Off-site monitoring is considered a routine operation at banking supervisory agencies around the world. However, just because it is routine does not mean that it is unimportant. This course will provide a new perspective on the tools and techniques of off-site monitoring in a risk-based supervision framework, emphasizing that analysts should utilize all available sources of information – not only regulatory reports submitted by the banks, but also the audited financial statements, Board minutes, reports of ratings agencies and securities analysts, and even media reports. Specific topics to be covered include: risk identification through level, trend, and peer group analysis; early-warning systems; the ideal relationship between off-site monitoring and on-site examination; the involvement of off-site analysts in determining the supervisory rating and preparing the supervisory plan; the legal and regulatory requirements on external auditors and the involvement of the banking supervisor in setting the scope and utilizing the results of the external audit; recent examples of poor performance of external auditors; and Pillar 3 disclosure requirements in Basel II / III. Case studies will test participants’ ability to identify risks from actual bank data.
Participants who complete this course will have a full understanding of risk identification using off-site tools; the knowledge to utilize the full range of information available to maintain a real-time understanding of the condition and performance of a bank; the ability to draw reasonable conclusions and propose supervisory actions from an early warning system; and an appreciation of the strengths and limitations of external audit.
The ideal participant will have at least two years’ experience in on-site examination and/or off-site monitoring at a banking supervisory agency. Participants must have at least a basic familiarity with bank financial statements (balance sheet, profit and loss and cash flow) and regulatory reports such as maturity gap reports for liquidity and/or interest-rate risk analysis and reports on FX-denominated assets and liabilities for FX risk analysis; concepts and reports on classified and non-performing loans; a basic understanding of the difference between stock indicators and flow indicators; and an appreciation for the need to annualize ratios to enable comparability of indicators measured over different time periods.
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