SPI Platform Toolkit

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The product of my work 2004-2009 - prepared by my excellent colleague Ramona Bratu

The product of my work 2004-2009 - prepared by my excellent colleague Ramona Bratu

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  • 1. European Banking Federation/World Bank’s “Convergence” Programme SPI Platform Toolkit ‐ 2009  SPI Platform Toolkit  How Can a Banking Association Promote  Financial Sector Modernization in Collaboration  with Authorities and Other Stakeholders    European Banking Federation/World Bank’s “Convergence” Programme   November 2009  
  • 2. European Banking Federation/World Bank’s “Convergence” Programme  SPI Platform Toolkit ‐ 2009                     Author and Editor of the SPI Platform Toolkit are respectively: Ramona Bratu ‐ (rvbratu@gmail.com) and Luigi Passamonti (lpassamonti@worldbank.org)  Summarizing professional contributions during 2006‐2009 by: Mihai  Bogza  ‐  Elona  Bollano  ‐  Ramona  Bratu  ‐  Riccardo  Brogi  ‐  Shkelqim  Cani  ‐  Oana  Nedelescu  ‐  Luigi Passamonti ‐ Anuela Ristani ‐ Endrita Xhaferaj With support from: Rumyana Uzunova Gained in the Context of: The World Bank’s Convergence Program ‐ www.convergence‐see.eu    
  • 3. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 WELCOME NOTE As  part  of  the  services  that  the  European  Banking  Federation  provides  to  its  Associates,  I  am  happy  to make  available  this Toolkit,  based on experience of  the World Bank’s Convergence Program,  which will help our Associates play an even more important role in stimulating financial modernization in their own countries.  Through  its  structured  public‐private  cooperation  focused  on  removing  obstacles  to  fluid  financial intermediation, the SPI Platform initiative helps better align the banking industry activities with the needs of  the  real  economy  –  and  contributes  to  a  more  balanced  post‐crisis  response.    Tightening  prudential regulations,  while  necessary,  can  stifle  the  economy  in  the  absence  of  measures  to  revitalize  financial intermediation.   Furthermore,  the  SPI  Platform  itself,  which  is  based  on  the  principles  of  transparent  evidence‐based professional  dialogue  and  consensus‐driven  recommendations,  embodies  the  values  that  have  been informing the public engagement of the European Banking Federation with its public counterparts.   Therefore, helping its Associates promote SPI Platforms in their own countries is a small contribution that the  European  Banking  Federation  makes  to  constructive  and  responsible  public‐private  dialogue  for sustainable economic prosperity in candidate and other countries in Eastern Europe.  Guido Ravoet  Secretary General  European Banking Federation  November 2009             3 
  • 4. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  FOREWORD The Chairman and Secretary‐General of a banking association occupy one of the most senior positions in the society of a country. The  authorities  and  society  look  to  her  or  him  to  exercise  constructive  leadership  in  the  sector  that protects the country’s savings and builds future prosperity. Under their leadership, competitive activities by individual financial institutions can converge, with positive impacts on the welfare of society; financial institutions  can  enhance  their  cooperation  to  modernize  standards  and  services  that  affect  the  entire economy; and banks can launch initiatives that bring them closer to their clients.  This  position  of  authority  also  carries  special  obligations.  As  Chairman  and  Secretary‐General  help  to shape the collective views of the  banking sector on actions by authorities and other stakeholders, they have direct influence on how your country governs itself. Expertise, balanced judgment and a sense of the collective good are therefore essential attributes: their position gives unique insights into how well banks support the needs of the real economy, and into changes to the legal and regulatory environment that would enable enhanced support.  Yet in many countries banking associations have not had many opportunities to equip themselves to carry out such actions in support of the public good.  This  SPI  Platform  Toolkit,  which  is  a  result  of  visionary  work  by  the  World  Bank  with  financial  support from  Italy’s  Ministry  of  Economy  and  Finance,  is  intended  as  a  guide  for  the  senior  leaders  of  banking associations that are Associates of the European Banking Federation to increase their contribution to the prosperity in their countries through financial sector modernization. The  SPI  Platform  catalyses  collaboration  among  authorities,  bank  clients  and  financial  institutions  to identify  a  modernization  program  that  meets  their  collective  interests  and  to  work  out  together  the solutions that will enhance the contribution of finance to the economy.  The detailed, transparent step‐by‐step process of the SPI Platform Toolkit enables a banking association to engage with the authorities and other stakeholders to launch a large financial modernization program, leveraging the unique  financial and intellectual resources of the banking sector.  The SPI Platform  itself can become the instrument of choice for the banking community to make itself a champion for economic prosperity – and raise the public profile and influence of its leadership.  I  am  grateful  to  the  European  Banking  Federation  for  agreeing  to  publish  this  SPI  Platform  Toolkit  to contribute to the institutional growth of its Associates in Eastern Europe.  Luigi Passamonti  Senior Adviser, World Bank and  Head and Founder, Convergence Program   October 2009   5 
  • 5. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  PREFACE It is a privilege for anyone to have the opportunity to leave the mark of his professional experience. It is a privilege  also  to  be part of  a new  and innovative  concept, to nurture it  and to  grow  with it. And  it is  a pleasant duty to pass on the experience and share the acquired knowledge.  For these reasons I was happy to respond to the opportunity granted by EBF to pass on the essence of my last three years of work and to make my experience and understanding helpful to others who believe in the force of dialogue and of partnerships. I  hope  that  this  Toolkit  leads  the  reader  to  the  conclusion  that  the  SPI  Platform  is  an  effective  way  of doing things for the benefit of the financial sector, that it provides a recipe for smooth implementation and that it encourages more such initiatives.   Ramona Bratu  Former SPI Regional Operations Manager  and SPI Romania Director for Bank Products and Services  October 2009                7 
  • 6. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 Table of Contents1  Main Document  Page Table of Contents .......................................................................................................................................... 9 Index (Key Features) ................................................................................................................................... 10 List of Boxes ................................................................................................................................................ 12 Executive Summary ..................................................................................................................................... 13 What is the SPI Platform? ........................................................................................................................... 15 Why Build an SPI Platform? ........................................................................................................................ 25 How to Promote an SPI Platform? .............................................................................................................. 29 How to Initiate the SPI Partnership with Authorities?  ............................................................................... 33  .How to Launch an SPI Platform? ................................................................................................................. 37 How to Fund SPI Platform Activities? ......................................................................................................... 39 How to Implement SPI Platform Activities? ................................................................................................ 45 What Are the Main SPI Platform Operating Processes? ............................................................................. 48 How Can EBF Help Its Associates? .............................................................................................................. 53 Useful Reading ............................................................................................................................................ 55 Annexes ....................................................................................................................................................... 57                                                                  1  Chapters and Annexes can be downloaded from  http://www.convergence‐see.eu/convergence/sharing‐experiences.html   9 
  • 7. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 Index (Selected key items) Annexes              Annexes                Page Overall Concept  Annex I‐2            SPI Platform Presentation to Banking Association ..........................................................27 Annex III‐8          SPI Platform Presentation to Financial Community  ........................................................ 69 Annex IV‐3          SPI Platform Presentation to Public Authorities  ............................................................. 87 Annex III‐1          SPI Platform Questions and Answers ............................................................................... 41 Annex I‐4            SPI Platform: A Financial Modernization Hub Framework ............................................... 39  Governance Annex I‐1           SPI Committee Operating Guidelines .................................................................................. 1  SPI Financial Modernization Program Annex VII‐7          SPI Platform Activity Program Building Questionnaire (Albania example) ................... 169 Annex VII‐8          SPI Multi‐Annual Activity Program Template ................................................................ 181 Annex I‐3              SPI Platform Achievements ............................................................................................. 35 Annex VIII‐5         EU Better Regulation Methodology .............................................................................. 217  SPI Secretariat Annex VII‐1           SPI Secretariat Terms of Reference .............................................................................. 145 Annex VII‐2           SPI Secretariat Responsibilities Sharing ....................................................................... 149 Annex VII‐3           SPI Secretariat General Manager Advertisement ........................................................ 151 Annex VII‐4           SPI Secretariat Job Interview Invitation  ...................................................................... 152 Annex VII‐5           SPI Secretariat Selection Process Report   .................................................................... 155  .Annex VII‐6           SPI Secretariat Self‐Training Support  .......................................................................... 157 Annex VIII‐16        SPI Secretariat Evaluation Questionnaire .................................................................... 317 Annex VIII‐17        SPI Secretariat Summary Evaluation ............................................................................ 327 Annex VIII‐12        SPI Secretariat Weekly Planning Report  Template ..................................................... 303 Annex VIII‐13        SPI Albania Monthly Activity Report  ........................................................................... 305   10 
  • 8. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  Annex VIII‐15        SPI Romania Semi‐Annual Stakeholder Activity Report...............................................309 Annex VIII‐14        SPI Romania Multi‐Weekly Work Plan ......................................................................... 307  SPI Project Working Groups Annex VIII‐1           SPI Project Working Group Responsibilities  ............................................................... 193 Annex VIII‐2           SPI Project Working Group First Meeting Presentation .............................................. 195 Annex VIII‐3           Responsibilities sharing PWG, SPI Secretariat and other experts  .............................. 207  SPI Project Documentation (Examples) Annex VIII‐6           SPI Project Working Group Terms of Reference ......................................................... 219 Annex VIII‐7           Scoping of the Problem Document ............................................................................. 227 Annex VIII‐8           Note on International Experience ............................................................................... 241 Annex VIII‐9           Cost‐Benefit Questionnaire ......................................................................................... 255 Annex VIII‐10         Survey Summary of Cost‐Benefit Findings .................................................................. 279 Annex VIII‐11         PWG Recommendation Document  ............................................................................ 301  SPI Platform Funding  SPI Secretariat Funding Annex VI‐2           EU Project Expression of Interest  ................................................................................. 117 Annex VI‐3           Bank Enterprise Adriatic Observatory Project Draft  .................................................... 123    SPI Project Funding Annex VI‐1          SPI Albania FIRST Application Enquiries Example  ......................................................... 111 Annex VI‐5          TAIEX Project Application ............................................................................................... 133 Annex VI‐6          TAIEX Technical Meeting Agenda  .................................................................................. 139     11 
  • 9. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 List of Boxes  Main Document  Page  Box 1            SPI Platform Partners .............................................................................................................. 15 Box 2            The Convergence Program’s Experience with SPI Platform Legal Status ............................... 16 Box 3            Location Options for the SPI Platform..................................................................................... 16 Box 4            SPI Romania 2007 12‐Project Activity Program ...................................................................... 18 Box 5            SPI Albania 2009 10‐Project Activity Program ........................................................................ 19 Box 6            SPI Committee in Romania ...................................................................................................... 20 Box 7            SPI Committee in Albania ........................................................................................................ 20 Box 8            Main Responsibilities of the SPI Secretariat ........................................................................... 21 Box 9            Ten Golden Rules for Consensus Building ............................................................................... 22 Box 10          SWOT analysis for the SPI Platform ........................................................................................ 25 Box 11          Cooperation between Romanian Banking Association and SPI Romania ............................... 27 Box 12          Banking Association‐ SPI Platform Criticalities ....................................................................... 27 Box 13          Benefits of the SPI Platform for the Banking Industry ............................................................ 27 Box 14          Steps for Building Consensus Among Banks ........................................................................... 29 Box 15          The EU Civil Society Facility ..................................................................................................... 39 Box 16          Information about IPA ............................................................................................................ 40     12 
  • 10. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 Executive Summary  This Toolkit is designed on the basis of the experience of the World Bank’s Convergence Program in  establishing and running SPI Platforms in Romania and Albania. In these two countries, the Convergence  Program encouraged private and public stakeholders to establish SPI partnerships; it also contributed  project management and European Union “Better Regulation” know‐how. The Convergence Program  hired and guided the work of the SPI Secretariat and was a non‐voting member of the SPI Committee.    Chapter 1 contains a description of the SPI Platform, its institutional framework and its working methods with a view to enabling the promoter to persuade other stakeholders of the benefits of establishing an SPI Platform.   Chapter  2  gives  the  promoter  of the  SPI  Platform  the  tools  for  raising  awareness  of the  concept, using examples from Albania and Romania to analyse “strengths and weaknesses” of SPI Platforms.  Chapter  3  documents  the  steps  in  establishing  the  SPI  Platform  and  provides  details  on  how  to  raise interest among the banking community.   Chapter  4  offers  the  promoter  a  set  of  instruments  to  capture  the  attention  and  interest  of  public authorities with regard to the public‐private partnership and its methods.   Chapter 5 focuses on the setting up of the SPI Committee.   Chapter 6 focuses on actions to secure funding for the SPI Platform.   Chapter 7 illustrates the first operational steps on designing the SPI Secretariat, on hiring and training its  staff and on setting up the activity program.   Chapter  8  covers  operational  aspects  related  to  SPI  Committee’s  responsibilities,  to  project documentation and the analytical methods used, and to planning and reporting activities of the SPI  Secretariat.   Chapter 9 distills the Convergence Program’s experience to illustrate the possible facilitating role of the  European Banking Federation (or its representative) with its Associates.              13 
