BIS chief Agustin Carstens tells banking regulators to ‘up their game’

London — Recent banking turmoil shows that supervisors need to up their game and become more forceful in tackling poorly run lenders, Agustin Carstens, GM of the Bank for International Settlements (BIS) said on Thursday.

US Silicon Valley Bank collapsed in March, raising doubts about the industry that led to UBS’s forced takeover of Credit Suisse.

“Banking supervision needs to up its game. It needs to identify weaknesses at an early stage and act forcefully to ensure that banks address them,” Carstens told a conference held by the European Banking Federation (EBF).

Supervisors need operational independence, a stronger forward-looking culture, more resources and a more intrusive stance, Carstens said.

The main cause of recent bank crises was the failure of directors and senior managers to fulfil their responsibilities, he said.

Separately on Thursday, the European Central Bank's chief banking supervisor Andrea Enria said lessons from the recent turmoil were much more relevant to supervisors than to regulators.

Authorities should “abandon the ambition” of designing ever more precise rules and instead focus on empowering supervisors to ensure banks have sound internal governance and risk management.

Klaas Knot, chair of the G20’s Financial Stability Board, told the EBF conference that some banking rules need reconsidering.

Reuters