CNB Board Meeting of 1 October 1998 - Provisions on Prudential Bank Operation

At its meeting today, the CNB Board approved two new provisions on prudential bank operation - a provision on capital adequacy including market risk, and a provision stipulating the terms for the performance of bank supervision on a consolidated basis. The two provisions will widen the regulatory framework in compliance with international standards and European Union directives. The capital adequacy concept used up to now will be adjusted for market risk, which is gaining significance in the banking sector, particularly in the derivatives trading area. Based on the provision on consolidated banking supervision, banks´ financial situation and their prudent performance, measured in particular by capital adequacy and credit exposure, will be kept under review and assessed for the entire financial group in which a bank is the parent company. The CNB expects the provisions to be definitively promulgated in 1999 Q2 after a five-month testing period, and to enter into force in two steps, on July 1, 1999 and January 1, 2000.

CNB - M. Svehla