  • 11. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 What is the SPI Platform?  1.1.  Understanding the Special Projects Initiative (SPI) Platform The information in this chapter is intended to enable the promoter of the SPI Platform –  that is, an EBF Associate – to understand the nature of the public‐private partnership, how it works, how it is organized and its benefits and costs. Examples from Romania and Albania are used to illustrate the concepts.   1.1.1. SPI Platform Objective  The SPI Platform is a public‐private partnership for institutional cooperation among market players, users of  financial  services  and  relevant  authorities  for  addressing  national  financial‐sector  modernization opportunities through proposals for reform.2  1.1.2. SPI Platform Partners SPI  partners  include  associations  of  financial  institutions,  users  of  financial  services  –  consumers  and enterprises,  regulating  and  supervising  authorities  of  the  financial  market,  academic  institutions  and international donors.  Box 1                                                                       SPI Platform Partners Romania  Albania   National Bank of Romania   Bank of Albania   Romanian Banking Association   Albanian Association of Banks Initial  Initial   Ministry of Finance   Ministry of Finance   Convergence Program   Financial Supervisory Authority   Convergence Program   National  Authority  for  Consumer   Ministry of Economy (Market Joining  Protection  Joining  Surveillance and Consumer later   Romanian Banking Institute  later  Protection Department)   European University of Tirana   Italian Banking Association  SPI  partners  undertake  responsibility  for  managing,  funding,  staffing,  data  and  any  other  aspects  of supporting financial sector modernization.  They  commit  themselves  to  dialogue,  cooperation  and  consensus‐building  in  deciding  the  issues  to  be tackled and the most suitable solutions3.  They use their institutional strengths – authority in the case of public institutions, and convening power in the  case  of  private  institutions  –  in  implementing  the  regulatory  and  self‐regulatory  outcomes  of  the partnership.                                                              2 General information about SPI Platform can be found at: http://www.convergence‐see.eu/instrument3 An effective framework for openness, transparency and dialogue is the main pillar of OECD’s “Principles for Transparency and Integrity in Lobbying”    http://www.olis.oecd.org/olis/2009doc.nsf/ENGREFCORPLOOK/NT0000503A/$FILE/JT03270937.PDF.    15 
  • 12. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 The  cooperation  framework  is  set  by  the  SPI  Committee  Operating  Guidelines,  which  set  out  the responsibilities and rights of the parties (see Annex I‐1).  1.1.3. Legal Status An SPI partnership may or may not be incorporated as a legal entity. It can function only on the basis of agreement between partner institutions on the basis of sound governance approved and implemented by the partner institutions.  If an SPI partnership is constituted informally it has a high degree of flexibility in its day‐to‐day work. But its  institutional  strength  can  be  enhanced  by  legal  incorporation  as  a  new  entity  –  a  complicated  and lengthy process – or by affiliation as a distinct entity with an existing institution, which would ideally be neutral or one of the main partner institutions. Former Governor of Croatian National Bank Marko Škreb made this recommendation when he  assessed SPI  Romania.4 In either case, it is critical to preserve the public‐private nature of the activities in terms of governance, implementation and administration. Legal incorporation will make it easier to organize revenue‐generating activities and to raise contributions from domestic  and  international  sources.  A  combination  of  these  options  may  be  designed,  with  the partnership starting as a non‐legally formalized entity for a trial period and legal incorporation at a later date. This depends on the stakeholders’ preferences, their financial options and institutional constraints. It  is  an  important  aspect  of  the  SPI  public‐private  partnership  that  has  consequences  for  staffing, management and financing.    Box 2 ‐ The Convergence Program’s Experience with SPI Platform Legal Status   In Romania and in Albania SPI started as a non‐legal entity under an agreement between the  stakeholders. Its efficient functioning may have been influenced by the sponsorship and participation of  the World Bank’s Convergence Program. After 18 months, the financial and managing ownership of the  SPI was transferred to the local stakeholders. In Romania ownership was transferred to an existing  separate legal entity in which both main partners – the National Bank of Romania and the Romanian  Banking Association – were already shareholders: the Romanian Banking Institute. In Albania the  transfer was a matter of absorption by one of the main partners. The appointment of the SPI Director  for Financial Modernization Program and Analytics as Secretary General of the Albanian Association of  Banks ensured the transfer of analytical skills, methods and procedures.   Box 3‐  Location Options for the SPI Platform 1) Public a. The Central Bank may wish to host the SPI Platform along the lines of the European Central Bank (ECB) European Financial Market Lawyers’ Group (EFLMG) (http://www.efmlg.org/) and equivalent units hosted by the Bank of England, the Federal Reserve Bank of New York and the Bank of Japan. The advantage is                                                             4  Report of the External Evaluation of the SPI Romania – Convergence Project, Marko  Škreb, March 2007. http://www.spiromania.eu/admin/filemanager/files/report_of_the_external_evaluation_of_spi_romania_final_ms__march_7_2007.pdf    16 
  • 13. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 that the unit draws on the institutional and professional strength of the central bank; the disadvantages are the lost opportunity to create multi‐polar intellectual capabilities in the country and a possible rigidity in adapting its activities to new opportunities.  b. The Prime Minister’s Office or equivalent central unit may be the host, as  in the United Kingdom 10 Downing  Street  “Delivery  Unit”  model  (http://www.number10.gov.uk/Page3055).  The  advantage  is considerable  political  influence  in  supporting  reforms;  the  disadvantage  may  be  the  distance  from  civil society, whose sustained intellectual engagement is beneficial to the reform process. c. The European Commission (EC) also hosts various think‐tanks for the purpose of improving the quality of regulatory design. A notable example is Fin‐Use, which was set up to represent the views of consumers of financial services (http://ec.europa.eu/internal_market/fin‐use_forum/index_en.htm).  2) Private  Local  public  and  private  stakeholders  may  decide  that  it  is  strategically  important  to  improve  the analytical activities of the banking association, in line with good practice in more advanced countries. To preserve the public‐private nature of this work, the banking association could sponsor the creation of a separate legal vehicle for this work that would operate under public‐private governance. The Romanian Banking Institute is an example of such as public‐private set‐up, although its driving force is the central bank. A similar institution in Italy is the Osservatorio Regionale Banche Imprese (Regional Bank Enterprise Observatory (http://www.bancheimprese.it/eng/index.asp). In the  past,  the Association  of  Italian Banks and the Bank of Italy jointly ran a think‐tank specializing in financial sector issues (http://www.enteluigieinaudi.it/en/index.htm). 3) Civil Society A think‐tank or university department with leadership open to building bridges with policy analysis could be identified to host the catalytic function. The benefit is to host the activity on neutral ground protected from commercial influence. Long‐term fundraising from foundations and public sources is easier with this vehicle compared with the public or private options. The downside is that its leadership, independent of the authorities and private stakeholders, may not have the incentives and capabilities to establish a track record  of  practical  contributions  to  policy  design. Possible  benchmarks  for  this  choice  are  the  recent Center  for  Financial  Regulation  (http://www.icffr.org/)  promoted  by  the  UK  Treasury  and,  closer  to  the commercial  end  of  the  spectrum,  the  “Better  Regulation”  activities  of  the  Oxford‐based  Oxera (www.oxera.com).   1.1.4. Object of the SPI Platform The  SPI  Platform  handles  financial  modernization  issues  that  increase  the  efficiency  of  financial intermediation through interventions with the following objectives: - reducing asymmetric information;  - completing the market; - increasing contractual opportunities for entering into financial transactions; - reducing transaction costs; and - enhancing competition in the market.   17 
  • 14. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009   This  taxonomy  is  drawn  from  the  ECB  criteria  for  measuring  progress  in  financial  integration  in  the European Union’s Single Financial Market: “Financial modernization refers to the  process of  financial innovation and organizational improvements that make  the financial  system more efficient by overcoming  a  number of  frictions  such as asymmetric information,  incompleteness  of  markets,  limited  opportunities  for  agents  to  engage  in  financial transactions through contracts, high transaction costs and limited competition.” Gertrude Tumpel‐Gugerell, ECB Executive Board Member, July 2006 speech  The  aim  of  these  interventions  is  to  remove  legal,  regulatory  and  institutional  obstacles  to  matching demand and supply in financial services. These interventions are normally prudentially neutral in terms of the overall targeted risk profile of financial intermediation chosen by financial regulators. In  this  respect,  financial  modernization5  defines  an  innovative  area  of  intervention  that  is  almost  fully complementary  with  that  of  financial  regulation,  which  traditionally  defines  the  interface  between financial  regulators  and  market  participants.  Annex  I‐2  gives  examples  of  the  financial  modernization programs  handled  by  SPI  Platforms  in  Romania  and  Albania.  The  Convergence  Program  developed  a search engine6 for identifying the modernization issues to be built into a program.    1.1.5. SPI Institutional Capacity Experiences  in  Romania  and  Albania  showed  that  an  SPI  Platform  supported  by  a  three‐person  SPI Secretariat can handle ten to fifteen financial modernization projects per year.  Box 4 ‐ SPI Romania 2007 12‐Project Activity Program   Positive credit information reporting   Electronic processing of debit instruments   Improving anti‐money‐laundering (AML) reporting   Revamping rural lending based on deposit certificates   Consumer financial education   Banking ombudsman   Credit rating agencies   Stress testing   Provisioning under International Financial Reporting Standards (IFRS)   Mortgage loan and loss given default databases   Markets in Financial Instruments Directive (MiFID) implementation   Optimizing bank security                                                                     5  For discussion, see: http://www.convergence‐see.eu/convergence/faq.html 6  http://www.convergence‐see.eu/our‐mandate/how‐to‐identify‐financial.html   18 
  • 15. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  Box 5‐  SPI Albania 2009 10‐Project Activity Program   Enhancing banks’ liquidity risk management   Revising regulatory act on Execution of Procedures on Bank Accounts   Revising public procurement law on financial advisory services    Rationalized central bank reporting system   Revising Foreign Currency Open Position regulation   Preparing a feasibility study for central depositary services   Loan loss provisioning under IFRS   Consumer Financial Education   Expansion of the credit bureau services: database for businesses   Expansion of the credit bureau services: scoring cards for individuals     1.1.6. SPI Results The  outcomes  of  the  SPI  public‐private  partnership  are  regulatory  and  self‐regulatory  proposals  whose impact is qualitative and quantitative – increased volume of transactions and reduced transaction costs – from the private and public good points of view. Annex I‐3 shows the outcomes of the SPI Platforms in Romania  and  Albania  and  the  quantitative  assessments  of  the  outcome  of  some  of  the  projects completed.  1.1.7. SPI Governance The strength and solidity of the SPI Platform are ensured by its partners’ commitment to collaboration, strong governance and effective work methods. The comprehensive governance  framework  (see SPI Committee Operating  Guidelines  in  Annex  I‐1) was conceived  by  the  Convergence  Program  and  tested  and  improved  in  Romania  and  Albania.  Its  project methods  are  the  result  of  practical  experience;  the  analytical  methods  are  based  on  the  advanced European approaches of EU Better Regulation and Regulatory Impact Assessment.   1.1.8. SPI Organization SPI Committee The supervising body of the SPI Platform is the SPI Committee of high‐level representatives of the partner institutions. An SPI Committee has the following responsibilities: i) to decide on the activity program; ii) to monitor implementation; and iii) to endorse and promote the outputs of the program.   19 
  • 16. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  Box 6‐ SPI Committee in Romania  Members National Bank of Romania – First Deputy Governor Romanian Banking Association – Chairman Ministry of Economy and Finance – State Secretary National Authority for Consumer Protection – Vice‐President  Convergence Program – Head Alternates Ministry of Economy and Finance – General Director National Authority for Consumer Protection – Director  Box 7‐ SPI Committee in Albania  Members Bank of Albania – First Deputy GovernorAlbanian Association of Banks – ChairmanMinistry of Finance – General Director  Financial Supervisory Authority ‐ Deputy Chairman  Ministry of Economy – Director of the Market Surveillance and Consumer Protection  Convergence Program – Head Permanent Observers Italian Banking Association – Director European University of Tirana – Dean of the Faculty of Economics Alternates Albanian Association of Banks – Secretary GeneralFinancial Supervisory Authority – DirectorConvergence Program – SPI General Manager   20 
  • 17. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 SPI Working Groups Implementation of the activity program is entrusted to public‐private working groups established for each project. These consist of experts from all the stakeholders, led by  a strong project management group reflecting the main stakeholders of the issue to be solved.  The project management group consists of a project owner such as the CEO of a bank or a central bank director, who appoints a project manager representing the main  stakeholder and a co‐project manager representing the other main stakeholder. The project owner ensures project oversight and is responsible for signing off the final SPI committee recommendations. The project manager and project co‐manager coordinate  the  day‐to‐day  activity  of  the  project  and  are  responsible  for  timely  achievement  of  project objectives.  The  project  working  group  is  set  up  under  detailed  terms  of  reference  (see  Annex  VIII‐1).  The  project manager and project co‐manager decide membership in consultation with the stakeholders. Participation is  voluntary.  The  members  of  project  working  groups  provides  the  necessary  mix  of  authority  and expertise for ensuring that projects are successfully implemented.  Project working groups are responsible for identifying optimal solutions that address the concerns of all parties  on  the  basis  of  EU  Better  Regulation  methods.  They  contribute  to  project  implementation, participate  in  meetings,  contribute  ideas  and  data,  validate  questionnaires,  interpret  consultation feedback and approve the final project document.  SPI Secretariat The SPI Committee and the project working groups rely on the work of an SPI Secretariat dedicated to the partnership.   The SPI Secretariat carries out most of the analytical work with a view to making the most of the time and knowledge of project working group members without interfering with their official responsibilities. The SPI  Secretariat  provides  secretarial  and  communication  services.  It  requires  strong  organizational capabilities to handle relationships with local and international experts.  Box 8‐ Main Responsibilities of the SPI Secretariat • Prepare SPI committee meeting agendas; keep and distribute records of meetings.  • Manage relationships with national and international banks, experts and technical assistance  providers.   • Build up the activity program.  • Present the SPI annual business plan, quarterly working plans and budgets to the SPI  committee for approval.  • Build up visibility for the SPI Platform.  • Draft project ToR.   • Organize project working groups and their meetings.  • Prepare background studies based on interviews, research, international benchmarks and  regulations.  • Summarize contributions by project working group members.  • Prepare documents for project working group meetings.   21 
  • 18. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  • Prepare draft regulatory impact assessment (RIA) questionnaires.  • Collect data and perform calculations.  • Prepare SPI Committee documents.  • Coordinate actions for promoting, enacting and implementing SPI proposals.  • Submit periodical activity reports to stakeholders.   The  Convergence  Program  tested  two  SPI  Secretariat  models:  i) in  Romania  –  a  General  Manager,  a Director  for  Bank  Products  and  Services,  a  Director  for  Analytics  and  Policy,  office  interns;  and  ii) in Albania – a General Manager, a Director for Financial Modernization Program and Analytics, a Director for Operations and one or two part‐time experts to cover analytical work. The  Romania  model  did  not  have  separation  of  duties;  the  Albania  model  did  not  cover  all  the responsibilities.  In  Romania,  both  directors  carried  out  analytical  work  and  could  handle  four  to  six projects  simultaneously;  in  Albania  only  one  did  analytical  work  and  the  Director  of  Operations  had difficulty  in  covering  secretarial  work.  The  optimum  formula  for  an  SPI  secretariat  might  be  a  General Manager with analytical and public relations skills and executive responsibilities, a Director for Analytics and Policy, part‐time assistant experts and a junior to manage the office. One  of  the  most  important  aspects  of  the  SPI  Secretariat’s  activity  is  its  position  as  a  neutral  body,  an “honest broker”. The SPI Secretariat has to build consensus among project working group members and SPI  Committee  members.  This  constitutes  a  fundamental  difference  between  the  SPI  Secretariat  and other employees of the SPI Platform. Box 9‐ Ten Golden Rules for Consensus Building  • Gain the confidence of project working groups through sound preparation of documentation and  meetings.  • Maintain a neutral position in project working group meetings.  • Focus project working group discussions.  • Keep accurate minutes.  • Keep track of disputed issues.  • Seek the arguments of all parties on disputed issues.  • Look for international experience in disputed issues.  • Ask for the opinions of third parties on disputed issues.  • Seek middle‐way solutions.  • Ask for the approval of project working groups for documents, particularly SPI committee  recommendations. In summary, the SPI Platform has three components: i) the policy‐making body – the SPI Committee; ii) the  operational  engine  –  the  SPI  Secretariat;  and  iii)  the  brain  –  the  project  working  groups.  Annex  I‐2 shows the SPI Albania organizational chart, which sets out the main responsibilities of each party and the composition of the managing and executive bodies of the public‐private partnership.     22 
