The financial system in Kazakhstan, which is dominated by private commercial banks, has been one of the most rapidly growing sectors of the economy. The International Monetary Fund (IMF) conducted a Financial Sector Assessment Program (FSAP) in 2000 of Kazakhstan's observance of the Basel Core Principles (BCPs) for Effective Banking Supervision. In 2004, the IMF also published an update of the FSAP. The 2004 FSAP Update concluded that changes have been observed in the implementation of the BCPs in Kazakhstan since 2000. The report found that Kazakhstan was compliant or largely compliant with almost three quarters of the BCPs, and had upgraded principles that had been rated as non-compliant in 2000. The 2004 FSAP acknowledged that, in many cases, amendments to the legal framework were so recent that there was little information regarding actual implementation of these regulations. For example, while significant legal improvements regarding consolidated supervision and risk management were introduced in late 2003, they had not been fully implemented at the time of the 2004 FSAP. Similarly, the 2004 FSAP reported that at the time of the update, a new supervisory agency had just been established. Therefore, a thorough assessment of the agency's implementation of its functions was not yet possible. The legal framework for banking supervision in Kazakhstan is mainly comprised of the Banking Law and several resolutions of the National Bank of Kazakhstan (NBK) that address prudential standards and reporting requirements. While many supervisory powers of the NBK have been passed to the new integrated financial supervisory authority, also known as the Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Markets and Financial Organizations (FSA), the NBK and the FSA still share responsibilities in licensing, and the establishment of accounting standards.

General Overview

The International Monetary Fund (IMF) conducted a Financial Sector Assessment Program (FSAP) in 2000 of Kazakhstan's observance of the Basel Core Principles (BCPs) for Effective Banking Supervision, and published an update of that FSAP in 2004. The 2004 FSAP Update concluded that changes had been made in the implementation of the BCPs in Kazakhstan since 2000. Kazakhstan was now compliant or largely compliant with almost three quarters of the BCPs, and had upgraded in principles that were rated as non-compliant in 2000. However, the report acknowledged that, in 2004, many of the amendments to the legal framework were fairly recent, rendering a thorough assessment of actual implementation of these laws impossible. For instance, while significant legal improvements regarding consolidated supervision and risk management were introduced in late 2003, effective implementation was still pending. Similarly, the new integrated financial supervisory authority, also known as the Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Markets and Financial Organizations (FSA), had just been established. Therefore, the 2004 FSAP Update noted that "there was an absence of evidence of effective implementation" (p. 6). The main recommendations of the 2004 FSAP Update included increasing focus on liquidity risk of individual institutions, introducing capital requirements for market risks, and taking prompt supervisory action with regards to banks paying excessive interest rates in order to remove interest rate ceilings.

The legal framework for banking supervision in Kazakhstan is mainly comprised of the Law on Banks and Banking Activity No. 2444 (hereafter referred to as "Banking Law"), and several resolutions of the National Bank of Kazakhstan (NBK) that address prudential standards and reporting requirements. The new integrated financial supervisory authority, the FSA, was established under the 2003 Law on Government Regulation and Supervision of the Financial Market and Financial Organizations No. 474-II. Under the Banking Law (as amended) the FSA is given a wide range of supervisory powers. While many supervisory powers of the NBK have been passed to the FSA, the NBK remains responsible for financial stability and has supervisory and licensing authority in specific areas. The NBK and the FSA share responsibilities in licensing and the establishment of accounting standards. According to the IMF's 2004 FSAP Update, the FSA has concluded several Memoranda of Understanding (MoUs) with foreign supervisors, including Turkey, Pakistan, Egypt, Moldova, Bahrain, Azerbaijan, Belarus, Georgia, and Tajikistan. So far, however, exchange of information and contacts have been limited in practice.

