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and share supervisory tasks in ongoing supervision and in crisis situations. The NBS has the necessary supervisory tools and expertise not only to fulfill competently its task as the domestic institutions’ supervisor, but as well to efficiently support the consolidated supervisor to perform its tasks. While the NBS has the authority to supervise the overseas activities of locally incorporated banks, this is not presently of importance, given the lack of such activity. Local branches of foreign banks are, in principle, subject to the same prudential, inspection, and reporting requirements as domestic banks. However, most of the branches are of banks from other EU countries, and, therefore, only subject to the home supervisors prudential supervision according to the Single European Passport Regime.

Recommended Action Plan


The NBS is compliant or largely compliant with all the Basel Core Principles

but, in the opinion of the assessors, the supervisory system would benefit from the additional measures listed below.

Table 4. Recommended Action Plan to Improve Compliance of the Basel Core Principles

Reference Principle CP6. Capital Adequacy

CP9. Problem Assets, Provisions, and Reserves

CP16. Interest Rate Risk in the Banking Book

CP17. Internal Control and Audit

Recommended Action

Provide clear statutory power to NBS to impose additional regulatory capital requirements to deal with particular risk profiles or to reduce regulatory capital (e.g., for non-arm’s length exposures or “hidden” losses, or other situations where “prudential filters” are required) on a case-by-case basis. It is understood that such power will be granted as a result of the transposition of the CRD into Slovak law. However, it has to be closely monitored whether such power is sufficiently defined to avoid legal challenges and whether it is executable in practice. Reduce ambiguity from the lack of a clear segregation of responsibility between the NBS and the external auditors. Make a clear distinction between capital provisions/reserves for accounting and regulatory purposes. Closely monitor the effect of IFRS on provisioning. Consider addressing interest rate risk in the banking book explicitly through secondary legislation. Provide the NBS power to remove persons who are subject to fit-and-proper testing according to the Banking Act to address prudential concerns resulting from such persons’ integrity or performance of their duties immediately.

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