Supervisory guidelines for identifying and dealing with weak banks

The Basel Committee is publishing for comment the consultative document Supervisory guidelines for identifying and dealing with weak banks. Once final, the guidelines will replace the 2002 Committee guidance on the topic. Comments are invited on all aspects of this consultative document by Friday 19 September 2014.

All supervisors face the problem of dealing with weak banks. Early identification and intervention is critical. This report provides a toolkit for supervisors and international financial institutions advising supervisors. It offers practical guidelines in the areas of problem identification, corrective action, resolution techniques and exit strategies and highlights the importance of:

• A clear operating framework to lessen the risk that legal and accounting gaps and political interference will undermine supervisory action.
• Prevention and early identification through financial reporting and monitoring, on-site examination, and regular liaison with auditors and bank management in order to remedy problems before a bank's solvency is threatened.
• Early preparation, including communication strategies and recovery and resolution plans, to support a quick response to a problem bank and limit disruption to the financial system.
• Close international cooperation among supervisors and other relevant authorities.

Comments on this consultative document may be uploaded here. Alternatively, comments may be sent to the following address: Basel Committee on Banking Supervision, Bank for International Settlements, Centralbahnplatz 2, CH-4002 Basel, Switzerland. All comments may be published on the website of the Bank for International Settlements unless a respondent marks their comment as confidential.