MADISON, Wis.—In follow-up to a meeting between the Basel Committee on Banking Supervision and representatives of the World Council of Credit Unions, WOCCU has written to the Committee seeking further guidance on “when less-complex regulatory approaches can be warranted for credit unions.”
In its letter, WOCCU said it urged the Basel Committee to issue a set of high-level principles or weighing-factors national- or regional-level regulators can consider, noting many policymakers continue to feel obligated to apply Basel III and other Basel Committee standards to non-complex, purely domestic deposit-taking institutions such as credit unions.
Basel III is the global financial regulatory framework adopted by the Committee in response to the financial crisis of 2007-09, which aims to strengthen the regulation, supervision and risk management of banks.
In the letter, WOCCU SVP-General Counsel Michael Edwards stated the Basel III framework is intended only for internationally-active banks.
High Level Principles
World Council asked the Basel Committee to consider issuing high-level principles or weighing factors for considering proportionality, including:
- Whether the institution has cross-border operations
- The complexity of the institution's assets
- The asset-size of the institution
- The institution's interconnectedness to the financial system
- The degree to which the institution reports to multiple prudential supervisors
- The extent and nature of the institution's off-balance-sheet exposures
- The mix of business activities of the institution, such as whether it engages in community banking, commercial banking and/or investment banking
Public Consultation Urged
In addition, World Council asked the Basel Committee to welcome public consultation on the issue from a range of smaller banking institutions, such as credit unions, joint-stock community banks, savings banks, building societies and other cooperatives.
The WOCCU letter follows earlier efforts calling for proportionality to the Basel Committee, as CUToday.info reported here.