  • 19. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  1.1.9. SPI Operating Principles   The SPI operating principles are therefore:    Local ownership. This is achieved through the support of the local stakeholders and their powers  to:  i)  decide  on  the  SPI  program;  ii)   mobilize  their  experts  and  cover  a  share  of  operating  expenses;  and  iii)  identify  solutions  and  select  those  that  address  their  concerns  and  accommodate their interests.    Programmatic  focus.  The  issues  to  be  tackled  under  SPI  are  proposed  by  the  partners  in  consultation. They are prioritized according to the financial modernization program objectives or  policy priorities approved by the SPI Committee. In Albania, for example, the annual program for  2009 was built up in the context of the policy priorities of the Albanian banking system, discussed  in Bank of Albania’s Banking Forum and other meetings with banks, authorities and donors.    Mobilization  of  local  expertise.  The  annual  program  is  implemented  by  public‐private  working  groups of local experts, led by a project management group.    Involvement  of  foreign  experts  to  fill  knowledge  gaps.  The  project  working  groups  prepare  proposals for regulatory or self‐regulatory changes, supported by the SPI Secretariat; if necessary,  project working groups invite international experts to provide complementary perspectives.    Disciplined program management. Project working groups run the projects according to detailed  ToR prepared by the SPI Secretariat. The ToR’s are based on standard documentation from the EU  Better Regulation system and must be discussed in project working group meetings within three  months.  The  recommendations  of  the  project  working  groups  are  endorsed  by  the  project  management  group  and  the  SPI  Committee  before  being  sent  to  the  relevant  authorities  for  consideration.   Evidence‐based analytical methods. Projects are implemented according to EU Better Regulation  methods: the main principles are that stakeholders must be consulted on policy options and that  Regulatory  Impact  Assessment  must  be  used  to  provide  supporting  evidence  for  regulatory  proposals.    Transparency.  The  governance  framework,  project  implementation  records  and  documents  are  made  available  to  the  public  through  the  SPI  Platform  website  and  on  the  websites  of  SPI  partners.     Practical  impact.  The  outcomes  of  the  SPI  are  not  studies  or  proposals:  they  are  regulatory  or  self‐regulatory changes.    1.1.10. Potential Future Development for SPI The SPI Platform has the potential to become the hub of a country’s financial modernization in facilitating the  involvement  and  coordination  of  donors  in  a  program  that  reflects  national  needs  (see  Annex  I‐4). The SPI Platform model offers significant cost and knowledge benefits in terms of the scale of operations and  the  networks  of  experts.  The  SPI  Committee  can  use  its  authority  to  promote  the  enactment  of regulatory proposals. International donors might sponsor the technical assistance necessary for carrying out analytical work for the project working groups, and in return SPI could offer donors a cost‐effective instrument for promoting financial modernization and preparation for EU integration.     23 
  • 20. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009   1.1.11. SPI Costs and Resources The costs of an SPI Platform are salary costs for the SPI Secretariat, equipment purchases and the costs of running an office and organizing events. The costs will vary depending on conditions in each country. The annual budget of an SPI Platform is estimated at €100,000 on the basis of the Albania case: a small SPI Secretariat  and  involvement  of  foreign  consultants  as  required.  A  ten‐project  annual  program  would therefore cost €10,000 per project.  In 2007 in Romania, 40 institutions – 9 public and 31 private – provided 120 experts who had 55 project meetings and spent 150 hours deciding on projects and implementing them.  With  regard  to  the  mobilization  of  in‐kind  partners,  in  the  first  18  months  of  operation  in  Albania  27 private institutions, of which 16 were banks, and six public institutions appointed 145 experts who met in 27 project working group meetings. The value of this stakeholder contribution in 2008 can be estimated as    the  opportunity  cost  of  these  experts  contributing  1,000  person‐days,  equivalent  to  five  staff  for  a year, based on two‐hour meetings per project.  ANNEX                                                                                                                                             ANNEX Section                                                                          Page Number  Annex I‐1    SPI Committee Operating Guidelines                    1 Annex I‐2    SPI Platform Presentation to Banking Association               27 Annex I‐3    SPI Platform Achievements                     35  Annex I‐4    SPI Platform: A Financial Modernization Hub Framework              39           24 
  • 21. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 Why Build an SPI Platform?  2.1. Rationale for Establishing an SPI Platform In this chapter, the promoter of the SPI Platform will find additional arguments in support of the idea. A  practical  approach  to  analysing  the  feasibility  of  establishing  an  SPI  Platform  is  the  strengths, weaknesses,  opportunities  and  threats  (SWOT)  system,  which  enables  a  business  person  to  reach  a decision by balancing the pros and cons and to develop appropriate risk‐mitigation strategies.  Box 10‐ SWOT Analysis for the SPI Platform  STRENGTHS  WEAKNESSES  Sound institutional framework   Additional costs for banks  Programmatic approach   Additional resources invested  Results orientation   No clear legal status (unless addressed)  Local leadership and initiative   Unclear institutional development  Efficiency  perspectives (unless addressed)  Productivity    Institutional capacity‐building  Focus on implementation  Structured processes  Evidence‐based approach  Standard documents  Accountability  Neutral stance   OPPORTUNITIES  THREATS  Developing markets, with large volumes of   Overlaps with other initiatives  modernization opportunities   Overlaps with banking association activities  Convergence with EU regulations   Competition with the banking association  Support from EBF members   Public institutions not willing to enter into  EU and other funding sources  partnership  Complementarities with banking association   Low probability of finding skilled people for  activities  the SPI Secretariat  Local expertise    Cooperation with similar Platforms  Tested framework, processes, efficiency and  productivity   These aspects are discussed in the following paragraphs.   25 
  • 22. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 Strengths.  An  SPI  Platform  is  a  stable  framework  for  cooperation,  not  a  single‐project  initiative.  Sound governance  means  that  it  addresses  the  sharing  of  responsibilities  and  cooperation  and  accountability among the parties; and it covers all project steps, with emphasis on implementation. Prior approval of a programmatic  framework  by  high‐level  public  and  private  partners  increases  the  likelihood  of  rapid practical results quickly. Banks have the right to propose issues to be solved in cooperation with public and  private  partners  and  to  take  advantage  of  the  synergies  among  projects.  Projects  are  largely implemented  by  local  experts,  which  helps  build  analytical  and  consensus‐building  capacities;  foreign experts intervene only to fill local knowledge gaps. Private stakeholders take part in designing regulatory solutions and can compare their opinions with those of experts from the public sector in the structured environment  of  the  SPI  Platform.  The  SPI  Secretariat  provides  assistance  and  support  with  additional analytical services while maintaining a neutral stance. The functionality and efficiency of the SPI Platform have been successfully tested in two countries. Weaknesses.  The  disadvantages  of  the  SPI  model  are  that it  may  require  additional  financial  and  other contributions from banking association members, and it might not have clear legal status at the outset. The size of the additional contributions depends on factors such as salary levels, the possibility of sharing costs with other SPI partners, and the prospects for attracting donors to sponsor the establishment and operation of SPI. This Toolkit offers detailed information for potential sponsors on access to EU funding. Identification  of  a  funding  source  covering  the  first  years  of  operations  could  solve  the  issue  of  SPI sustainability, but clarification of legal status is a prerequisite for accessing funds.  Opportunities. The basic opportunity for establishing an SPI Platform is the need for financial modernization in  a  country.  Consultations  in  2008  in  Romania  brought  35  modernization  issues  before  SPI  Committee’s table; consultations in Albania in 2009 identified 40 project proposals. A large banking group has listed 273 regulatory  issues  that  need  to  be  addressed  in  central  and  southern  Europe.  Regulatory  reform requirements can be greater for countries in the process of EU pre‐accession. Opportunities for establishing a financial sector modernization body should be tested in consultations with potential partners. It  is  important  to  stress  that  EBF  is  willing  to  support  its  Associates  in  establishing  and  operating  SPI Platforms (see Chapter 9, page 51). This support includes dealing with EU institutions, raising awareness and  building  consensus  among  EBF  Associates  and  public  institutions.  The  cooperative  framework  that EBF can create and maintain for SPIs is a major asset in dealing with the weaknesses and threats. Pre‐accession  to  EU  country  status  brings  with  it  access  to  EU  funding,  which  mitigates  one  of  the identified weaknesses – additional costs for partners. The existence of reliable funding sources will solve the issue of SPI sustainability, and the eligibility criteria for accessing EU funds will help to clarify the legal status of the partnership.  Threats. Potential threats to the establishment of an SPI Platform include the possibility of overlap with the  work  of  the  banking  association  and  the  danger  of  the  SPI  Platform  becoming  a  competitor  to  the banking  association.  In  such  a  case,  any  overlapping  could  be  transformed  into  complementarities  and cooperation between the SPI Platform and the banking association. The Romania case showed that this in fact happened, and that each institution used its comparative advantage to leverage the effects of their joint activities.    26 
  • 23. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 SPI  Platform  complements  and  expands  the  banking  association’s  work  on  building  an  industry  position  on various issues. Box 11‐ Cooperation between Romanian Banking Association and SPI Romania  • Projects supported by the Banking Association  – Building a stronger image of the SPI program  – Bringing the SPI program into Romanian institutions  – Discussing SPI projects at monthly meetings with the central bank   – Gathering banking professionals  – Building banking consensus on SPI projects  • Support by the SPI Secretariat for the Banking Association  – Managing projects for the banks  – Analytics and international benchmarking  – Convening experts of public institutions and private non‐financial entities   – Engagement in public consultations    – EU Better Regulation impact assessment Box 12‐ Banking Association – SPI Platform Criticalities 1. The banking association must be alert to policy and regulatory developments. An SPI Platform exists  to handle projects where there is prior agreement in principle between the authorities and the  banking industry. Both stakeholders retain full freedom to regulate and advocate without SPI  Platform involvement. 2. The banking association must monitor SPI work in progress to ensure that the discussions of project  working groups reflect banking industry views and to build consensus among their members with  regard to the recommendations of project working groups. The banking association may wish to  have parallel technical discussions among its membership to give project working group  representatives the full range of banking industry views. 3. The banking association must support SPI Committee follow‐up actions to ensure that its  recommendations are implemented.        Box 13‐ Benefits of the SPI Platform for the Banking Industry1. It creates space for banking industry initiatives, particularly when public action is hampered by  fragmented decision‐making. 2. It facilitates a medium‐term programmatic approach rather than reactive case‐by‐case dialogue with  financial regulators. 3. It secures a high degree of likelihood of public action on SPI Platform recommendations as a result of  prior SPI Committee commitment. 4. It increases the quality of recommendations through informal collaboration with public‐sector experts. 5. It increases professional networking among private and public experts, promoting faster growth of  sophisticated expertise in the country.      To summarize, the outcomes of an SPI Platform are worth the effort involved in establishing and running the  public‐private  partnership.  The  knowledge  and  support  at  the  EU  level  are  strong  arguments  in  its favor. The first things to be assessed in the initial stage are the “market” for financial modernization and other institutions’ openness to join the partnership.   27 
  • 24. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 How to Promote an SPI Platform?  3.1. Steps for Building an SPI Platform Establishing  an  SPI  partnership  is  a  long  step‐by‐step  consensus‐building  process.  In  this  chapter  we assume that a banking association that is an EBF associate is the SPI Platform promoter.   First, the banking industry should be made aware of SPI so that it can assess the feasibility of establishing the partnership and  initiating the build‐up  actions. Then the main public partner should  be gained as a supporter of the idea. This nucleus can invite other private and public institutions to join the partnership.  Box 14 – Four‐step consensus‐building process 1.  Steps for building consensus among banks:  i.  EBF Associate’s decision to assess the feasibility of establishing the SPI Platform.  ii.  Bilateral discussions with the EBF Associate’s senior management.  iii.  Seminar for bank staff.   iv.  EBF Associate’s decision to initiate the SPI Platform. 2. Steps for initiating the partnership:  i.  Bilateral discussions between high‐level representatives of banks and public authorities.  ii.  Seminar with public authority staff.  iii.  Official proposal to the central bank.  iv.  Joint invitation from the central bank and banking association to other stakeholders. 3. Steps for establishing and running the partnership:  i.  SPI Committee set up.  ii.  Preparation of public‐private partnership project.  iii.  Submission of request for funding to European Commission and other donors. 4. First implementation steps of project when funding has been secured:  i.  Hiring SPI Secretariat staff.   ii.  Training SPI Secretariat staff.     iii.  Designing and setting up a multi‐annual financial modernization program.   3.2. Consensus–Building among Banks on Initiating the SPI Platform The starting point for consensus‐building is the decision by the management of the EBF Associate to take the  preliminary  steps  for  establishing  the  SPI  Platform:  awareness‐building  and  consultations  with  the banks.  The  decision  to  go  further  depends  on  raising  awareness  of  the  advantages  of  SPI  Platform, because  the  banks  will  have  to  contribute  expertise  and  money.  The  annexes  to  this  Toolkit  give  the promoter a rich `set of tools – questions and answers, presentations, draft communications for banks, a seminar  package  and  a  questionnaire  for  assessing  the  potential  project  –  that  can  be  used  in  the negotiations.      29 
  • 25. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009   3.2.1. EBF Associate’s Decision to Assess the Feasibility of Establishing an SPI Platform To  persuade  the  management  of  the  EBF  Associate  of  the  merits  of  SPI  Platform,  the  promoter  should give  a  presentation  on  the  SPI  partnership  and  on  the  proposed  approach  strategy,  and  answer  any questions. The Toolkit offers a presentation (Annex I‐2) and a question‐and‐answer discussion instrument (Annex III‐1) that goes into greater detail. Anticipating positive feedback, the Toolkit provides a draft of the communication to senior bank management (Annex III‐2) as a basis for public consultations with the industry. These  consultations  should  involve  senior  management  of  the  banks,  and  then  address  the  executive levels. For practical reasons, senior management must be approached through bilateral meetings because it is unlikely that senior managers of all banks will be available on a given date. The other levels of bank management should be addressed in a seminar. Information  gathered  through  this  round  of  consultations  will  enable  the  EBF  Associate  to  decide  to initiate establishment of the SPI Platform.  3.2.2. Bilateral Discussions with the EBF Associate’s Senior Management Bilateral  discussions  with  senior  bank  managers  are  essential  for  raising  awareness  about  the  SPI Platform, for obtaining opinions as to the feasibility of establishing the SPI Platform and implementing its actions and for understanding and addressing the banks’ concerns.  To get the best results from the bilateral discussions, the Toolkit provides a presentation to be delivered during  the  meeting  (Annex  III‐3),  a  questionnaire  to  help  banks  to  identify  modernization  issues  to  be undertaken by an SPI Platform (Annex III‐4), and a checklist (Annex III‐5). The presentation is designed to address a bank management’s primary points of interest: what is “SPI”, what does it do, what results are envisaged, and what is the quantitative impact on banks likely to be in terms  of  annual  costs.  The  questionnaire  is  intended  to  help  interviewees  to  understand  what  an  SPI Platform  could  do  for  banks.  These  processes  are  backed  up  by  the  check‐list.  The  overall  aim  is  to provide the information necessary for the EBF Associate to reach its decision.        3.2.3. Seminar for Bank Staff Having collected policy opinions from senior managers, the promoter must obtain technical opinions to ensure  that  potential  project  working  group  members  understand  the  SPI  Platform  concept  and  are willing to be involved in its activities. The presentation given  in  seminar for  bank  staff therefore  focuses on project management  procedures and  on  analytical  methods.  It  describes  the  roles  of  project  working  groups  and  the  SPI  Secretariat, cooperation with banks, the banking association and its committees. Brainstorming sessions on the SWOT analysis  of  the  SPI  Platform  or  the  project  pipeline  of  an  SPI  Platform  encourage  bank  executives  to provide feedback.   30 
