Sustaining a Resilient Banking Sector Through Open and Transparent Regulation
JUNE 03, 2021

By David Eacott - Head, Banking Supervision, MFSA

The relationship with the Board of Directors is a vital one for supervisors if, as a regulator, we want to influence the direction and quality of controls in the business models that we regulate. The Banking Supervision team within the MFSA, recently held a webinar for Non-Executive Directors. During the webinar we set out a large part of our Minimum Engagement Level questions to give a good line of sight, not just of our regulatory priorities, but also of how we will go about assessing their contribution to delivering them. In banking, that means ensuring a profitable and sustainable business model that is viable through stress, a credible board that can deal with the complex regulatory and business environment and, appropriate controls including on Anti Money Laundering. All of these themes and more were covered during the webinar.

Our external speakers from the Bank of England, European Central Bank (ECB) and industry participants lent more credibility and esteem to the event. The perspectives that our colleagues brought to the session not only demonstrate the MFSA as an open and transparent regulator, but part of a wider system that is designed to ensure financial stability and a resilience within the banking sector for each of the economies making part of the EU bloc.

The MFSA is supplementing this engagement with a number of specific industry roundtables. During an annual roundtable with the Chairs of Board Risk Committees, the MFSA put forward the results of its onsite inspections. Moreover, this year and next we are committed to maintain our outreach to ensure a quality dialogue, initially weighted more towards the MFSA providing information, but increasingly, soliciting feedback on our work and the business, while also focusing risk issues in the sector. This will not only help banks, but also the MFSA’s own understanding of the environment in which the businesses we supervise are operating.

The ECB has been very supportive of the work the MFSA has carried out in the field of Banking Supervision, particularly the initiatives undertaken to revamp its supervisory model, and its supervisory approach, within the context of wider efforts across the MFSA, including the enhancement of industry outreach. As a result of this dialogue, we look forward to an improved understanding with Boards, which will, over time, increase the MFSA’s impact and credibility within the Single Supervisory Mechanism.