By Ruzayi Chiviri - MEFMI Graduate Fellow; Reserve Bank of Zimbabwe, Banking Supervision Division

Abstract of an Article Published in MEFMI Forum Issue 9 June 2010

In many MEFMI countries, financial conglomerates are major players in the financial services sector. The conglomerates vary in size, scope of operation, risk profile, geographical representation and origin. The presence of these conglomerates has significant implications for oversight and the manner of prudential supervision as risks in a conglomerate can exist at the group level and the individual banking entity level.

This paper, which is a summary of the Technical Paper submitted to MEFMI in 2008, in partial fulfillment of the MEFMI Fellowship Programme discusses some of the practical challenges relating to supervision of banks which are part of a conglomerate, mixed activity group or banking group. It also proffers broad based suggestions on how MEFMI country supervisors can oversee such banks on a consolidated basis in accordance with international best practice.

The paper draws from the work of the Basel Committee on Banking Supervision, the Joint Forum as well as practices drawn from other jurisdictions which have long embarked on the supervision of financial conglomerates or consolidated supervision.