Basel II

Prudential Reporting

The Commission has been working with the GFSC and JFSC in developing a common reporting framework for Basel II reporting of capital adequacy. This does not mean that the suite of prudential returns for banks across the three islands will be identical, as each island will prescribe its own reports in respect of, for example, liquidity, interest rate risk in the banking book, and other supplementary information. However, the Tri-Party Group intends to align reporting as much as possible, albeit the presentation of the forms and associated guidance will be different. This was outlined in the Tri-Party Group paper of June 2007 "High level principles on Pillar 2 and revision of supervisory returns".

The Commission has published a new suite of reporting forms and guidance which provides deposit taking banks who are adopting Basel II from 1st January 2008 with the excel templates (which mirrors the new forms contained in the on-line reporting systems) for mapping to their systems. Reporting under the new forms commenced for the period ended 31st March 2008. For deposit taking banks that are not in a position to adopt Basel II for reporting as at 31st March 2008, the Commission will allow them to continue reporting using the existing prudential returns (Basel I) but encourages adoption as early as possible.

The Commission is also aware that there are a small number of incorporated entities that hold banking licences but do not accept deposits. The Commission does not expect these entities to adopt Basel II and they will continue to report under the existing forms. Under the consolidation of legislation ("CAROL") project it is envisaged that these entities will ultimately not be required to complete banking prudential returns.

Due to changes to, primarily, the balance sheet format, the Commission has also published a new suite of reporting forms and guidance for branches. Reporting under the new forms commenced for the period ended 31st March 2008.

The Commission communicated with all relevant banks during December 2007 and in the first quarter of 2008 with further information, which commenced with the issue of the paper titled "Basel II - Revised Prudential Reporting Requirements".

Incorporated deposit takers - reporting forms and guidance

The Tri-Party Group has issued the following to align reporting and guidance for capital adequacy under Basel II across the three islands:-

"Basel II - Operational Risk", published in May 2007, which sets out:

A template reporting form and associated guidance / completion notes which have been agreed by the Tri-Party Group;
Additional guidance relating to the business line mapping process; and
Qualification criteria for use of the standardised approach and alternative standardised approach.

"Basel II - Credit Risk", published in October 2007, which sets out:

A template reporting form and associated guidance / completion notes which have been agreed by the Tri-Party Group for the simplified standardised approach; and
A template reporting form and associated guidance / completion notes which have been agreed by the Tri-Party Group for the standardised approach.

The Tri-Party Group does not intend to publish any further joint papers but will continue to liaise closely to ensure reporting is aligned as far as possible.

The Commission issued a paper in November 2007 titled "Basel II - Reporting Market Risk, Settlement Risk and Interest Rate Risk in the Banking Book" which sets out the reporting forms and guidance for FX, gold, commodities and settlement risk in relation to capital adequacy under Basel II together with the requirements for the prudential returns for Interest Rate Risk . A final paper was published in December 2007 titled "Basel II - Revised Prudential Reporting Requirements" which captures other changes to reporting forms and confirms the existing forms that will either not change or will have only very minor changes.

All of the above were ultimately compiled into a full new suite of reporting forms and guidance prior to the submission deadline for March 2008 returns.

Branches - reporting forms and guidance

A paper was published in December 2007 titled "Basel II - Revised Prudential Reporting Requirements" which captures changes to reporting forms and confirms the existing forms that will either not change or will have only very minor changes.

This information was ultimately compiled into a full new suite of reporting forms and guidance prior to the submission deadline for March 2008 returns.

Commission papers

Basel II - Reporting Market Risk, Settlement Risk and Interest Rate Risk in the Banking Book

Basel II - Revised Prudential Reporting Requirements

Tri-Party Group papers

High level principles on Pillar 2 and revision of supervisory returns

Basel II - Operational Risk

Basel II - Credit Risk

Final Reporting forms and guidance

Basel II - incorporated bank forms

Basel II - branch forms

Banking Guidance Note BGN 2 - Banking Returns - Basel II