XN000022-1988-07-01 — Page 9

8

FRIDAY, JULY 1, 1988

DOWN

THAT BANKS COULD FIND HOWEVER, HE SAID, IN VIEW OF THE FACT THAT THEIR RATIOS MOVE UP AND

UNEXPECTEDLY FOR QUITE

REASONS OF "TRIGGER" RATIOS HAD BEEN OFTEN OUTSIDE THEIR CONTROL, A SYSTEM INTRODUCED WHICH WAS SET AT A SMALL MARGIN ABOVE THE MINIMUM RATIO.

OF

THIS LEVEL HE SAID WHEN AN INSTITUTION'S RATIOS DROPPED BELOW

OF IT WAS ASKED TO CONSULT THE OFFICE

THE COMMISSIONER

BANKING STEPS IT WOULD TAKE IN AS TO THE REASONS FOR THE CHANGE, AND WHAT ORDER TO AVOID A BREACH OF THE STATUTORY MINIMUM.

WITH A MEANS DO NOT FALL

IS TAKEN,

"THIS IS TO PROVIDE BOTH THE INSTITUTION AND US OF GUARDING AGAINST THE POSSIBILITY THAT CAPITAL RATIOS TO OR BELOW THE STATUTORY MINIMUM BEFORE REMEDIAL ACTION HE SAID.

SURE "IT IS INTENDED AS A HELPFUL TOOL FOR BOTH OF US, TO MAKE

BEFORE A LACK OF CAPITAL THAT A WARNING LIGHT WILL START FLASHING

* HE ADDED. BECOMES A POTENTIAL THREAT TO DEPOSITORS,

TURNING TO THE

RECENTLY

RELEASED

REPORT

OF THE SECURITIES INTEREST TO REVIEW COMMITTEE, MR NICOLLE SAID ANE AREA OF PARTICULAR

ROLE THE IMPORTANT

WHICH THE HIM HIGHLIGHTED BY THE COMMITTEE WAS

THE IN COORDINATING BANKING SUPERVISOR COULD HAVE

SUPERVISION OF

WHICH COMPRISED BOTH BANKING GROUPS

BANKING AND OTHER FINANCIAL

BUSINESSES.

FOCUSSED

HE SAID THAT AT PRESENT, THE SUPERVISION TENDED TO BE

ONLY LIMITED REGARD WAS ON THE INDIVIDUAL AUTHORISED ENTITIES, AND PAID TO THE REST OF THE GROUP OF WHICH AN INSTITUTION WAS PART.

INSTITUTIONS HAD

HE POINTED OUT THAT BANKS AND DEPOSIT-TAKING OF COURSE DIVERSIFIED INTO A RANGE OF DIFFERENT FINANCIAL ACTIVITIES,

THEY WERE AS A RESULT OF WHICH LARGER FINANCIAL GROUPS.

INCREASINGLY

BEING

LOCATED WITHIN

IN ONE PART OF THE OR DEPOSIT-TAKING

"IT FOLLOWS, THEREFORE, THAT A DISASTER GROUP COULD CAUSE A LOSS OF CONFIDENCE IN THE BANK COMPANY AND EVEN PRECIPITATE A WITHDRAWAL OF DEPOSITS.

HAVE A "IN MY VIEW IT IS MOST IMPORTANT FOR THE SUPERVISOR TO

GROUP BANKING

IN

ΤΟ ORDER

TAKE BROAD VIEW OF A

ACCOUNT OF THE BE APPARENT POTENTIAL RISKS WITHIN THE GROUP WHICH MAY OTHERWISE NOT TO HIM, HE SAID.

SAID

[

THE

THE

ON THE CONSOLIDATED SUPERVISION OF FINANCIAL GROUPS, MR NICOLLE

RECOMMENDED THAT COMMITTEE THE SECURITIES REVIEW COMMISSIONER OF BANKING SHOULD HAVE A PRIMARY ROLE IN SUPERVISING

DEPOSIT-TAKING COMPANIES CAPITAL ADEQUACY AND LIQUIDITY OF BANKS AND WHICH WERE ALSO LICENSED TO DEAL IN SECURITIES.

NUMBER

THE REPORT SUGGESTED THAT WHERE A

OF SUPERVISORY A GROUP IT AUTHORITIES WERE SUPERVISING DIFFERENT ACTIVITIES WITHIN

OVERALL VIEW OF THE WOULD BE IMPORTANT THAT SOMEONE SHOULD TAKE AN GROUP AS A WHOLE.

/"IN MOST