The financial system in Kazakhstan is dominated by private commercial banks, and has benefited from a period of strong economic growth, as noted in the IMF's 2004 FSAP Update. It has undergone substantial consolidation in the past few years, according to the IMF's 2005 report on Selected Issues, with 35 licensed banks in 2004, as opposed to 71 banks operating in 1998. Per the same report, the three largest banks account for about 60 percent of total assets in the banking sector, and foreign banks make up for roughly one third. According to the NBK's 2007 Financial Stability Report, the main risk in the financial sector is related to the concentration of banking assets within the five largest banks. Capital adequacy in 2007 increased, per the 2007 NBF report, and regulatory capital on October 2007 amounted to 1,685.6 billion Kazakh Tenge (KZT). Of this, Tier 1 capital increased by 49.9% and amounted to 1,223.7 billion KZT, and Tier 2 capital increased by 35.2% or to 521.2 billion KZT. The 2007 NBK report also notes that nonperforming loans in 2007 were below critical value.

The Principles

1. (1) Clear responsibilities and objectives for each supervisory agency.

CP

Per the 2004 FSAP Update, the IMF rated Kazakhstan as "materially non-compliant" with this principle in 2000, citing significant weaknesses in the legal framework for banking supervision. According to the 2004 FSAP Update, this principle was reassessed as "largely compliant" by the IMF. As noted in the same report, the new FSA was established under the 2003 Law on Government Regulation and Supervision of the Financial Market and Financial Organizations No. 474-II, with the objectives of "ensuring stability of financial markets and financial organizations, maintaining confidence, protecting consumers and ensuring fair competition in the markets" (p. 8). The Banking Law, as amended, provides the "authorized agency" with a range of supervisory powers. While many supervisory powers of the NBK have been passed to the new FSA, the NBK remains responsible for financial stability, and has supervisory and licensing authority in specific areas. The NBK and the FSA share responsibilities in licensing and the establishment of accounting standards. According to the 2004 FSAP Update, the IMF recommended implementing the new detailed agreement between the FSA and the NBK, which was recently signed.

1.(2) Operational independence and adequate resources.

NC

According to the 2004 FSAP Update, the IMF rated Kazakhstan as "materially noncompliant" with this principle, giving it the same rating as in 2000 due to the FSA's lack of operational independence and significant vacancies in banking supervision divisions. Under Law No. 474-II, per the same report, the authorized agency is funded under the NBK budget, and is "directly subordinated and answerable to the President of the Republic of Kazakhstan" (p. 9). Moreover, the President appoints the governor of the NBK and may remove him from his functions for any reason. The IMF report recommended ensuring the FSA's budgetary autonomy, citing the lack of legal provisions so far for the FSA to establish its own funding base. In its 2004 FSAP Update, the IMF recommended filling existing staff vacancies. It further advised specifying in law the reasons for removal of the FSA's high level officials.

1.(3) A suitable legal framework for authorization and ongoing supervision.

FC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "compliant" with this principle, with which it had also been found compliant in 2000. The legal framework for banking supervision in Kazakhstan is mainly comprised of the Banking Law and several NBK resolutions addressing prudential standards and reporting requirements. Per the same report, while the FSA has the authority to issue new legislation. Regulations issued previously by the NBK remain in force.

1.(4) A suitable legal framework to address compliance with laws as well as safety and soundness concerns.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle. Since 2000, most shortcomings have been addressed through amendments to the Banking Law. Furthermore, supervisory actions have not been overturned by court decisions since the original FSAP. In 2004, this principle was assessed as "largely compliant." In its 2004 FSAP Update, the IMF recommended adopting "a provision in law expressly establishing the ability of the FSA to exercise judgment in assessing the adequacy of the various parts of the application" (p. 13).

1.(5) Legal protection for supervisors.

FC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "compliant" with this principle, agreeing with the findings of the IMF's 2000 assessment.

