Supervision Department

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

PROJECT OBJECTIVES

To facilitate further improvement of efficiency and

effectiveness of supervision over the activities of financial

institutions and creation of a better basis for the

development of the banking sector in Russia.

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

PROJECT COMPONENTS

• Application of IFRS Approaches in Prudential Reporting

• Supervision and prudential reporting

• Pilot banks

• Awareness and Training

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

KEY RESULTS

1. Development of an new architecture for prudential reporting and supervision methodology

2. Development of new and revised reporting forms and subsequent testing in pilot banks

3. Provision of recommendations for key legislative changes required to bring the legislative base of banking supervision in Russia into conformity with international practice

4. Provision of workshops, study tours and consultations to Central Bank supervision employees

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

SOME KEY RECOMMENDATIONS

• Restructure the architecture of the reports submitted by banks

• Move to risk-focused supervision

• Improve infrastructure within the function of supervision

• Enhance the approach to analyzing the reports submitted to the CBRF

• Improve the level of coordination between on and off-site supervision

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

SOME KEY RECOMMENDATIONS

• Restructure the architecture of the reports submitted by banks

• Move to risk-focused supervision

• Improve infrastructure within the function of supervision

• Enhance the approach to analyzing the reports submitted to the CBRF

• Improve the level of coordination between on and off-site supervision

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

PRINCIPLES OF PROPOSED NEW ARCHITECTURE

1. IFRS basis

2. Prudential specificities

3. International practice

4. Russian environment

5. Differentiated reporting

6. Dynamic information

7. Periodicity of reports

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

THE BASIS OF THE PROPOSED ARCHITECTURE

1. Activity

2. Risks

3. Financial Structure

4. Profitability

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress

WHERE TO NEXT?

• Analysis and implementation

• Phased convergence with the principles of Basle II by 2009/ 2010

BANK SUPERVISION AND ACCOUNTING

XVth International 9 June 2006 Richard Gregson Banking Congress