BCBS Provides Guidance On Early Supervisory Intervention

The Basel Committee on Banking Supervision ("BCBS") published a report titled Frameworks for early supervisory intervention. In the report, the BCBS emphasized the importance of early supervisory intervention to provide for the safety of individual banks and the banking system. The BCBS identified challenges faced by supervisors and provided characteristics of effective frameworks for early intervention.

In the report, the BCBS described how early intervention contributes to financial stability. The BCBS also expressed support for recent efforts to improve early supervisory practices, including adopting qualitative and quantitative risk-assessment measures and deploying system-wide reviews on particular areas of concern in addition to institution-specific assessments. The BCBS highlighted the challenges supervisors may face in evaluating risks, dealing with unintended consequences, compelling banks to take remedial action, and gaining public support.