1.(6) Arrangement for sharing of information between supervisors and protection of confidentiality of shared information.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle, citing the NBK' s lack of timely information about the capital market activities of subsidiaries and affiliates of banks a major shortcoming. The Update noted that at the time of the 2000 FSAP, these institutions were supervised by a separate agency. In 2004, however, this principle was assessed as "largely compliant." Under the 2003 Law on Government Regulation and Supervision of the Financial Market and Financial Organizations No. 474-II, the supervisory agency is authorized to share confidential information, including information related to banking secrecy, with foreign supervisory authorities and law enforcement agencies within and outside Kazakhstan, when necessary. The IMF Update noted that the establishment of the new FSA "should ensure domestic coordination and information sharing with respect to the oversight of banking, insurance and the capital markets" (p. 11). The FSA has entered into MoUs with foreign supervisors, including Turkey, Pakistan, Egypt, Moldova, Bahrain, Azerbaijan, Belarus, Georgia, and Tajikistan. However, exchange of information and contacts are limited in practice. In its 2004 FSAP Update, the IMF recommended implementing the detailed agreement between the FSA and the NBK, which at the time had just been signed.

2. Clearly defined permissible activities for banks and control of the use of the word 'bank'.

FC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "compliant" with this principle, as the 2000 IMF report had also concluded. Under the Banking Law, a bank is defined as "a legal entity and a commercial organization authorized in accordance with the provisions of the decree to engage in banking" (p. 12). Unless the entity is appropriately licensed by the NBK or the authorized agency, the law further prohibits the undertaking of banking activities or the use of the word "bank."

3. Criteria for structure, directors, operating plan, controls, financial condition and capital base.

CP

In its 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle, agreeing with the findings of the IMF's 2000 assessment. Since 2000, apart from the transfer of most licensing authority from the NBK to the FSA, the licensing regime has not undergone any major changes. Under the NBK Law, the NBK is given powers to license and set licensing requirements. Furthermore, "the Banking Law provides that licenses shall be issued by either the authorized agency or the NBK" (p. 12).

4. Authority to review and reject transfer of ownership.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle, citing several instances where "transfers of significant ownership stakes in bank had taken place without the consent of the NBK" (p. 13). In 2004, this principle was assessed as "largely compliant." Under the Banking Law, the control of 10 percent or more of a bank without the prior consent of the authorized agency is prohibited. Furthermore, amendments to the Banking Law, which require affiliates and subsidiaries of banks to provide any information necessary for supervisory purposes, have led to "the identification of the beneficial ownership of almost all significant shareholdings in Kazakhstani banks" (p. 13).

5. Authority to review major acquisitions and investments.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle citing the lack of provisions to prohibit acquisitions or investments that would hinder effective supervision. Since 2000, this shortcoming has been addressed through an amendment to the Banking Law "which provides a legal basis for the supervisory agency to require affiliates and subsidiaries of banks to provide any information required for supervisory purposes" (p. 14). In 2004, this principle was assessed as "largely compliant." According to the 2004 FSAP Update, the IMF recommended preventing the establishment or acquisition of a subsidiary if they could potentially hinder effective supervision.

6. Minimum capital adequacy requirements (meet Basle Capital Accord for internationally active banks).

NC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "materially noncompliant" with this principle, giving it the same rating as in 2000 and citing the absence of the calculation and application of capital adequacy ratios on a consolidated basis as the main shortcoming. This shortcoming was to be addressed in part through the introduction in July 2003 of NBK Resolution No. 250 on prudential requirements for groups. The IMF report further noted that the FSA was still putting in place its approach to conglomerate supervision. Under the 2002 NBK Resolution No. 213, the minimum capital adequacy ratio is set at 12 percent. According to the 2004 FSAP Update, the IMF recommended effectively implementing the group-wide capital adequacy standards. It further advised calculating the capital adequacy ratio on a consolidated basis.

7. A method exists for the evaluation of procedures related to loans, investments and portfolio management.

CP

In its 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle, in agreement with the IMF's 2000 findings. Under the Banking Law, the Board of Directors or stockholders are required "to approve the written credit granting policies and procedures of each bank" (p. 15) at the general meeting. The 2001 NBK Resolution No. 116 provides further prudential guidance on risk management systems and internal controls. In order to achieve full compliance, banks will have to effectively implement the prudential requirements on risk management, which were introduced in December 2003.