  • 26. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 The Toolkit provides the seminar package: the invitation letter (Annex III‐6), an agenda (Annex III‐7) and a presentation (Annex III‐8).      3.2.4. EBF Associate’s Decision to Initiate the SPI Platform The results of the public consultations should be made known to the EBF Associate so that an informed decision can be made. The Toolkit provides an outline of the memo to be presented to the management of the EBF Associate (Annex III‐9). For reasons of transparency, the findings of the consultations with the banks should be made known to all participants.  ANNEX                                                                                                                                                           ANNEX Section                                                                         Page Number Annex III‐1               SPI Platform Questions and Answers                                                                      41    Annex III‐2               Draft Communication Letter to Bank Management                                             45                  Annex III‐3               SPI Platform Presentation to Bank Management                                                  47              Annex III‐4               SPI Platform Pipeline Building Questionnaire                                                        53           Annex III‐5               Checklist for Bilateral Meetings with Banks                                                           63      Annex III‐6               Banking Community Seminar Invitation Letter                                                      65   Annex III‐7               Banking Community Seminar Agenda                                                                     67   Annex III‐8               SPI Platform Presentation to Financial Community                                              69  Annex III‐9               Memo Outline on Consultations with Banks                                                          81          31 
  • 27. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 How to Initiate the SPI Partnership with Authorities? This  chapter  guides  the  promoter  of  the  SPI  Platform  through  the  process  of  advocacy  with  public authorities. It contains a set of tools and instructions for organizing actions and using information already presented or available from other sources. As mentioned in the previous chapter, we assume here that the banking association is the SPI Platform promoter. Given the support of the banks, the EBF Associate should identify the public authorities to be approached to establish the SPI Platform. The most important are the Central Bank and the Ministry of Finance.  Involvement  of  the  supervisory  authorities  is  essential  in  view  of  the  collaboration  between  them  and market participants. It is important to understand that the SPI Platform will be only partially involved with matters that come under the direct and exclusive oversight of the supervisory authorities.7 It is vital for the performance and impact of the SPI Platform to define a significant role for the Ministry of Finance or the  Ministry  of  the  Economy,  because  they  are  responsible  for  policy  analysis,  the  design  of  financial modernization interventions and legislative action on matters affecting the financial sector.8  The  Ministry  of  Justice  must  also  be  approached  because  its  endorsement  of  legal  proposals  will  be needed. The authority regulating the capital, leasing and other financial markets should be on the list of potential SPI partners because it has many interests in common with the banking sector. And because all SPI projects have  a  public good  impact  –  some also have  important consequences for consumers  –  the authority in charge of consumer protection should also be approached.  The  consultation  strategy  for  public  authorities  is  similar  to  that  for  the  banking  community:  first,  a “political” stock‐taking round  at the senior management level, followed by a seminar for executive and technical  staff.  The  results  of  these  consultations  should  be  synthesized  in  a  memorandum  for  the attention of the management of the EBF Associate and as a basis for the next steps (see Annex IV‐1).   4.1 .  Bilateral  Discussions  between  Senior  Management  of  Banks  and  Public  Authorities   The first institution to be approached is the other main partner – the Central Bank. Soon after this, the managers of the banking association should approach the Ministry of Finance or Ministry of the Economy, preferably at the level of the Deputy Minister in charge of financial sector policy issues. Bilateral  discussions  between  banks  and  public  authorities  should  be  introduced  through  a  letter  (see draft in Annex IV‐2).                                                              7  Unless the supervisory authorities wish to avail themselves of the SPI Platform’s collaborative analytics to analyse proposed regulations in consultation with market participants, in line with EU Better Regulation principles. 8  For a discussion of the roles of financial authorities and governments on financial efficiency, see: Lucas Papademos, European Central Bank Vice President – Price stability, financial stability and efficiency, and monetary policy , 7 July 2006.   33 
  • 28. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 The discussions should be supported by a presentation (see Annex IV‐3) that emphasizes the public good elements of the SPI partnership and the benefits that public institutions can obtain by participating in the partnership.  The  presentation  focuses  on  the  projects  proposed  by  the  public  authorities  in  Romania  and  Albania. Some  of  them  concerned  prudential  issues,  because  the  central  banks  appreciated  that  they  could  use information  from  banks  or  consulting  companies  to  determine  readiness  to  implement  regulatory provisions,  the  impact  on  banks,  the  timeline  for  implementation  and  the  clarity  of  the  regulations. Central  banks  in  modern  economies  consult  market  participants  on  new  regulations  –  and  the  SPI Platform  is  a  structured  framework  for  doing  this.  The  central  bank  will  wish  to  be  involved  in  market efficiency issues with a view to preserving public goods, consumer rights, sustainable development and stability. A concern that arose  in discussions with central banks related to the participation of private entities in defining  prudential  and  stability  regulations  that  are  the  exclusive  responsibility  of  a  central  bank.  This concern is justified, but it is mitigated by the fact that central banks have a right of veto on the SPI activity plan  and  full  rights  of  approval  of  SPI  Platform  proposals  through  their  SPI  Committee  representation. Even  when  regulations  are  drafted  with  inputs  from  an  SPI  Platform,  the  central  bank  retains  an undiminished right and responsibility to approve and enact regulatory provisions. The  promoter  should  consult  the  Central  Bank  and  the  Finance  and  Economy  Ministries  as  to  other institutions to be approached for the partnership, the legal status of the SPI and the next steps. It is of paramount  importance  that  the  Central  Bank  is  comfortable  with  the  SPI  Secretariat  located  in  the banking  association  and  that  it  trusts  its  neutrality  under  these  circumstances.  The  SPI  Secretariat operates under a fiduciary mandate from the SPI Committee: as a check‐and‐balance measure, it will be important  for  the  SPI  Committee  to  be  chaired  by  a  public‐sector  representative,  particularly  if  the  SPI Secretariat is located in the banking association. If  the  public  authorities  express  concern  that  the  banking  association’s  representatives  cannot  respond immediately, the latter should collect the concerns and set up a second round of bilateral meetings. The EBF can help in clarifying issues and suggesting solutions.  4.2  Seminar with Public Authority Staff Middle  managers  of  the  public  authorities  should  be  invited  to  a  seminar  so  that  they  can  form  a comprehensive impression of the SPI partnership, the contribution expected of them and the advantages they can expect from being involved in SPI  activities.  The  feedback  from the  interactive  sessions of the banking sector seminar will help senior representatives decide on participation in the partnership.   The seminar package for the banking association can also be used for public authority staff (see Annexes III, 6‐8). If the banking association decides to run parallel consultations with banks and public authorities, only one seminar need be organized for middle management of private and public institutions.     34 
  • 29. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  4.3 Raising Public Awareness of the SPI Platform Public information concerning the initiative to establish an SPI partnership is important because it helps stakeholders  to  buy  into  the  idea.  And  it  can  attract  supporters  such  as  international  donors  and  raise public awareness.  The direct advocacy campaign should be complemented by a public information campaign in support of the decision to establish an SPI Platform. This can be done by inviting the media to the seminars and by publishing  articles  on  SPI  governance,  results  and  experiences  in  other  countries,  interviewing  banking association  managers  in  public  and  disseminating  the  opinions  of  academics  and  international institutions.  The  Toolkit  provides  comprehensive  information  for  use  by  a  media  specialist  in  preparing  a  public information campaign.  4.4 Improved Regulation Methods and Regulatory Impact Assessment Tools –  Seminar for Public Authority Staff  Public  authorities  are  usually  interested  in  adopting  the  analytical  methods  of  the  SPI  Platform  –  EU Better Regulation and RIA, its quantitative evidence tool. Introducing RIA practice and the possibility of exercising it with private institutions, but having the work done by the SPI Secretariat, is one of the most appealing arguments in favor of the SPI Platform. The seminar on RIA capacity‐building should be based on the model provided by the seminar in Albania (http://www.spi‐albania.eu/en/ria‐capacity‐building/). This had three sessions: i) introducing participants to  EU  Better  Regulation  and  RIA;  ii) applying  RIA  to  proposed  local  regulations;  and  iii) assessing  the results of the exercise. This process takes some time and involves homework between seminar sessions. The  Convergence  Program  website  gives  a  list  of  RIA  experts  who  were  invited  to  training  sessions  in Albania, Bulgaria, Romania and Slovenia.9  ANNEX                                                                                                                                                              ANNEX Section                                                                          Page Number Annex IV‐1                  Memo Outline on Consultations with Authorities                                              83 Annex IV‐2                  Draft Introductory Letter to Public Authorities                                                   85 Annex IV‐3                  SPI Platform Presentation to Public Authorities                                                 87                                                               9  http://www.convergence‐see.eu/work‐method/to‐learn‐more.html   35 
  • 30. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 How to Launch an SPI Platform? This  chapter  sets  out  the  steps  to  be  taken  to  set  up  the  SPI  partnership  once  key  public  and  private stakeholders have agreed to it.  Establishing the SPI Committee sets up the partnership. This strategic decision must be made known to other institutions and to the public. The Toolkit annexes document the actions to be taken at this stage: an official invitation letter to the central bank and the finance and economy ministries, a note backing up the letter, a draft joint letter inviting other institutions to join the partnership, a possible open letter from the newly established SPI Committee, and the operating guidelines covering this stage.   5.1.    Setting up the SPI Committee  On  the  basis  of  a  memorandum  detailing  the  favorable  results  of  consultations  with  public  authorities (see Annex IV‐1), the management of the banking association will be able to take the decision to establish the SPI partnership. The  next  action  is  to  set  up  the  supervising  body  of  the  partnership,  the  SPI  Committee,  whose  main responsibilities at this  stage are to raise awareness  of the initiative, take the necessary  steps to ensure funding, recruit the SPI Secretariat team and decide on the first projects to be undertaken.    5.1.1 Official Invitation to the Central Bank and Ministries The first step is to send official invitations to the central bank and relevant ministries to enter into the SPI partnership (see Annex V‐1). The information provided in the note attached to the invitation letter (see Annex V‐2) should enable the governing bodies of the public authorities to take an informed decision and empower  their  members  to  represent  them  on  the  SPI  Committee  for  the  initial  mandate  to  secure financial coverage for SPI Platform activities.  5.1.2 Joint Invitation to Other Stakeholders The two private‐public founding institutions should send invitation letters to other potential SPI partners. As mentioned in Chapter 1, an institution can be invited to nominate a permanent observer or a member to the SPI Committee, subject to approval by the initial SPI partners. A  joint  letter  constitutes  a  statement  that  the  SPI  partnership  is  established,  so  it  will  have  a  greater impact  on  the  invited  institutions.  A  sample  invitation  letter  is  provided  in  Annex  V‐3;  it  should  be adjusted  in  line  with  the  agreed  composition  of  the  SPI  Committee.  The  note  in  Annex  V‐2  could  be attached  to  the  joint  letter  because  it  provides  summary  information  about  the  SPI  Platform  and  the responsibilities of the SPI Committee.  5.1.3 First SPI Committee Meeting The establishment of the SPI Committee should be marked by a launch meeting to approve the operating guidelines  for  this  pre‐funding  stage,  to  clarify  the  responsibilities  of  each  member  institution  and  to define the next steps (see Annex V‐4).   37 
  • 31. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009  The  newly  established  SPI  Committee  should  announce  the  launch  of  the  partnership  through  an  open letter to be published in newspapers and posted on the partners’ websites (see Annex V‐5).  ANNEX                                                                                                                                                                   ANNEX Section                                                                         Page Number  Annex V‐1            Draft Invitation Letter to Central Banks and Ministry of Finance                                   95 Annex V‐2            Decision Note for Authorities                                                                                               97 Annex V‐3             Draft Joint Invitation Letter to SPI Partners                                                                     101 Annex V‐4             SPI Committee Operating Guidelines in the Initiation Stage of the                            103                                Public – Private Partnership                                                                                                                                  Annex V‐5             Draft Communication on SPI Partnership launching                                                     109             38 
  • 32. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 How to Fund SPI Platform Activities?  6.1.    Fund‐raising for the Public‐Private Partnership Project As  sponsor  of  the  SPI  Platform,  the  banking  association  must  take  the  lead  in  mobilizing  financial resources  for the SPI Secretariat, recruitment of technical assistance to identify financial modernization interventions,  project  implementation  and  organization  of  project‐related  events  such  as  awareness‐building and public information campaigns.  Part of  the cost  should  be covered by  the  banking  association  from members’ contributions, part in  by kind  potential  secondments  from  local  private  or  public  institutions  and  the  rest  through  international assistance.  EU  funding  should  be  targeted,  but  other  sources  could  be  explored  such  as  the  European Bank for Reconstruction and Development (EBRD)10 (www.ebrd.com/about/index.htm), the United States Agency  for  International  Development  (USAID)  (www.usaid.gov/business)  and  the  Centre  for International  Private  Enterprise  (CIPE)  (www.cipe.org/programs/ba/index.php).  Information  on international  assistance  available  present  in  a  country  should  be  sought  from  the  government  donor coordination department or similar body. As  an  example  of  approaching  international  donors,  Annex  VI‐1  provides  two  samples  of  funding applications sent to World Bank‐managed Financial Sector Reform and Strengthening (FIRST) Initiative by SPI Albania.   6.2.  Potential EU Funding Sources The Financial Perspectives of the European Union adopted in April  2006 set the priorities of the EU for 2007–2013. On the basis of this document, the European Commission prepared 300 funding programmes for  this  period,  with  revised  budgets  and  renewed  priorities  of  competitiveness,  innovation  and employment.  The EC holds the view that it is of paramount importance to strengthen civil society in the region and that its organizations demonstrate their legitimacy and credibility as reliable and constructive partners. One of the programs developed by the EC is the Civil Society Facility (CSF) – Partnership Actions involving socio‐economic partners that addresses the mandate of an SPI Platform.  Box 15‐ The EU Civil Society Facility CSF has three areas of activity: i) local civic initiatives and capacity‐building; ii) People 2 People; and iii) CSF Partnership Actions, which focus on developing networks of civil society organizations (CSOs) and promoting transfers of knowledge and experience. CSF Partnership Actions favor: a professionally operating civil‐society sector; new CSO networks, strategies and initiatives; improved services and dissemination of common values in the region; and greater support for democratic issues.                                                              10  EBRD sponsors similar initiatives such as business support councils in Armenia, Georgia and Mongolia.   39 
