Parallel-owned banking structures

Subject Area Financial Regulation and Supervision
Issuing Body BCBS
Date of Issuance January 2003
Location http://www.bis.org/publ/bcbs94.pdf
Summary Description

This document sets out supervisory guidance for dealing with parallel banks.

Detailed Description

Parallel banks are defined as banks licensed in different jurisdictions that, while not being part of the same financial group for regulatory consolidation purposes, have the same beneficial owner(s), and consequently, often share common management and interlinked businesses. The owner(s) may be an individual or a family, a group of private shareholders, or a holding company or other entity that is not subject to banking supervision. Parallel banking relationships may exist, unknown to the supervisors of the parallel banks.

 

Given the supervisory issues that may arise with parallel-owned banking structures, there is a presumption that in principle such structures should not be permitted and this has been the Committee's attitude over recent years since the failure of BCCI. This document sets out supervisory guidance for dealing with parallel banks.