27. This document refers to a governance structure composed
of a board and senior management. The Committee
recognises that there are significant differences in the
legislative and regulatory frameworks across countries
regarding these functions. Some countries use a two-tier
board structure, where the supervisory function of the board is
performed by a separate entity known as a supervisory board,
which has no executive functions. Other countries, in contrast,
use a one-tier board structure in which the board has a
broader role. Owing to these differences, this document does
not advocate a specific board structure. Consequently, in this
document, the terms “board” and “senior management” are
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only used as a way to refer to the oversight function and the
management function in general and should be interpreted
throughout the document in accordance with the applicable
law within each jurisdiction.
Essential criteria
Essential criteria
1. The licensing authority could be the banking 1. The law identifies the authority responsible for supervisor or another competent authority. If the granting and withdrawing a banking licence. The licensing authority and the supervisory authority licensing authority could be the banking are not the same, the supervisor has the right to supervisor or another competent authority. If the have its views considered on each specific licensing authority and the supervisor are not the application. In addition, the licensing authority same, the supervisor has the right to have its provides the supervisor with any information that views on each application considered, and its may be material to the supervision of the licensed concerns addressed. In addition, the licensing institution.
authority provides the supervisor with any
information that may be material to the
EC1, CP1(3). 1. The law identifies the authority supervision of the licensed bank. The supervisor (or authorities) responsible for granting and imposes prudential conditions or limitations on withdrawing banking licences.
the newly licensed bank, where appropriate.
2. The licensing authority has the power to set 2. Laws or regulations give the licensing authority criteria for licensing banks. These may be based the power to set criteria for licensing banks. If the on criteria set in laws or regulations.
criteria are not fulfilled or if the information
provided is inadequate, the licensing authority
4. The licensing authority has the power to reject has the power to reject an application. If the an application if the criteria are not fulfilled or if licensing authority or supervisor determines that the information provided is inadequate.
the licence was based on false information, the
licence can be revoked.
12. If the licensing, or supervisory, authority
determines that the licence was based on false
information, the licence can be revoked.
3. The criteria for issuing licences are consistent 3. The criteria for issuing licences are consistent with those applied in ongoing supervision.
with those applied in ongoing supervision.
5. The licensing authority determines that the 4. The licensing authority determines that the proposed legal, managerial, operational and proposed legal, managerial, operational and ownership structures of the bank and its wider ownership structures of the bank and its wider group will not hinder effective supervision on both group will not hinder effective supervision on both a solo and a consolidated basis.12
a solo and a consolidated basis.28 The licensing
authority also determines, where appropriate, that
12. Therefore, shell banks shall not be licensed. (Reference these structures will not hinder effective document : BCBS paper on shell banks, 2003) .
implementation of corrective measures in the
future.
28. Therefore, shell banks shall not be licensed. (Reference
document : BCBS paper on shell banks, January 2003.)
6. The licensing authority identifies and 5. The licensing authority identifies and determines the suitability of major shareholders, determines the suitability of the bank’s major including the ultimate beneficial owners, and shareholders, including the ultimate beneficial 9/73
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others that may exert significant influence. It also owners, and others that may exert significant assesses the transparency of the ownership influence. It also assesses the transparency of structure and the sources of initial capital.
the ownership structure, the sources of initial
capital and the ability of shareholders to provide
AC1. The assessment of the application includes additional financial support, where needed.
the ability of the shareholders to supply additional
financial support, if needed.