  • 33. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 CSF is financed from the Instrument for Pre‐Accession Assistance (IPA) multi‐beneficiary program managed by DG Enlargement, Directorate D, and from national IPA programs managed by EC delegations. Regional partnerships should consist of at least three CSOs from three beneficiary entities and one from the EU.  Activities under CSF‐partnership action include: ‐ organization and implementation of workshops, information events, training sessions and communication and awareness‐raising campaigns; ‐ provision of training and expert advice to increase the capacity of CSOs to assist and advise their members on the implementation and impact of the relevant EU acquis communautaire; ‐ organization and implementation of partnership activities to link business associations, trade unions, think‐tanks and other CSOs with each other and with stakeholders; and ‐ establishment of communication Platforms to promote and exchange good practices and to formulate recommendations and practical solutions (that is, the SPI Platform). Banking  associations  could  be  beneficiaries  of  this  program.  They  could  apply  under  national  IPA programs or, if organized in a regional partnership, under IPA multi‐beneficiary program. Under  IPA  multi‐beneficiary  program,  the  SPI  Platform  program  will  be  implemented  through  grant contracts following calls for proposals. The selection and award criteria for the award of grants are laid down in the practical guide to contract procedures for EC external actions. The  IPA  is  the  EC’s  financial  instrument  for  the  pre‐accession  process  for  2007–2013.  Assistance  is provided on the basis of the European and accession partnerships of candidate countries, currently the western Balkan countries and Turkey. The IPA is a flexible instrument that provides assistance depending on  the  progress  made  by  beneficiary  countries  and  their  needs  as  shown  in  EC  evaluations  and  annual strategy papers. Box 16‐ Information about EU IPA  Beneficiary countries are divided into two categories depending on their status as candidate countries for accession or potential candidate countries undergoing the stabilization and association process. Candidate countries are Croatia, Turkey and the former Yugoslav Republic of Macedonia; potential candidate countries are Albania, Bosnia and Herzegovina, Montenegro and Serbia including Kosovo as defined by United Nations Security Council Resolution 1244. Exceptionally, and in the interests of coherence and efficiency, other countries may benefit from measures financed under IPA, provided the measures form part of a regional, cross‐border, trans‐national or worldwide framework and do not duplicate other programs under EC external aid instruments. The IPA was designed to address the needs of beneficiary countries in the context of pre‐accession. Its main aim is to support institution‐building and the rule of law, human rights including the fundamental   40 
  • 34. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 freedoms, minority rights, gender equality and non‐discrimination, administrative and economic reforms, economic and social development, reconciliation and reconstruction, and regional and cross‐border cooperation. To ensure targeted, effective and coherent action, the IPA is made up of five components covering priorities defined according to the needs of beneficiary countries. Two components concern all beneficiary countries:  ‐ support for transition and institution‐building, aimed at financing capacity‐building and institution building; and ‐ cross‐border cooperation, aimed at supporting beneficiary countries in cross‐border cooperation among themselves and with Member States. Banking  associations  should  consult  with  the  EU  delegation  in  their  countries  for  further  details  about other EU programs that could finance SPI Platforms in full or in part.  6.3. Preparation of the SPI Project for EU Funding To prepare the SPI project as a sound business case for EU funding, applicants should first understand EC interests  in  a  particular  area.  The  project  can  be  a  strong  case  if  it  encompasses  the  EC  priorities  of competitiveness, innovation and employment. SPI projects fall under “innovation”. The  applicant  should  select  the  optimal  financing  programme,  because  it  is  not  possible  to  apply  for several programmes at the same time for the same action. The EC provides a search engine on European programmes. The Convergence Program has identified the national IPA and the multi‐beneficiary IPA Civil Society Facility – Partnership Actions project.  Preparing  a  EC  funding  application  requires  some  knowledge  of  the  EC  programmes:  their  legal  basis, geographical coverage, eligible organizations, partnership criteria and date of the publication of the next call for proposals.  The  potential  applicant  should  understand  the  life‐cycle  of  a  program:  i) preparation  –  analysis  and feasibility; ii) programming once the program  is adopted and the legal  aspects defined for one or more years; iii) implementation – before 31 March of each year the EC publishes an annual work programme defining the priorities of the program and the financial decisions for the year; and iv) re‐programming – an evaluation at the end of the program to obtain operational results. To select projects for the programs, the EC uses the call for proposals procedure. Examples may be found on  the  Welcomeurope  website.  If  the  program  has  a  preliminary  stage,  the  call  for  proposals  refers  to expression‐of‐interest  papers  (see  Annex  VI‐2  for  the  document  prepared  by  Regione  Puglia  for  an  SPI Adriatic  program  under  the  Southeast  Europe  Transnational  Cooperation  Program (http://www.southeast‐europe.net/hu/), one of the regional cooperation programmes supported by IPA.   41 
  • 35. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 The applicant should recruit the project participants and establish distribution of responsibilities among participants:    The  contractor  is  the  organization  that  has  prepared  the  funding  request  and  that  will  sign  the  grant  agreement  with  the  EC  if  the  project  is  selected.  In  the  case  of  an  SPI  it  should  be  the  banking association and/or the SPI legal entity.   The  partners  constitute  a  body  that  participates  in  the  project  from  inception  to  conclusion.  In  the case of an SPI these include financial authorities, consumers’ associations, universities, think‐ tanks and employers’ associations.   Other  participants  include  the  sub‐contractor,11  the  associate  partner  or  collaborator,  the  committee,12 the co‐financer and the sponsor. In the case of an SPI, the SPI Committee should be  included.  The  coordinator  must  prepare  and  propose  to  the  partners  a  working  method  for  the  project  and  the partnership.  In  the  case  of  an  SPI  Platform  project  this  is  covered  by  the  SPI  Committee  operating guidelines; in the case of a regional partnership, the project should show the distribution of tasks among regional  partners.  Documentation  of  a  regional  partnership  can  be  based  on  standard  letters  of  intent provided by the EC for annexation to the application. There must be a project sheet that answers the main initial questions:   What is the rationale for your project?    What is the context of your project – political, legislative, projects already funded in this field?   What are its objectives? A European project has to be sound, meet a global objective and have  several objectives.   Whom does your project address?   How?   Which activities should be undertaken to achieve your objectives?   With whom?   What are the capabilities and appraisals needed for the project?   Where?   Where the project activities take place?   What will the results be?   What results do you aim to achieve through this project?  Annex VI‐3 gives a detailed project description for applying for EU funding.                                                                11  The sub‐contractor is entrusted by the project leader or by a member of the partnership to carry out part of the project on the basis of remunerated service delivery corresponding to the market price. 12  To set up a suitable project monitoring and evaluation system, the project partnership may canvass the opinions of a scientific committee made up of external experts that will evaluate progress.     42 
  • 36. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009   6.4   Other Potential Funding Sources SPI Platform stakeholders (either public institutions or  banking associations) can also apply for TAIEX assistance to receive technical support from EU experts on specific financial modernization projects that involve approximation with EU legislation.  SPI Albania successfully applied for TAIEX assistance to ensure that the solution identified by the local team on modernization of public procurement for financial advisory services was in line with EU best practices.  Annex VI‐4 gives information about TAIEX. Annexes VI‐5 and VI‐6 show the application and the structure of the TAIEX‐supported intervention respectively.  ANNEX                                                                                                                                                              ANNEX Section                                                                          Page Number Annex VI‐1                       SPI Albania FIRST Application Enquiries Example                                       111 Annex VI‐2                       EU Project Expression of Interest                                                                  117 Annex VI‐3                       Bank Enterprise Adriatic Observatory Project Draft                                  123 Annex VI‐4                       TAIEX General Background                                                                             131 Annex VI‐5                       TAIEX Project Application                                                                               133 Annex VI‐6                       TAIEX Technical Meeting Agenda                                                                  139   43 
  • 37. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 How to Implement SPI Platform Activities? This chapter sets out the steps for implementing  SPI Platform activities once funding has been secured.  Two issues have to be settled: i) Who is going to be in charge of daily operations? and ii) What projects are to be undertaken by the partnership? This chapter presents some functions of the SPI Secretariat, the hiring process, and the build‐up to the first program activity. It provides supporting documentation on the sharing of responsibilities among SPI Secretariat staff, draft job advertisements, a draft message to candidates, an outline of the memorandum on  the  selection  process  and  its  results,  a  training  package  and  a  template  for  presenting  the  first modernization program.  7.1. Building up the SPI Secretariat  This involves defining the allocation of responsibilities among the members and identifying and training the team leader and the members.   7.1.1. Designing the SPI Secretariat The SPI Secretariat is a small, efficient unit consisting of up to three full‐time professionals. It is set up to help market participants and authorities to work harmoniously together on analysis of regulatory change opportunities and on sound and credible proposals to the authorities.  The  SPI  Secretariat  coordinates  the  work  of  the  project  working  groups,  supports  the  solution  design process,  promotes  technical  public‐private  consensus,  prepares  public‐private  consensus  and  supports enactment work. Annex VII‐1 presents the SPI Secretariat’s ToR and responsibilities. The quality of the SPI Secretariat and its work is of utmost importance for the success of the SPI Platform. The SPI Secretariat staff must have the necessary seniority to be able to:   bring  together  partners,  managers  and  experts  in  the  project  working  groups,  which  have  to  persuade senior managers of the financial institutions to assume ownership of the projects;   convene project working group meetings in an environment free of hierarchical constraints; the  members’  professional  status  will  give  them  the  authority  to  support  the  project  management  group;   plan, implement and coordinate multi‐project activities;   carry out analytical activities, and research regulations and international experience;   design analytical tools; and   record accurately the substance and important nuances of the discussions of the project working  groups and SPI Committee.  The main responsibilities of the SPI Secretariat are described in Chapter 1.1.8. Annex VII‐2 gives a formula for  the  sharing  of  responsibilities  among  SPI  Secretariat  staff  of  three  full‐time  members  –  a  general manager, a director of the policy modernization program and an office manager.   45 
  • 38. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 If office management can be covered by the banking association, the SPI Secretariat analytical team could be  enlarged  with  another  member,  who  could  be  a  part‐time  expert.  Depending  on  the  size  of  the  SPI Secretariat team, the responsibilities in the Annex can be shared differently: for example, some executive tasks of the general manager could be allocated to an additional person.  7.1.2. Hiring the SPI Secretariat Advertising the job To ensure a large pool of candidates, job advertisements should be posted on the websites of the central bank’s  and  the  banking  association,  on  specialized  human  resource  websites  and  published  in  major newspapers. Annex VII‐3 contains a sample job advertisement for the position of general manager.  Special  attention  should  be  given  to  the  selection  of  the  SPI  general  manager,  who  has  to  be  a  senior person with management experience, entrepreneurial skills and the ability to run the day‐to‐day work of the SPI Platform without intervention from the main SPI partners. Selection process The  experiences  of  SPI  Romania  and  SPI  Albania  lead  to  a  four‐stage  process  of  selection  of  the  SPI Secretariat that also involves other SPI partners. The process should be transparent and thorough so that the  SPI  Secretariat  acquires  the  professional  legitimacy  required  to  do  its  work.  The  interviewing  panel should  consist  of  banking  association  representatives;  it  may  be  enlarged  as  the  process  develops  with representatives from partner institutions. The sequence should ensure that the general manager is selected first so that he or she can be involved in the recruitment of the other members of the SPI Secretariat. Recruitment of the office manager should not  pose  problems  unless  further  promotion  to  the  status  of  analyst  is  foreseen.  Selection  of  the  right analyst and compatibility with the general manager are most important. Short‐listed candidates should be invited for a first interview. The message should contain a description of the selection process and the requirements for each step (see Annex VII‐4). Round One The purpose of the first meeting is to get to know the candidates and their professional backgrounds and to assess their compatibility with SPI Platform requirements. The interviews should take about an hour. Candidates should be invited:   to  familiarize  themselves  with  the  material  on  www.spi‐albania.eu  and  the  banking  association  website.  They  should  be  invited  to  read  about  the  SPI  governance  framework,  the  SPI  Secretariat’s responsibilities and the activity programs;   to discuss their views on the SPI mandate and strategy; as indicated in the job advertisement, SPI  Secretariat staff need to have an entrepreneurial desire to build a new institution;   to justify their suitability for the job in terms of professional and personal background.     46 
  • 39. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009   Round Two Round  two is  a technical  session.  Shortlisted candidates  from  round  one should be  asked  to  identify  at least three possible modernization projects that could be handled by the SPI Platform and to develop one of them. This will test their understanding of SPI projects and their analytical and planning capabilities.  Round Three The  third  round  is  dedicated  to  assessing  team  compatibilities  and  team‐building.  Teams  of  candidates shortlisted for general manager and director of analytics should be tested in several meetings to define the dynamics of the team. The output of this round should be the proposed SPI Secretariat team. Round Four The  proposed  SPI  Secretariat  team  should  present  their  candidacies  at  an  SPI  Committee  meeting,  at which a final decision should be reached. The selection panel should report to the SPI Committee meeting on the selection process (see Annex VII‐5).  7.1.3. Training the SPI Secretariat The  SPI  Secretariat  should  have  a  training  session  on  the  SPI  Platform,  SPI  partner  institutions  and  SPI methods and procedure.  The banking association and the central bank should invite the SPI Secretariat team to study tours of their institutions  to  acquaint  them  with  their  organization  and  activities.  With  regard  to  training  on  the  SPI Platform,  Annex  VII‐6  contains  a  self‐training  support  tool.  The  SPI  Secretariat  should  receive  training opportunity on RIA procedure.   7.2  Preparing a Multi‐Annual Modernization Program Multi‐annual modernization program should be built on the findings of the round of consultations with the banking community, performed through bilateral meetings and through the seminar by the banking association when building consensus on the establishment of the SPI Platform. For  consulting  SPI  stakeholders,  the  SPI  Secretariat  must  use  a  detailed  questionnaire  adapted  to  the national context. The SPI Albania 2009 questionnaire (Annex VII‐7) presents the proposed annual activity program13).  To  facilitate  project  proposals,  this  document  guided  consultation  among  participants  on Albanian market issues, topics raised by the Governor of the Bank of Albania at the Banking Forum, the Strategic Directions for the Albanian Financial Sector outlined in the National Strategy for Integration and                                                             13 (http://www.spi‐albania.eu/admin/js/filemanager/files/web/spicommittee/thirdmeeting/02%20SPI%20Albania%20Proposed%202009%20Program.pdf   47 
