Front Matter Page
IMF Country Report No. 18/171
ROMANIA
FINANCIAL SECTOR ASSESSMENT PROGRAM
DETAILED ASSESMENT OF OBSERVANCE OF THE BASEL CORE PRINCIPLES FOR EFFECTIVE BANKING SUPERVISION
June 2018
This Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision paper on Romania was prepared by a staff team of the International Monetary Fund and the World Bank. It is based on the information available at the time it was completed in May 2018.
Copies of this report are available to the public from
International Monetary Fund • Publication Services
PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623–7430 • Fax: (202) 623–7201
E-mail: publications@imf.org Web: http://www.imf.org
Price: $18.00 per printed copy
International Monetary Fund
Washington, D.C.
© 2018 International Monetary Fund
Front Matter Page
ROMANIA
FINANCIAL SECTOR ASSESSMENT PROGRAM
DETAILED ASSESSMENT OF OBSERVANCE
BASEL CORE PRINCIPLES FOR EFFECTIVE BANKING SUPERVISION
May 2018
Prepared By
Monetary and Capital Markets Department, International Monetary Fund, and Finance, Competitiveness and Innovation Global Practice, World Bank
This Detailed Assessment Report was prepared in the context of a joint IMF-World Bank Financial Sector Assessment Program (FSAP) mission to Romania during October 31–November 21, 2017, and January 11–23, 2018 led by Erlend Nier, IMF and Laurent Gonnet, World Bank, and overseen by the Monetary and Capital Markets Department, IMF, and the Finance, Competitiveness and Innovation Global Practice, World Bank. http://www.imf.org/external/np/fsap/fssa.aspx and http://www.worldbank.org/fsap.
Contents
Glossary
SUMMARY
INTRODUCTION AND METHODOLOGY
A. Information and Methodology Used for Assessment
INSTITUTIONAL AND MARKET STRUCTURE
PRECONDITIONS FOR EFFECTIVE BANK SUPERVISION
A. Sound and Sustainable Macroeconomic Policies
B. Framework for Financial Stability Policy Formulation
C. A Well-Developed Public Infrastructure
D. Framework for Crisis Management, Recovery, and Resolution
E. Public Safety Net
F. Effective Market Discipline
MAIN FINDINGS
A. Responsibilities, Objectives, Powers, Independence, and Accountabilities (CPs 1–2)
B. Ownership, Licensing, and Structure (CPs 4–7)
C. Ongoing Supervision (CPs 8–10, 12)
D. Corrective and Sanctioning Powers (CP 11)
E. Cooperation and Cross-Border Banking Supervision (CPs 3, 13)
F. Corporate Governance, Risk Management, Internal Control and Audit (CPs 14, 15, 26)
G. Capital Adequacy and Liquidity Risk (CPs 16, 24)
H. Credit Risk, and Problem Assets (CPs 17–18)
I. Related Parties Transactions, Concentration, and Country risks (CPs 19–21)
J. Market Risk, Interest Rate Risk in the Banking Book, and Operational Risk (CPs 22, 23, 25)
K. Financial Reporting, Auditing and Disclosure (CPs 26–28)
L. Abuse of Financial Services (CP 29)
DETAILED ASSESSMENT
A. Supervisory Powers, Responsibilities, and Functions
B. Prudential Regulations and Requirements
SUMMARY COMPLIANCE OF BASE CORE PRINCIPLES
RECOMMEDED ACTIONS AND AUTHORITIES’ COMMENTS
A. Recommended Actions
B. Authorities’ Response to the Assessment
BOX
1. The 2012 Revised Core Principles
TABLE
1. Overview of the Structure of the Banking System (As of end–2016)
Glossary
| AC |
Additional Criteria (of the Core Principles) |
| ASF |
Financial Supervisory Authority |
| AMA |
Advanced Measurement Approach |
| AM L/CFT |
Anti Money Laundering and Combating the Financing of Terrorism |
| ANEVAR |
National Association of Valuators in Romania |
| AQR |
Asset quality review |
| BCBS |
Basel Committee for Banking Supervision |
| BCP |
Basel Core Principles |
| BRRD |
Bank Recovery and Resolution Directive |
| CAR |
Capital Adequacy Ratio |
| CEBS |
Committee of European Banking Supervisors |
| CET 1 |
Common Equity Tier 1 |
| CI |
Credit Institution |
| COREP |
Common Reporting |
| CP |
Core Principle |
| CRD IV |
Capital Requirements Directive IV (2013/36/EU) |
| CRR |
Capital Requirements Regulation (EU Regulation 575/2013) |
| CSIPPC |
Public Interest Oversight Board for the Accountancy Profession |
| DSTI |
Debt Service to Income |
| EBA |
European Banking Authority |
| EC |
Essential Criteria (of the Core Principles) |
| ECB |
European Central Bank |
| ECL |
Expected Credit Loss |
| EIOPA |
European Insurance and Occupational Pension Authority |
| ESCB |
European System of Central Banks |
| ESMA |
European Securities and Markets Authority |
| EU |
European Union |
| FATF |
Financial Action Task Force |
| FGDB |
Bank Deposit Guarantee Fund |
| FINREP |
Financial Reporting |
| FIU |
Financial Intelligence Unit |
| FSAP |
Financial Sector Assessment Program |
| FSD |
Financial Stability Department |
| GL |
EBA Guideline |
| ICAAP |
Internal Capital Adequacy Assessment Process |
| ICT |
Information and Communication Technology |
| IFRS |
International Financial Reporting Standards |
| ILAAP |
International Liquidity Adequacy Assessment Process |
| IRRBB |
Interest Rate Risk in the Banking Book |
| KRI |
Key Risk Indicator |
| LCR |
Liquidity Coverage Ratio |
| LTV |
Loan to Value |
| ML/TF |
Money Laundering and Terrorism Financing |
| MOPF |
Ministry of Public Finance |
| MOU |
Memorandum of Understanding |
| NBR |
National Bank of Romania |
| NCA |
National Competent Authority |
| NCMO |
National Committee for Macroprudential Oversight |
| NPE |
Nonperforming Exposure |
| NPL |
Nonperforming Loan |
| OSII |
Other Systemically Important Institutions |
| OUG |
Government Emergency Ordinance |
| RCAP |
Regulatory Consistency Assessment Program |
| RON |
Romanian leu |
| RWA |
Risk Weighted Asset |
| SD |
Supervision Department |
| SEP |
Supervisory Examination Program |
| SME |
Small and Medium-sized Enterprises |
| SRB |
Single Resolution Board |
| SREP |
Supervisory Review and Evaluation Process |
| SSM |
Single Supervisory Mechanism |
