Consultation Paper on Amendments to the Banking Rules on Accounts, Disclosure & Large Exposures (March 2021)

Summary

This is a Guernsey Financial Services Commission consultation paper proposing amendments to the banking rules governing accounts, disclosure and large exposures, together with related upstreaming and regulatory reporting sign off requirements. It applies to all institutions holding a banking licence in Guernsey under the Banking Supervision (Bailiwick of Guernsey) Law, 2020, though many of the substantive changes are targeted specifically at Licensed Institutions incorporated in the Bailiwick (subsidiary banks) rather than branches of overseas banks.

• Accounting standards: Proposes replacing the 1994 accounting rules with new Banking Supervision (Accounts, Disclosure and Reporting) Rules 2021 that specify three permitted accounting standards (IFRS, UK GAAP, US GAAP) for subsidiary banks incorporated in the Bailiwick; branches are unaffected.
• Disclosure: Proposes requiring subsidiary banks to publish audited annual accounts and auditor's report online on their own (or group) website, together with additional key metrics: CET1 Capital Asset Ratio, Liquidity Coverage Ratio or Liquidity Mismatch Ratio, Net Stable Funding Ratio, and Leverage Ratio, published annually alongside the accounts.
• Large exposures and upstreaming: Proposes updating the large exposure and upstreaming regime for subsidiary banks to align more closely with international (Basel) standards, reduce concentration risk, and clarify treatment of connected counterparties, with a phased implementation timeline.
• Regulatory reporting: The Commission signals it is planning to update sign off and verification requirements for banking regulatory returns, and is using this paper to notify licensees of the coming change.

As a consultation paper, this document is at the proposal stage only and does not itself impose binding obligations; it invites feedback from licensed institutions and other stakeholders before the Commission finalises new rules and guidance.

Key obligations

• Respondents wishing to comment on the proposals must submit responses via the Commission's Consultation Hub before the stated closing date of 11 May 2021
• Once finalised, subsidiary banks incorporated in the Bailiwick would be required to use one of the specified accounting standards (IFRS, UK GAAP or US GAAP) for financial reporting
• Once finalised, subsidiary banks would be required to publish audited annual accounts, auditor's report, and key metrics (CET1 CAR, LCR/LMR, NSFR, Leverage Ratio) annually on their own or group website

Applies to

Licensed Institutions (banks) holding a banking licence in Guernsey, subsidiary banks incorporated in the Bailiwick, bank branches incorporated outside the Bailiwick

Deadlines

• 11 May 2021: Closing date for responses to the Consultation Paper
• 2023: Deferred implementation date for Basel III (Basel IV) standards, not being consulted on in this paper