8. Policies, practices and procedures for evaluating the quality of assets and the adequacy of loan loss provisions and reserves.

CP

In its 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle, concurring with the IMF's 2000 findings. The NBK's 2002 Resolution No. 456 introduced a new approach to loan loss provisioning. Moreover, banks are required to provide monthly and quarterly reporting on asset quality and loan loss provisions. The IMF report recommended improving the new loan loss provisioning requirements.

9. Prudential limits and management information system on concentration of exposure.

NC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "materially non-compliant" with this principle, giving it the same rating as in 2000 and citing the lack of consolidated reporting and the inability to obtain information from affiliates and subsidiaries of banks as the underlying drawback. Under the 2002 NBK Resolution No. 213, exposure to a single borrower is limited to 25 percent of capital, or 10 percent of capital if the loans are unsecured. The IMF report noted that "the introduction of consolidated reporting requirements in the banking law... provides a legal basis to apply large exposure limits on a group-wide basis" (p. 18). At the time of the assessment, however, the FSA was still putting in place its approach to conglomerate supervision. In its 2004 FSAP Update, the IMF recommended implementing the new group-wide prudential requirements.

10. Arm's length rule and monitoring for connected lending.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle citing the lack of provisions to prohibit acquisitions or investments that would hinder effective supervision. Since 2000, this shortcoming has been addressed through an amendment to the Banking Law "which provides a legal basis for the supervisory agency to require affiliates and subsidiaries of banks to provide and information required for supervisory purposes" (p. 14). Therefore, in 2004, this principle was assessed as "largely compliant." As noted in the 2004 IMF report, exposures to related parties are restricted to 10 percent of capital, and the aggregate of these exposures is not allowed to exceed total bank capital. In order to achieve full compliance, per the same report, there is a need for greater certainty that all related parties' transactions are appropriately identified and reported.

11. Policies and procedures for country risk and transfer risk.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle and noted that at the time of the 2000 assessment there were lack of provisions directly addressing country risk. Since 2000, several requirements have been introduced in the area of foreign exchange, capital adequacy, and asset classification "that require banks to specifically reflect country risk exposure" (p. 20). Moreover, relevant internal policies and procedures for banks are provided under the 2003 NBK Resolution No. 434 on risk management. Therefore, in 2004, this principle was assessed as "largely compliant." In order to achieve full compliance, per the same report, banks will have to effectively implement the prudential requirements on risk management.

12. Measuring and monitoring market risk. Limit and/or specific capital charge on market risk exposure.

NC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "materially noncompliant" with this principle, giving it the same rating as in 2000 due to the lack of regulatory requirements consistent with the Bank for International Settlement's capital accord principles. The report also indicated that there was "the general absence in banks of systems in place to adequately measure, monitor and control market risks" (p. 21). Per the same report, although the prudential requirements under Resolution 434 generally address market risk management, there is no evidence so far as to whether these requirements have been implemented. As noted in the 2004 FSAP Update, the IMF recommended effectively implementing the prudential requirements on risk management, and introducing capital requirements for market risk.

13. Comprehensive risk management processes.

NC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "materially noncompliant" with this principle, giving it the same rating as in 2000 due to inadequate requirements and practices regarding the management of liquidity risk, interest rate risk, and operational risk. Under the Banking Law, banks are required "to maintain policies and procedures that comply with prudential norms addressing a wide range of risks, including liquidity risk, maturity and interest rate risk, and operational risk" (p. 21). Furthermore, the 2003 NBK Resolution No. 434 provides prudential guidance on risk management. Frequent reporting is also required on all material risk exposures. Per the same report, while banks have made progress in their risk management processes, there is no evidence so far as to whether requirements under NBK Resolution No. 434 have been implemented. Moreover, the IMF report identified weaknesses in the systems for monitoring and controlling risks in banks. As noted in the 2004 FSAP Update, the IMF recommended effectively implementing the prudential requirements on risk management, which were introduced in December 2003.

