Banks briefed on regulatory changes

The Central Bank governor Christodoulos Christodoulou briefed representatives of the 18 local and foreign banks in Cyprus on Tuesday on the new capital requirements directive that will come into force on January 1, 2007.

Rules for commercial banks are undergoing a series of changes that will affect corporate governance and assessment of risk.

The Capital requirements directive is based on a three-pillar process.

Pillar 1 is minimum capital requirements for credit, market and operational risks.

Pillar 2 covers instances where a firm should hold additional capital. Pillar 3 covers market discipline, namely strong requirements on public disclosure.

Christodoulou said that he expected the full text of the directive at the beginning of May, and expected that this would be enough time for the commercial banks to study their obligations.