24th conference of banking supervisors from Central and Eastern Europe

Publication date: 19.04.2011


On 12- 13 April 2011, the 24th international conference of banking supervisors from Central and Eastern Europe (BSCEE) group was held in Tirana. This group was established in 1991 and its current members consist  of banking supervisory authorities from 21 countries of this region. In broader terms, this group serves to:

  • Promote a cooperation platform between banking supervisory units of its member states;
  • Provide the possibility to exchange supervisory experiences;
  • Ensure a high-level forum for discussions on technical issues.

The BSCEE chairmanship - which changes yearly - was assigned for the first time to Albania, entrusting it with the responsibility for the administrative and technical organisation of BSCEE 24th annual conference. Albania has been a member of the group since 1996 and is represented by the Bank of Albania, the country's sole supervisory authority.

In addition to participants from member states, special guests to the conference were renowned personalities, such as the Deputy Secretary General of the Basel Committee on Banking Supervision, EBRD Director for Financial institutions in Western Balkans, and Head of the Banking Groups Supervision Department at the Bank of Italy.

The conference, which served as a high-level forum for technical discussions, addressed two topics:

  • Role of the banking system and the supervisor in financial stability, and
  • Basel III: global regulatory standards on financial institutions capital adequacy and liquidity set out by the Basel Committee on Banking Supervision.

Governor of the Bank of Albania, Mr. Ardian Fullani, in his opening remarks, introduced a brief overview of economic and financial developments in Albania over the past two years, focusing on some concrete issues requiring more attention by the banking industry and the supervisory authority in the future. Governor Fullani underlined the importance of the central bank's preventive role, the need for improvement of macro-prudential policies, enhancement of the supervisors work, increased responsibility and accountability in managing banking institutions, the importance of the quality of banks managing structures and a prudent assessment of any banking innovative or new products. The above statements were in full coherence with issues raised during the proceedings of the conference and in line with conclusions by the participants.

Furthermore, in their presentations, the participants introduced developments and stances of respective institutions and contributed in discussions through their opinions and considerations. The discussions revealed that regardless of differences stemming from diversities in banking systems conditions, individual developments and banking supervision approaches, the conclusions fully converged.

The recent financial crisis showed the role of supervision and the need for improvements in different fields with a special focus on banks that have a systemic importance, stabilisation of banks financing conditions, improvement of risk management practices, enhancement of trust and confidence in the banking system, etc. Likewise, it was emphasised that beyond the role of the supervisory authority to maintain financial stability, it must be taken into consideration that the supervisor is not merely a regulator; implementation is as important as having an accurate and clear regulatory framework. Therefore, primary importance is given to the development of standards used for transparency and their application.

Despite their significant importance, global supervisory standards, a step in the right direction, are not a 'remedy' for any problem, especially in CEE countries.

Periodic stress tests on supposedly unfavourable economic and financial developments was another shared point of view of the participants, considering it a micro and macro prudential instrument.

Moreover, the need for adequate capital reserve was discussed broadly by the participants, who presented tendencies in their countries during the crisis years and respective measures taken to handle the situation.

It is worth mentioning that in spite of the improvement of the liquidity situation in markets, it remains one of the issues that requires constant attention, by both supervisors and other main stakeholders in the banking system. The philosophy of Basel III is to make banks more flexible and mitigate various economic shocks experienced recently, serving also as a drive to introduce micro and macro prudential reforms. However, regardless of the above, the conference concluded that liquidity and capital management should remain at national levels and that supervisory requirements for liquidity should be considered as minimal requirements and not as a recommended instrument for the administration of liquidity in a given bank.

The conclusions of this conference may be summarised as below:

  • Continue efforts to revitalise crediting, a development that supports not only clients and banks, but also the economy of the participating states, in the framework of a safe and healthy banking activity;
  • Define targeted improvement of credit quality, where application of envisaged and timely actions to execute the guarantees and other forms of collateral, in order to recover maximum values, as well as cooperation with clients facing temporary difficulties are considered essential under the circumstances when crediting faces a challenging environment;
  • Embrace a banking system culture based on best values of ethics, service and integrity, as a primary objective of managing structures, which would lead to increased responsibility in institutions management;
  • Avoid large concentrations and dependency on short-term financial funds with a priority to adopt prudent practices of risk management;
  • Increase the role of the central bank, in the framework of macro-prudential policies on supervision, especially as regards its preventive role. This implies the identification and creation of a set of measurable indicators, which, together, form warning systems on macro-prudential concerns, with the necessary stress tests, which need to be more frequent, real, and transparent as well as shared with supervisory units of the conference's member states.