14. Adequate internal controls.

CP

In its 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle, concurring with its own 2000 assessment. Under the Banking Law, the board of directors is required to approve all necessary internal policies, procedures, and controls. Further prudential guidance is provided in the 1998 NBK Resolution on Internal Controls No. 112, and the 2003 NBK Resolution No. 434. With regard to corporate governance, voluntary guidelines were issued to Kazakhstani companies in 2002. In order to achieve full compliance, the 2004 IMF report, stated that banks will have to further improve the application of internal control and audit requirements.

15. Strict "know-your-customer" rules and high ethical and professional standards.

NC

According to the 2004 FSAP Update, the IMF rated Kazakhstan as "noncompliant" with this principle in 2000. In 2004, this principle was assessed as "materially non-compliant," due to the introduction of "know-your-customer" requirements and evidence of their enforcement. At the time of the 2004 FSAP, there were no specific laws addressing anti-money laundering (AML) and combating the financing of terrorism (CFT) in Kazakhstan. The IMF report noted that an AML/CFT law was being drafted. In its 2004 FSAP Update, the IMF recommended introducing the planned AML/CFT law and creating a Financial Intelligence Unit. Bank secrecy provisions should also be amended. The IMF report further advised developing "specific prudential guidelines for banks in conjunction with broader work on AML/CFT issues" (p. 32). As of June 2007, based on a report by the Eurasia Group, draft AML/CFT laws were still being prepared in Kazakhstan.

16. Effective supervisory system consisting of on-site and off-site supervision.

CP

In its 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle, confirming its 2000 assessment. The IMF report noted that while the quality of off-site supervision had improved since 2000, "the recent establishment of the FSA has resulted in some uncertainty regarding the ongoing management of the supervision function" (p. 24).

17. Regular contact with bank management and understanding of bank's operations.

FC

According to the 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle in 2000, citing the supervisor's inability to fully understand banks operations on a consolidated basis. Since 2000, this shortcoming has been addressed "with the supervisory authority having made liberal use of the legal power introduced into the banking law to obtain information on related parties and affiliates of banks" (p. 24). Therefore, in 2004 this principle was assessed as "compliant."

18. Analytical reports and statistical returns on solo and consolidated basis.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle citing the lack of legal authority to collect consolidated data as the reason for this rating. Since 2000, this shortcoming has been addressed through the requirement under the Banking Law for banks to submit consolidated data on an annual basis. In addition, the 2003 NBK Resolution No. 250 requires banks to submit a quarterly report on capital adequacy and large exposures on a consolidated basis. In 2004, this principle was assessed as "largely compliant." The IMF report noted that the FSA was still putting in place its approach to conglomerate supervision. In its 2004 FSAP Update, the IMF recommended deepening analysis with respect to liquidity risks. It encouraged reviewing "the volume and frequency of data collection to ensure that it is commensurate with the size, activities, and risk profile of individual banks" (p. 25).

19. Independent validation of supervisory information through on-site examination or external auditors.

FC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "compliant" with this principle, concurring with its 2000 findings. While appropriate procedures were in place for validation of supervisory information, the IMF report expressed concerns regarding the relatively small number of on-site inspections conducted during 2003. It further noted that the expected examination of 10 banks in 2004 was "insufficient to provide full comfort regarding off-site reporting" (p. 25).

20. Ability to supervise on a consolidated basis.

NC

According to the 2004 FSAP Update, the IMF rated Kazakhstan as "non-compliant" with this principle in 2000. Since 2000, legal revisions have been put in place "to provide an appropriate foundation for consolidated supervision" (p. 26). In 2004, this principle was reassessed as "materially non-compliant. The IMF report noted that effective monitoring and enforcement of the new prudential standards for banking groups was required. Moreover, the FSA was still putting in place its approach to conglomerate supervision. In its 2004 FSAP Update, the IMF recommended effectively implementing the new group-wide prudential requirements.

