Coordination among Banking Authorities
If one is to deal with an insolvent bank effectively, the following are essential: timely cooperation and coordination between the various banking authorities and other public bodies concerned (e. g., the central bank; the operators of payment and settlement systems; the deposit insurance agency; and, where required, the supervisors of other sectors and jurisdictions, including the securities and insurance sectors).43 Whenever the
restructuring stage is reached (see chapter 5, section 5.3.5), coordination with the officials responsible for the restructuring will be crucial.
At the domestic level, there should be a sound legal basis for the exchange of information and coordination among all the public bodies involved. The law should not impede the sharing of information; in particular, the duties of secrecy owed by official decision makers should not prevent interagency disclosures. Furthermore, means should be clarified for coordination among agencies, particularly with respect to banks that belong to financial conglomerates. In this context, there should be clear principles for determining which supervisory authority bears primary responsibility, and the obligation of each authority to keep other bodies informed should be recognized.
Where an insolvent bank operates in several jurisdictions, the banking authorities should be able to exchange information and to coordinate actions with their foreign counterparts. The operational terms of cooperation should be laid down in bilateral arrangements between the respective national authorities, for example, in the form of memoranda of understanding or through an exchange of letters. A duty of confidentiality should apply to all information shared between the authorities, in accordance with the national legislation of the countries concerned. The flow of information between host and home supervisors should be in both directions.