  • 40. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 Development (2007–2013) and the Bank of Albania regulations issued in 2008. The SPI Secretariat should look for similar issues in modifying the questionnaire. Another  source  of  SPI  projects  is  analysis  of  the  current  state  of  the  market  compared  with  the  EU Financial  Services  Action  Plan  (FSAP)  to  identify  issues  where  the  SPI  could  be  involved  and  issues  that were not proposed by the stakeholders. The directives of the Government for achieving EU acquis are to be considered by the SPI Secretariat as complementary to project proposals by the public authorities. On the basis of information gathered through the questionnaires, the SPI Secretariat must set up bilateral talks  with  the  proposers  of  projects  to  understand  the  problems  to  be  addressed  and  the  regulatory implications.  Project  proposals  should  be  listed  in  a  table  that  should  be  sent  to  SPI  stakeholders  for prioritization.  Of the proposals prioritized by SPI stakeholders, projects for the current year should be selected, bearing in mind that the SPI Secretariat could be expected to manage two or three projects in four months. The SPI General Manager then has to plan the implementation of the activity program for the current year.  The proposed SPI multi‐annual activity program has to be presented for the SPI Committee for approval in the format presented in Annex VII‐8. The approved program should then be communicated to the SPI stakeholders. ANNEX                                                                                                                                                 ANNEX Section                                                                          Page Number         Annex VII‐1                 SPI Secretariat Terms of Reference                                                                       145 Annex VII‐2                 SPI Secretariat Responsibilities Sharing                                                                149 Annex VII‐3                 SPI Secretariat General Manager Advertisement                                               151 Annex VII‐4                 SPI Secretariat Job Interview Invitation                                                                152 Annex VII‐5                 SPI Secretariat Selection Process Report                                                              155 Annex VII‐6                 SPI Secretariat Self‐Training Support                                                                    157 Annex VII‐7                 SPI Platform Activity Program Building Questionnaire                                      169 Annex VII‐8                 SPI Multi‐Annual Activity Program Template                                                      181    48 
  • 41. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 What Are the Main SPI Platform Operating Processes? Chapter  8  provides  an  overview  of  SPI  activities  and  documentation.  The  SPI  Committee  operating guidelines  are  completed,  with  more  details  on  project  management  group  activities  and  on  EU  Better Regulation methods. Most documents prepared by the SPI Platform are standardized; the annexes to this chapter contain templates to be used for project documents and for activity planning and reporting.  8.1.   SPI Committee Operating Guidelines   The SPI Committee operating guidelines (see Annex I‐1) and their annexes govern the activities of the SPI Platform. They provide the rules and procedures for decisions and executive activities in the SPI Platform for all stages of project‐related activities:   the functions of the SPI Committee;   Project selection and approval (see Annex II of the SPI Committee Operating Guidelines);   Project implementation (see Annex III); and   Enactment activities (see Annex IV).  Annex V of the SPI Committee Operating Guidelines presents the cooperation between SPI stakeholders and the SPI Secretariat when deciding on projects to undertake, identifying solutions, reaching consensus on the proposals and enacting the agreed solutions.   8.2.     Organizing Project Activities The  essence  of  the  SPI  Platform  work  methodology  is  that  individual  projects  are  placed  under  the responsibility  of  a  Project  Owner  who  is  appointed  by  the  SPI  stakeholder  proposing  the  project.    The Project  Owner  assembles  a  public‐private  Project  Management  Group;  provides  guidance  to  project working activities; endorses final project working group recommendations before they are transmitted to the SPI Committee for discussion and endorsement; and leads post‐SPI Committee approval enactment promotion activities with relevant authorities. The  Project  Manager  and  Co‐Project  Manager,  with  SPI  Secretariat  support,  identify  the  technical expertise needed in the project working group and recruit the experts; clear the documents prepared by the  SPI  Secretariat  before  submission  for  project  working  group  discussion;  lead  project  working discussions.  The responsibilities of project working groups (see Annex III of the SPI Committee Operating Guidelines) are summarized in Annex VIII‐1. This document should be handed to project working group members at their  first  project  meeting.  For  some  of  the  projects,  domestic  or  international  experts,  known  as technical anchors or TANs, may be needed to identify the most appropriate solutions.   49 
  • 42. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 The presentation shown  in Annex VIII‐2 helps the SPI Secretariat to explain: i) what it is expected from the  project  management  team  and  from  the  project  working  groups;  ii) SPI  Committee  responsibilities; and iii) EU Better Regulation methods. The Annex explains the steps for analysis and provides examples from the SPI Albania project in terms of understanding a problem, the general, specific and operational objectives of the project and identification of possible solutions.  Annex VIII‐3 sets out models for sharing responsibilities between project working groups, TANs and the SPI Secretariat in three situations:    when  the  project  working  groups  and  SPI  Secretariat  can  achieve  project  objectives  without  additional expertise;    when project working groups and the SPI Secretariat ask for the assistance of a TAN, but most of  the analytical work is done by SPI Secretariat;    when the SPI Secretariat has a supporting role, with the analytical work covered by a TAN.  Examples of minutes of meetings that must be prepared by the SPI Secretariat to record discussions of documents  and  project  progress  is  presented  in  Annex  VIII‐4.  It  is  important  that  the  SPI  Secretariat accurately  records  points  raised  by  project  working  group  members  during  discussions  and  notes  the conclusions  reached.  Practical  examples  can  be  downloaded  from  http://www.convergence‐see.eu/instrument/project‐working‐groups.html.    8.4            Project Documents  In  the  Annex  section  are  shown  examples  of  standard  SPI  project  documents  based  on  EU  Better Regulation approach (see Annex VIII‐5) to be prepared by the SPI Secretariat as projects develop:   Terms of Reference (Annex VIII‐6);   Scoping the Problem (Annex VIII‐7);   Note on International Experience (Annex VIII‐8);   Cost‐Benefit Impact Analysis (Annex VIII‐9);    Summary of the cost and benefits analysis (Annex VIII‐10);   Final project working group recommendations document (Annex VIII‐11).   Use of standardised documentation is a key operational process to enable the small SPI Secretariat team support  many  domestic  expert  teams  to  execute  the  financial  modernization  program.  International experts bring with them their own idiosyncratic project management methodologies which are ill‐suited for the emergence of local analytical and project management capabilities.     A detailed Terms of Reference, to be approved in the first project working group meeting, becomes the roadmap that will guide the work, step‐by‐step, with a strong focus on quick resolution of the solution‐finding process.   The  Scoping  the  Problem  document  provides  a  succinct  institutional,  legal  and  regulatory  context, defines  the  nature  of  the  problem  to  be  solved  (either  a  market  or  a  regulatory  failure),  assesses  the impact of this failure on the authorities policy goals and outlines possible solution options.    50 
  • 43. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 The  Note  on  International  Experience  provides  a  benchmark  on  how  the  problem  at‐hand  has  been addressed in other relevant countries or group of countries.  It helps guide the project working group to identify solutions that would work in an international context.  The Cost‐Benefit Analysis is an essential part of the solution‐searching as it purports to understand how proposed  regulatory  measures  may  affect  clients,  financial  intermediaries  and  financial  authorities.  It provides a “reality‐check” on how whether the intended solution (or solution options) is likely to work out in  practice.  The  resulting  Summary  is  then  discussed  in  a  Market  Consultation  context  to  generate technical consensus on the final recommendation.  The Recommendation document, cleared by the Project Owner, contains the proposed official decision document, together with background analyses that will help the enacting authority process the proposal through its own decision‐making circuit.       These documents, codified by EU financial regulators as helping achieve the goals of “Better Regulation”, are also very useful to catalyze transparent and evidence‐based analytical collaboration between public sector and private sector experts, consistently with the high integrity standards now being implemented internationally for public‐private policy dialogue.     8.5            SPI Secretariat Reporting  The SPI Secretariat may plan activities and reporting on a weekly basis (see Annex VIII‐12). It should also prepare monthly activity reports (see Annex VIII‐13) to be sent to SPI Committee members, SPI partners and to the SPI website.  In  order  to  have  a  comprehensive  image  of  all  activities  project  or  non‐project  related  and  of  their progress, SPI Secretariat could use a multi‐week planning board as exemplified in Annex VIII‐14.  To obtain a clear picture of stakeholders’ involvement in SPI activities, it is recommended that quarterly or bi‐annual analyses be carried out of each party’s contribution to the partnership, in line with the example of an SPI Romania report  (Annex VIII‐15). For Annual Reports, the SPI Romania 2007 and SPI Albania 2008 reports could be used as benchmark14.  8.6          Project Evaluation It is a good practice to ask project working group members to evaluate the activities of the SPI Secretariat at  the  completion  of  a  project.  This  helps  improve  performance  and  is  an  effective  mechanism  for feedback  of  financial  community  views  of  the  activities  of  the  SPI  Platform.  Project  working  group members should be given an evaluation questionnaire (see Annex VIII‐16) at their first meeting so that they can familiarize themselves with the aspects of Secretariat performance to be observed. Annex  VIII‐17  gives  an  example  of  a  summary  of  SPI  Secretariat  performance  as  appraised  by  project working group members in Albania.                                                              14  SPI Romania: http://www.spi‐romania.eu/admin/filemanager/files/spi_romania_annual_report_2007.pdf SPI Albania: http://www.spi‐albania.eu/admin/js/filemanager/files/web/news/SPI%20Albania%20Annual%20Report%202008.pdf   51 
  • 44. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 ANNEX  ANNEX Section                                                                      Page Number          Annex VIII‐1                  SPI Project Working Group Responsibilities                                                            193 Annex VIII‐2                  Project Working Group First Meeting Presentation                                              195 Annex VIII‐3                  Responsibilities sharing PWG and SPI Secretariat                                                 207 Annex VIII‐4                  Example of Project Working Group Meeting Minutes                                          211 Annex VIII‐5                  EU Better Regulation Methodology                                                                         217 Annex VIII‐6                  Example of SPI Project Working Group Terms of Reference                               219 Annex VIII‐7                  Example of Scoping of the Problem Document                                                     227                            Annex VIII‐8                  Example of Note on International Experience                                                       241 Annex VIII‐9                  Example of  Cost‐Benefit Questionnaire                                                                 255         Annex VIII‐10               Example of Survey Summary of Cost‐Benefit Findings                                          279                            Annex VIII‐11               Example of Project Working Group Recommendation Document                      301                            Annex VIII‐12               SPI Secretariat Weekly Planning Report Template                                                 303 Annex VIII‐13               Example of SPI Secretariat Monthly Activity Report                                              305              Annex VIII‐14               Example of SPI Secretariat Multi‐Week Work Plan                                                307 Annex VIII‐15               Example of SPI Secretariat Stakeholder‐based Bi‐Annual Activity Plan             309                             Annex VIII‐16               Example of SPI Secretariat Evaluation Questionnaire                                           317 Annex VIII‐17               SPI Secretariat Summary Evaluation                                                                        327             ADDITIONAL READING 1. Examples of SPI Albania and SPI Romania Project Working Group Meetings activities http://www.convergence‐see.eu/instrument/project‐working‐groups.html  2. Example of SPI Albania Secretariat Activity Evaluation http://www.convergence‐see.eu/IMG/pdf/SPI_Albania_Secretariat_evaluation_Liquidity_Octobe_2009.pdf  3. Example of a Cost‐Benefit Qualitative Analysis Questionnaire http://www.convergence‐see.eu/IMG/pdf/Capital_Adequacy_Questionnaire.pdf  4. Example of SPI Secretariat Activity Planning Reports http://www.convergence‐see.eu/instrument/spi‐secretariat.html    52 
  • 45. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 How Can EBF Help Its Associates?  9.1.  EBF Assistance for its Associates One of EBF’s guiding principles refers at promoting Better Regulation in the EU and at winning support for regulatory  convergence  abroad,  in  order  “to  alleviate  the  burden  on  banks  and  improve  their competitiveness”.  EBF identified the SPI Platform, designed and operated by the World Bank’s Convergence Program, as a suitable  instrument  to  implement  these  guiding  principles  in  candidate  and  other  countries  in  Eastern Europe. By  sponsoring  the  publication  of  this  Toolkit,  EBF  offers  a  new  service  to  its  Associates  –support  for implementing  SPI  Platform  and  for  helping  raise  financial  support  for  these  activities  from  EU  financial assistance programs. Through the Toolkit, EBF helps to enhance the analytical capacities of its Associates, with positive  effects on the  integration  of candidate and  other Eastern European countries  into the EU Single Financial Market.  EBF supports its Associates in establishing and operating SPI Platform partnerships (please see Annex IX‐1 – the letter to EBF Associates). Possible EBF support measures are provided in Annex IX‐2.   9.2. EBF Support at each Stage of Implementation    9.2.1. Support for Associates in Building Consensus on Establishing SPI Platforms Through the letter presented in Annex IX‐1, EBF could encourage its Associates to state their commitment to bilateral discussions with members of banking associations and public authorities.  EBF might consider participating in meetings with stakeholders if required to do so by the Associate. The presentation in Annex IX‐2 may be used to illustrate EBF’s offer on such occasions. EBF experts could also participate in the Better Regulation and RIA seminar to share the knowledge of the experiences of EU members, as reflected in its December 2007 report15 .   9.2.2.  Support for Associate in Preparing a Request for EU Funding for an  SPI Platform EBF can keep its Associates informed of changes in the assistance programs developed by the European Commission and could provide samples of successful applications. It can also provide supporting letters to back up its Associates’ funding applications, and could intervene to facilitate the formation of the regional partnerships. And, depending on the needs of Associates, EBF could help to mobilize assistance in drafting the application for EU funding.                                                                15  http://www.fbe.be/DocShareNoFrame/Docs/1/HOMLKALBOMBOBFOCMJFGNKABRDVOHT4JH681BOQHUC5N/EBF/docs/DLS/Better_Regulation_EBFReport_2007‐2007‐02318‐01‐E.pdf   53 
  • 46. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 EBF might consider applying for EU funding itself, and take part in forming a European partnership. As a beneficiary of EU funding, EBF would have the financial means to provide technical assistance, organize training and knowledge‐sharing events for its partners, offer guidance on efficient operation of SPI Platforms, assess their performance and promote best practices and regional initiatives.   9.2.3. Assistance to Associates in SPI formation  EBF may send a congratulatory letter to the newly established SPI Committee on the occasion of its first meeting (Annex IX‐3). This will reinforce its support for the initiative and offer its contribution SPI Committee activities.  9.2.4. Support in Operating the SPI Platform EBF can provide support for projects run by SPI Platforms through its members. Technical assistance might take the form of peer review of documents produced by project working groups or advice on international experience, EU regulations and possible solutions to problems.  EBF can make available to SPI Platforms a list of experts to be contacted if needed, and can facilitate contact with them and encourage their participation in SPI Platform events or projects. EBF can use its regular meetings to share knowledge about SPI Platforms. It could organize special events and training seminars or workshops by pooling resources from SPI Platforms and from its members. The EBF website could host a forum for SPI Platforms where members can share views, concerns and solutions.   ANNEX                                                                                                                                                           ANNEX Section                                                                         Page Number Annex IX‐1       European Banking Federation Letter to SPI Committee                                               331  Annex IX‐2       Presentation on European Banking Federation Support                                              333  Offer to its Associates          Annex IX‐3       European Banking Federation Congratulatory Letter                                                   335     54 