21. Consistent accounting policies and practices that provide a true and fair view of the financial condition of the bank.

CP

In its 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle, concurring with its 2000 findings. Under the Banking Law, banks are required to publicly release their quarterly and annual financial statements. Since January 1, 2003, Kazakhstani banks have been required to use International Financial Reporting Standards (IFRSs), previously known as International Accounting Standards, or IASs. The IMF's 2004 report noted that while the implementation of accounting standards had improved for larger banks, smaller banks were lagging behind in the introduction of internal systems that truly reflected IFRSs or the pre-existing Kazakhstani Accounting Standards, which differed from IFRSs. In its 2004 FSAP Update, the IMF recommended ensuring open channels of communication with auditors, notably through regular meetings.

22. Adequate supervisory measures to ensure timely corrective action.

CP

According to the 2004 FSAP Update, in its 2000 assessment the IMF rated Kazakhstan as being "materially noncompliant" with this principle citing "the lack of evidence of timely response to identified problems in banks, and the reversal by courts of supervisory action taken by the NBK" (p. 27) as the reason for this low rating. Since 2000, according to the same report, the legal framework for dealing with problem banks has been significantly revised by giving the supervisory authority more control over the liquidation process, as well as a wide range of remedial measures, including the ability to revoke licenses. Under the Banking Law, the supervisory authority is given a broad range of remedial actions. Furthermore, the supervisory authority has abolished its policy to grant exemptions from prudential requirements. Banks with identified weaknesses are also subject to more intensive monitoring. The IMF 2004 report noted that all banks reported compliance with all prudential norms. In 2004, this principle was reassessed as "largely compliant." However, the IMF report expressed concerns regarding the introduction of deposit interest rate ceilings by the deposit insurance fund in 2003. In its 2004 FSAP Update, the IMF recommended taking prompt supervisory action with regards to banks paying excessive interest rates in order to remove interest rate ceilings.

23. Banking supervisors must practice global consolidated supervision over their internationally-active banking organizations.

NC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "materially noncompliant" with this principle, giving it the same rating as in 2000 and citing the lack of a legal foundation for globally consolidated supervision as a major shortcoming. The 2004 FSAP continued to rate Kazakhstan as being materially non-compliant with this principle. According to the IMF's 2004 report, this principle was not given much consideration at the time of the 2000 FSAP, due to the low international exposure of Kazakhstani banks. This principle has become more relevant following the original assessment, as five Kazakhstani banks have established foreign operations. As part of the on-site inspection process, as noted in the 2004 FSAP Update, the IMF has recommended developing "a module explicitly focusing on bank management's oversight of foreign establishments" (p. 28).

24. International exchange of information with other supervisors.

NC

In its 2004 FSAP Update, the IMF rated Kazakhstan as "materially non-compliant" with this principle, giving it the same rating as in 2000. According to the IMF's 2004 report, this principle was not given much consideration at the time of the 2000 FSAP due to the low international exposure of Kazakhstani banks. This principle has become more relevant following the original assessment, as five Kazakhstani banks have established foreign operations. Although the supervisory authority has concluded many agreements with foreign supervisors where Kazakhstani banks have establishments, there has been little formal or informal information sharing or collaboration in practice. According to the 2004 FSAP Update, the IMF recommended improving collaboration with foreign supervisors, through notably information exchange and coordination of activities.

25. Supervision of local operation of foreign banks and information sharing with home country supervisors.

CP

In its 2004 FSAP Update, the IMF rated Kazakhstan as "largely compliant" with this principle, concurring with its 2000 findings. Per the same report, "local branches and subsidiaries of foreign banks are subject to the same prudential standards applied to local banks, although there are additional licensing requirements and some non-prudential restrictions" (p. 29). The IMF report recommended increasing the frequency of contacts and improving collaboration between the supervisory authority and home country supervisors. It further advised assessing the home country's capacity for consolidated supervision.