  • 47. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009 Useful Reading   Has the Italian Banking Association (A.B.I.) Contributed to Financial Sector Development in Italy?  A Case Study Report (December 2005)  http://www.convergence‐see.eu/IMG/pdf/Cesarini_Report.pdf     “Financial Sector Development: Why and How to Build a Public Private Partnership” (May 2005)  http://www.convergence‐see.eu/IMG/pdf/LP_Speeches_15_‐ _Financial_Sector_Development_When_and_How_to_Build_a_Public_Private_Partnership_‐ _Tshakhdzor_May‐05.pdf   Roger W. Ferguson Speech: “Financial regulation ‐ seeking the middle way”  http://www.convergence‐see.eu/IMG/pdf/Regulations_‐_The_Middle_Way.pdf    “Managing Regulation in a New Era”, McKinsey Quarterly (December 2008)  http://www.convergence‐see.eu/IMG/pdf/McKinsey_Quarterly_Dec_2008_‐ _Managing_regulation_in_a_new_era.pdf    “The Financial Industry Calls for Action to Strengthen the Global Financial System and Promote  Stability in Financial Markets “ (July 2009)            http://www.iif.com/press/press+76.php   http://www.iif.com/download.php?id=/11YetxP3hE=   “What Does SPI Albania Do?” SPI Committee and SPI Secretariat Presentations to the EU  Conference on Donor Coordination  to the Western Balkans and Turkey (April 2009)  http://www.spialbania.eu/admin/js/filemanager/files/web/news/SPI%20Albania%20Donor%20C onference%20SPI%20Committee%20Presentation.pdf  http://www.convergence‐ see.eu/IMG/pdf/SPI_AlbaniaDonorConferenceSPISecretariatPresentation.pdf   “How to Change a Law in Six Months: Improving Auction Procedures for Immovable Collateral  under Foreclosure”  (July 2009)  http://www.spi‐albania.eu/admin/js/filemanager/files/web/news/FPD%20‐ %20Improving%20auction%20procedures.pdf        55 
  • 48. European Banking Federation/World Bank ‘s “Convergence” Programme  SPI Platform Toolkit ‐ 2009    Annexes – Table of Content              Annexes                Page                          Chapter 1 Annex ........................................................................................................................................... 1 Chapter 3 Annex   ........................................................................................................................................ 41  .Chapter 4 Annex ......................................................................................................................................... 83 Chapter 5 Annex ......................................................................................................................................... 95 Chapter 6 Annex ....................................................................................................................................... 111 Chapter 7 Annex ....................................................................................................................................... 145 Chapter 8 Annex ....................................................................................................................................... 193 Chapter 9 Annex ....................................................................................................................................... 331           57 
  • 49. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex I-1 SPI Committee Operating Guidelines SPI Committee Three Core Principles  The SPI Committee represents a high level commitment to public-private collaboration to promote financial sector modernization.  The SPI Committee selects unanimously the Financial Sector Modernization Program projects.  The SPI Committee commits to bring projects to final implementation with utmost diligence by supporting the project working groups in their analytical, consensus building and enactment activities. Context Enhancing the financial sector contribution to growth requires a large-scale fine-tuning of micro-regulations that affect the efficiency of financial sector intermediation. These actions have to take place in close cooperation between financial authorities, members of the banking and financial industry, and users of financial services. To accelerate this process, main financial sector stakeholders have agreed to launch the “SPI Financial Sector Modernization Platform” (“SPI Platform”) and, in order to support it, to establish a high-level public-private Steering Committee (the “SPI Committee”) that will initiate, oversee and act upon analytical projects that hold the greatest potential for their contribution to financial sector modernization. The SPI Committee receives analytical support from the SPI Secretariat, which is jointly managed by a General Manager, implementing and running together SPI Platform. SPI is placed in the broader context of a regional financial sector modernization program that will promote the launch of similar activities in neighboring countries to ensure maximum regional cooperation and coordination. Page 1 of 335
  • 50. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme ARTICLE 1: SPI COMMITTEE PURPOSE Section 1. Mission Statement and Authority The SPI Committee represents a high level commitment to public-private collaboration to implement financial sector modernization projects. Its founding members are the Central Bank, Ministry of Finance/Economy and the Banking Association. The SPI Committee is responsible for selecting the analytical projects to be undertaken as part of the Modernization Program. The SPI Committee undertakes projects with the view to promote their enactment with the greatest effectiveness as provided by the institutional means and instruments at the disposal of its members. The SPI Committee will support with utmost diligence the analytical, consensus building and enactment work of the projects. The SPI Committee will submit the reports prepared by the SPI Secretariat to the competent authorities for consideration and approval, will closely monitor progress of their enactment, and will intervene as appropriate to ensure their speedy enactment and implementation. The SPI Committee may decide to establish links with other authorities and civil society institutions with a key role in design and implementing financial sector modernization solutions. The links may involve SPI Committee membership, formation of specific SPI Committee consultative panels or other ad hoc arrangements as necessary. ARTICLE 2: SPI COMMITTEE MEMBERSHIP Section 1. Members The SPI Committee is composed of three founding members (hereinafter, the “SPI Committee Members”) as follows: 1. Governor of Central Bank (Hosting Chairperson); 2. Minister/State Secretary of Ministry of Finance/Economy; 3. Chairman of the Banking Association The SPI Committee Members operate in their personal capacity to promote, on a best effort basis, win-win public-private solutions to financial sector modernization issues. Their actions and decisions in the SPI Committee cannot be deemed having being taken pursuant to the general powers and authority that are vested with each of them by her or his institution. Each SPI Committee member may appoint an Alternate SPI Committee member. The SPI Committee may invite representatives of other institutions to attend its meetings as permanent observers in order to enhance relevance and effectiveness of SPI Committee-sponsored initiatives. Page 2 of 335 2
  • 51. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex I contains the list of the SPI Committee members and permanent observers and of their alternates. The SPI General Manager participates in the SPI Committee meetings as observer, except when the Committee determines to meet in executive session. The SPI Secretariat acts as SPI Committee Secretary. The Secretary is in charge of drafting the SPI Committee meetings agenda and disseminates minutes of SPI Committee meetings to the Members for approval following each meeting. Section 2. Term The SPI Committee has been established at the launch of SPI Platform that is, on [date]. ARTICLE 3: SPI COMMITTEE ACTIVITIES General Remarks: SPI Committee Members or their Alternates attend regularly all the meetings to underline a high-level commitment to public-private dialogue. They must be able to actively participate in Committee meetings and projects. The specific role of SPI Committee is to: 1. Review the pipeline of micro-regulatory issues that require resolution and approve the proposals for individual analytical projects prepared by the SPI Secretariat consistently with the priorities for financial sector modernization. The selection and approval process is extensively described in Annex II. 2. Provide high level representatives for SPI projects’ management teams and experts for the project working groups, documents, data and information for the analytical work, as extensively described in Annex V SPI Stakeholders cooperation Guidelines and in Annex III SPI Working Group Activities Guidelines. 3. Monitor, on a quarterly basis, progress of projects agreed and undertaken according to the report submitted by the SPI Secretariat and discuss options to bring them to practical conclusions in line with SPI Albania objectives. 4. Support the enactment of the SPI proposals, according to the provisions of Annex IV SPI Cooperation for Enactment Activities. 5. Authorize SPI Secretariat to circulate certain work reports and recommendations to respective counterparts. 6. Approve the annual report of SPI Platform for distribution to main stakeholders. ARTICLE 4: SPI COMMITTEE MEETINGS Section 1. Frequency, venue and chairmanship The SPI Committee meets formally at least quarterly. The SPI Committee Member hosting the meeting will also act as a chairperson of the respective meeting. Page 3 of 335 3
  • 52. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Section 2. Notice of meeting, agenda and quorum Notice of the meeting is provided in advance, with an agenda and respective meeting materials e-mailed/mailed to the SPI Committee Members seven days prior to the meeting. The SPI Committee meeting agenda is prepared by the SPI Secretariat, in consultation with SPI Committee Members. A draft agenda is distributed to SPI Committee Members prior to the meeting. Any SPI Committee Member may request inclusion of items in the agenda. S/he will do so by contacting in written form the SPI Secretariat before the meeting. A quorum shall be required to conduct the business of the SPI Committee. A quorum is defined as a simple majority of the members. Section 3. Meeting Records Minutes of SPI Committee meetings are kept and maintained by the SPI Secretariat. Approved minutes are distributed to the SPI Committee Members no later than a week after their approval. Meeting decisions are made publicly available in ways to be determined. Section 4. Decision Making and Method of Vote SPI Committee decisions are taken by consensus among the SPI Committee Members present in the meeting. Section 5. Compensation No SPI Committee Member will receive salary or any other honorarium for their services under these bylaws. Page 4 of 335 4
  • 53. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme ARTICLE 5: OPERATING GUIDELINES AMENDMENTS These guidelines shall govern the SPI Committee in all cases to which they are applicable. The SPI Committee may adopt special rules of order if required. These rules can be amended at any regular meeting of the SPI Committee by consensus, provided that the amendment has been submitted in writing at a previous meeting. [place, date] Central Bank Governor Ministry of Finance/Economy Chairman of Banking Association Annexes Annex I List of SPI Committee members and permanent observers and of their alternates Annex II SPI Project Selection and Approval Process Annex III SPI Working Group Activities Guidelines Annex IV SPI Cooperation for Enactment Activities Annex V SPI Stakeholders Cooperation Guidelines Page 5 of 335 5
  • 54. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme List of SPI Committee members and permanent observers and of their alternates SPI Stakeholder SPI Committee SPI Committee Members alternate members Central Bank Ministry of Finance/Economy Banking Association SPI Committee Permanent Observers [Financial Supervision Authority] [Ministry of Economy and Finance] Page 6 of 335 6
  • 55. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Proposal, Selection and Approval Process for SPI Projects Financial sector modernization “Financial modernization refers to the process of financial innovation and organisational improvements in the financial system that reduces asymmetric information, increases the completeness of markets, increases opportunities for agents to engage in financial transactions through (explicit or implicit) contracts, reduces transaction costs and increases competition.” – An ECB Executive Board Member I. Eligible projects to be undertaken under SPI Committee aegis In order to be undertaken under SPI Committee aegis, projects should observe the following eligibility criteria:  Relevance for both market players and authorities SPI projects should have important public and private benefits in order to motivate authorities and market participants to join forces in their preparation. The public good benefits refer to financial innovation and organizational improvements that reduce asymmetric information, complete the market framework, and increase opportunities for public and competition among market players. Examples of public benefits:  potential reduction in costs to users of bank products and services;  improved access to bank products and services;  improved regulatory and enforcement environment;  enhanced tools for monitoring financial stability. Examples of private benefits:  improvement of market infrastructure, accounting and reporting systems;  diversification and growth of market opportunities;  reduction of costs.  Action lines SPI projects should envisage the following areas of interest: (a) new product development; (b) cost efficiencies; and (c) better industry-consumer relationships.  Benchmarking with the strategic directions set by the EU Commission to build a single financial market Page 7 of 335 7
  • 56. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme SPI projects should contribute to the national efforts for EU accession. The objectives of the Commission’s financial services policy over the next 5 years are to: • consolidate dynamically towards an integrated, open, inclusive, competitive, and economically efficient EU financial market; • remove the remaining economically significant barriers so financial services can be provided and capital can circulate freely throughout the EU at the lowest possible cost – with effective levels of prudential and conduct of business regulation, resulting in high levels of financial stability, consumer benefits and consumer protection; • implement, enforce and continuously evaluate the existing legislation and to apply rigorously the better regulation agenda to future initiatives; • enhance supervisory cooperation and convergence in the EU, deepen relations with other global financial marketplaces and strengthen European influence globally. II. Proposal and selection process A. SPI projects are proposed by stakeholders primarily and residually by the SPI Secretariat based on the above mentioned criteria. 1. Stakeholders’ proposals SPI Secretariat initiates the consultation process with stakeholders by sending them a questionnaire on the initiatives suitable to be approached under SPI Committee aegis (attached). SPI Secretariat collects the proposals and starts mapping them in a descriptive matrix in order to perform a first assessment on the eligibility of the proposals as SPI projects. In order to get details on the background of the eligible issues, the objectives of the projects, the possible implications, the possible involved parties and their contributions to the projects, SPI Secretariat conducts interviews with main players. 2. SPI Secretariat’s proposals SPI Secretariat performs analysis on the current status of the market as compared to FSAP (Financial Services Action Plan) in order to identify areas and specific issues where the SPI involvement could be needed and that were not proposed by the stakeholders. SPI Secretariat performs the necessary research in order to acquire information on the context of the identified issues, on the European experience in solving the issues, on the interested parties and potential impact of the project. SPI Secretariat consults with the international donors’ community (World Bank Group, EBRD, etc) in order to check on their plans and on the support they might need from the SPI partnership. Page 8 of 335 8
  • 57. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme B. SPI Secretariat performs a brief impact assessment for all the proposed projects. C. SPI Secretariat structures the proposals in a matrix, by estimated completion time and by area of interest, detailing them on the following outline:  Description-Background;  Impact drivers (industry and public);  General economics;  SPI Committee involvement rationale;  Objective;  Proposed/expected contributions of the stakeholders and of SPI Secretariat. SPI Secretariat justifies the non-inclusion of project proposals received from stakeholders in the final proposal for SPI Committee consideration. III. Approval process Based on the matrix, in its quarterly meetings, SPI Committee approves the projects to be undertaken under its aegis, having in view:  suitability of the project for the public – private partnership;  importance of the project proposals (in qualitative and quantitative terms);  balanced distribution across the action lines. SPI Committee establishes priorities, stakeholders’ and SPI Secretariat’ contributions and provides necessary guidance. IV. Raising awareness on the SPI projects In order to raise the stakeholders awareness on the SPI projects, on their expected contributions in terms of specialists for the project working groups, data and information, and in order to avoid any eventual overlapping, SPI Secretariat takes the following actions: SPI Secretariat sends the projects matrix, under SPI Committee members’ signatures, to stakeholders; Secretariat posts the approved SPI projects on the SPI Albania website. Page 9 of 335 9
  • 58. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme SPI Working Group Activities 1. Setting up the Project Working Groups Principles  SPI Secretariat proposes the Project Working Groups composition having in view the representation of the relevant stakeholders and the leadership.  SPI partners undertake the projects’ ownership and ensure participation in the Project Working Groups.  PMT agrees on the project strategy and on the optimal composition of the PWG in order to ensure timely achievement of the project objective a. Project Working Group composition SPI Secretariat drafts the Project ToRs with the following structure (see template in attachment 1 of this annex): - background information; - project objective; - strategy; - methodology (steps, output, contributions); - Project Management Team and Project Working Group composition: o Project Management Team (PMT): Project Owner - represents the main stakeholder at top management level and ensures the project oversight; Project Manager – is appointed by the Project Owner (out of the PO’s institution management staff) and ensures the management of the day-to day activities; Deputy Project Manager(s) – represent(s) the other main stakeholder(s) and second(s) the Project Manager in coordinating the day-to- day activities; o Project Working Group members: they represent all stakeholders, with specific expertise profiles. b. Project Working Group (PWG) appointment - SPI Secretariat proposes, in consultation with the Banking Association and Central Bank, a list of persons to be appointed in the PWG/a list of banks to be invited to appoint members in the PWG. - SPI Secretariat prepares the invitation/appointment letters according to the attached templates. - SPI Committee members/their representatives/POs sign the letters jointly or separately (as agreed) in order to invite/appoint PWG members. - Based on the confirmation received, SPI Secretariat contacts PMT, sending them the draft ToRs. Page 10 of 335 10
  • 59. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme c. Strategy PMT meetings - PMTs gather/have individual meetings with SPI Secretariat in order to agree on the project ToRs, on the adequacy of the PWG composition and on the first documents prepared by SPI Secretariat. - SPI Secretariat presents them the SPI concept, structure, activities and methodology, emphasizing the responsibilities’ sharing among SPI Secretariat and PWG members. - SPI Secretariat re-runs the appointment procedure in case PMT decides that changes in PWG composition are needed. 2. Project Working Group activities Principles  PWG activities are based on homework, active participation in the discussions and agreement on the final output.  SPI Secretariat convenes PWG meetings, contributes to/prepares background documentation, provides international benchmarking (directly or through contracted experts), centralizes individual contributions, ensures consensus – building and writes final documents to be presented for SPI Committee approval.  As evidenced either in the approved minutes of the relevant PWG meeting or through a separate approval by Project Management Team, PWG documents always reflect a PWG position. Whenever possible, they carry an explicit caption to this effect.  In order to ensure a fair representation, SPI Secretariat divides the banking community by clusters and makes sure the clusters are properly represented in PWGs. a. Pre-gathering activities In order to ensure the same level of knowledge for the PWG members, SPI Secretariat and PMT share the responsibility of preparing: - a compilation of the regulatory framework, or - a background study, or - a note on international experience, or - the scoping the problem documents, as the case may be. b. PWG meetings - SPI Secretariat sends the meeting proposal with the agenda, ToRs and background documentation. - With the package for the first PWG meeting, SPI Secretariat forwards also the questionnaire for evaluating their activity in order to get PWG members familiarized and to follow the assessment criteria during the project life. - At the beginning of the first PWG meeting, SPI Secretariat performs an introductory presentation on SPI as described at 1.c. Page 11 of 335 11
  • 60. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme - In setting up the meeting details (date and venue), SPI Secretariat consults with PMT and/or the Banking Association. - SPI Secretariat drafts the minutes of the meetings and sends them to PWG for approval. - PWG meetings could be held on-line, through exchange of email messages. In this case, SPI Secretariat will include in the meeting package the proposed draft minutes of the meeting. - PMT establishes the individual tasks. - SPI Secretariat follows up with PWG members for the individual contributions. - SPI Secretariat centralizes individual contributions and prepares intermediary and final documents. - PWG agree on the external expertise needed (expert profile and expected contribution) and provides suggestions on possible/preferred providers of technical assistance. - SPI Secretariat contracts the expert and handles the relationship with this one. c. Other project related activities - PMTs will relate with all possibly involved institutions in reaching the projects’ objectives. SPI Secretariat will make the respective suggestions and will draft proposed letters to be signed by PMT (preferably PO). - PMT will attend meetings and discussions with the partner institutions. - In case the project objectives or strategy will need to be changed due to objective factors, SPI Secretariat will draft the proposed amendments to the project ToRs, stating reasons and further actions. Based on PWG approval, SPI Secretariat will inform the SPI Committee accordingly. d. PWG recommendations - PMT will facilitate discussions and consensus reaching among PWG members during their meetings and/or by drafting possible PWG proposals. - Based on the discussions within PWG meetings, on PWG members’ individual contributions and on research in the international experience, SPI Secretariat will draft PWG recommendations. - PWG members will approve the proposed recommendations, for further submission to the SPI Committee. SPI Secretariat will seek for PO’s and/or PM’s express approval. Page 12 of 335 12
  • 61. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme TERMS OF REFERENCE Project: [Title] Project Owner: Project Manager: Deputy Project Managers: Technical Anchor (TAN): Project Working Group: I - Background - Identification of the problem II - Project Objective – Definition of policy goals III – Intended Strategy – Description of the BR 9 steps =============IAAD============== Data=========Policy====Conclusion== Consultation Consultation Regulatory Problem Policy Proposed Cost and Policy Consultati PWG context regulatory Benefit document for on Policy Identification objectives action questionnaire consultations recommendati Feedback ! 2 3-4 5-9 10 on 11 IV- Methodology: from kick off to the accomplishment of the project A. First PWG Meeting Preparation of PWG 1st meeting (PM/DPM and SPI Secretariat) Regulatory Problem Policy Proposed Consultations Feedback Questions Overall Policy context goals regulatory goals asked feedback recommen- identification action dation PMG and SPI Secretariat to prepare: a. a background note on current situation. b. a note on international experience. Output: First Draft of “Scoping of Problem” for PWG discussion Page 13 of 335 13
  • 62. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme PWG 1st meeting Regulatory Problem Policy Proposed Consultations Feedback Questions Overall Policy context goals regulatory goals asked feedback recommen- identification action dation Objectives: to understand the current context and the policy goals; to formulate recommendations on policy options. Output: Information to complete Impact Assessment Analysis Document (IAAD) 1-4 (scoping the problem and impact analysis) (to be endorsed in PWG 2nd meeting) B. Second PWG Meeting Preparation of PWG 2nd meeting (PM/DPM and SPI Secretariat) PMG and SPI Secretariat to draft the questionnaire for data collection. PWG 2nd meeting Objective: to analyze the impact for users, regulated firms and regulators (cost-benefit analysis) Output: (a) Endorsement of IAAD (1-4) and (b) Final questionnaire C. Third PWG Meeting Regulatory Problem Policy Proposed Consultations Feedback Questions Overall Policy context goals regulatory goals asked feedback recommen- identification action dation Preparation of PWG 3rd meeting (PM/DPM and SPI Secretariat) SPI Secretariat to: collect data from PWG participating banks analyzing; summarize questionnaire results and prepare draft “summary impact assessment” for PWG discussion and endorsement. PMG and SPI Secretariat to draft policy option consultation paper PWG 3rd meeting Objectives: (a) to endorse Impact Assessment Analysis Document including “Summary Impact Assessment”; b) finalize policy option consultation paper. Output: IAAD; final policy option consultation paper on IAAD. Page 14 of 335 14
  • 63. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme D. Forth PWG Meeting Regulatory Problem Policy Proposed Consultations Feedback Questions Overall Policy context goals regulatory goals asked feedback recommen- identification action dation Preparation of PWG 4th meeting (PM/DPM and SPI Secretariat : a. Run consultations with stakeholders based on the policy option consultation paper; b. Draft feedback document; c. Draft the final policy document. PWG 4th meeting Objective: a) to discuss the consultation feedback document and the policy document and b) to agree on the policy recommendations. Output: Policy recommendations. Following PWG 4th meeting: Preparation of the SPI Committee paper. Page 15 of 335 15
  • 64. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Enactment Procedure for SPI regulatory proposals I. Background Ministry of Finance will be asked to facilitate the enactment of the law amendment proposals prepared under SPI Committee aegis and endorsed by it. The complexity of the enactment procedure requires a high degree of coordination between MoF and SPI Secretariat in order to: - avoid potential hurdles and delays; - build on the extensive preparatory work done within the SPI PWGs; - ensure the continuous support of the SPI Secretariat and of the PWG members; - assist MoF staff to comply with the procedures with the utmost diligence. II. Enactment procedure A. Preparation of the enactment process 1. The enactment procedure starts with the preparation of the promoting package by SPI Secretariat, based on PWG members’ contributions. The promoting package should contain the followings: - the law amendment proposals; - the supporting notes including the Regulatory Impact Assessment findings; - any other relevant document. MoF will provide the list with the documents to be included in the promoting package. 2. SPI Committee endorses position paper and promotion package. Its members sign the cover letter to the Minister of Finance prepared by the SPI Secretariat. In case the letter cannot be signed in the SPI Committee meeting, the designated replacements of the SPI Committee members or other appointed persons and the SPI Secretariat are responsible for getting the signatures rapidly in order not to produce unnecessary delays. An electronic system for speeding up the signatures gathering will be envisaged. 3. SPI Secretariat delivers the promoting package with the cover letter to the designated contact person in MoF. B. Enactment process within MoF 1. After receiving the documentation from the Minister’s cabinet, the designated MoF contact person sends the law amendment proposal to the involved departments asking for opinions. In order to facilitate the understanding process, the SPI Secretariat and/or the MoF PWG member should be indicated to the departments as reference contacts. Page 16 of 335 16
  • 65. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme 2. Designated MoF contact person takes care of the official public consultations (if needed) by posting the law amendment proposals on MoF website. 3. Designated MoF contact person collects the opinions expressed by MoF departments and notifies the SPI Secretariat on the suggestions made, asking for SPI Secretariat support in assembling the final form. 4. Designated MoF contact person sends the promotion package to the involved departments for final endorsement. After the final endorsement of the involved departments, the promoting package is sent to the Minister for signature. 5. Designated MoF contact person collects the promoting package signed by the Minister and sends it to BoA for endorsement, notifying the SPI Secretariat. C. Co-Enactment process . In case the law enactment requires Central Bank endorsement, the Central Bank SPI Committee member will co-ordinate the necessary actions in order to get Central Bank endorsement. SPI Secretariat will support Central Bank /MoJ with all the necessary information. 2. In case the law enactment procedure requires the endorsement of other Ministries (typically the Ministry of Justice) or other institutions, the designated MoF contact person sends the promoting package to the respective Ministry/ institution, follows up and asks for SPI Secretariat support. 2. The designated MoF contact person follows up with the respective Ministry/institution on the status of the promoting package and asks for SPI Secretariat support. 3. After the promoting package is signed by MoJ, the designated MoF/MoJ contact person sends it to the Government in order to be forwarded to the Albanian Parliament, notifying all the co-signatory parties. The detailed steps of the enactment procedure and the estimated time for each of the steps are described in Attachment 1. III. General provisions 1. SPI Secretariat will consult with MoF designated person in charge with the enactment process regularly (weekly). 2. SPI Secretariat will open a separate file for every law amendment proposal under enactment process (sample in Attachment 2) and will evidence the progress and the time taken by each step. Page 17 of 335 17
  • 66. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme 3. MoF will acknowledge the involved departments on the enactment procedure and will communicate to SPI Secretariat the contact details of the departments’ management. 4. In order to establish a permanent contact with MoJ for enactment purposes, SPI Secretariat will prepare a letter to be sent under SPI Committee members’ signatures to MoJ in order to ask for support in enactment process and for designation of a contact person for the enactment procedure. 5. For transparency reasons, the status of the enactment process will be communicated monthly through the electronic newsletter to the large community of the SPI Committee member institutions. A summary enactment monitoring table is also shown on the SPI Albania website. Page 18 of 335 18
  • 67. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Enactment procedure – steps and estimated time No. Steps Responsible Involved Estimated time parties parties 1. Preparation of the promoting SPI Secretariat PWGs According to the package, based on the list approved plan provided by MoF 2. Preparation of the SPI cover SPI Secretariat SPI Committee SPI Committee letter meeting /two days after meeting 3. Signatures on the cover letter SPI Secretariat and SPI Committee Two weeks/4 days in replacements of SPI case of electronic Comm. members signature 4. Sending the promotion SPI Secretariat MoF designated One day after getting package to MoF person the last signature 6. Sending the law amendment MoF designated Involved proposals for comments and person departments suggestions 7. Support the presentation of SPI Secretariat Involved law amendment proposals departments 8. Post the law amendment MoF designated Relevant proposals on MoF website (if person department in MoF needed) 9. Collect suggestions and MoF designated Involved comments from departments person departments and comments from the public 10. Finalize the presentation note MoF designated Involved and send it to be signed person departments 11. Send the promoting package MoF designated Minister’s cabinet to the minister’s cabinet for person signing 12. Send the signed promoting MoF designated CB member in the package to CB/other person SPI Committee institution/MoJ /MoJ 13. Internal BoA/other institution CB member of SPI CBo departments/ procedure Committee Governor’s cabinet 14. Follow up with CB/institution SPI Secretariat CB member in the SPI Committee 15. Internal MoJ procedure MoJ designated MoJ departments person /Minister’s cabinet 16. Follow up with MoJ MoF designated MoJ designated person person Page 19 of 335 19
  • 68. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Content of the file open for a law amendment proposal No. Enactment step Time taken/ Actions to be Actions taken date taken by SPI by SPI Secretariat Secretariat 1. Signatures on the cover letter 2. Sending the promotion package to MoF 3. Sending the law amendment proposals for comments and suggestions 4. Post the law amendment proposals on MoF website (if needed) 5. Collect suggestions and comments from departments and comments from the public 6. Finalize the presentation note and send it to be signed 7. Send the promoting package to the minister’s cabinet for signing 8. Send the signed promoting package to BoA/other institution/MoJ 9. Internal NBR/other institution procedure 10. Internal MoJ procedure Page 20 of 335 20
  • 69. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme SPI Albania Interface Issues with Key Stakeholders Central Bank Banking Association The SPI Platform mandate is to prepare proposals for legislative, regulatory and self-regulatory financial sector modernization initiatives which are likely to result in quick enactment and endorsement by competent authorities and institutions. Ex-ante consensus on the relevance of the issue, quality of analysis and broad consensus on the proposal are key to fulfilling this mandate. A high level public-private SPI Committee, supported by an efficient SPI Secretariat, oversee the integrity of these activities. Placed at the juncture of public and private institutions, SPI Platform draws its legitimacy from helping each stakeholder fulfill its specific mission in full transparency, within the boundary of solutions that reflect the broadest possible public-private consensus. Accordingly, SPI Platform helps public institutions improve the effectiveness of their regulatory actions as defined by their own mandates (e.g., financial sector efficiency, stability or consumer protection). It helps the market participant community minimize the impediments to their businesses arising from unintended consequences of the regulatory framework. In both cases, it significantly contributes to their institutional strengthening. The SPI Platform relevance depends therefore on how its activities are aligned with the objectives of its key stakeholders. While the SPI Committee has a key role in setting the general direction and in shaping the outcomes of the public-private partnership, the SPI Secretariat has a specific responsibility to ensure that the technical work it supports is fully integrated into the operational processes of the relevant stakeholders for issue alignment, consensus-building and, eventually, enactment support. The following table describes the SPI Platform interface with the Central Bank and with Banking Association in each of the four phases of the SPI activities (i.e., issue identification, solution searching, consensus-building and enactment promotion). Page 21 of 335
  • 70. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme ISSUE IDENTIFICATION – 3 TYPES Description Central Bank (CB) Banking Association SPI SECRETARIAT (BA) STRUCTURING ASSISTANCE1) IMPACT ASSESSMENT - Identifies future - Performs simplified / full RIA depending on the CB request regulatory initiatives - Prepares and runs market surveys relating to BA - design ofCB banking sector regulatory issues (with where SPI could help questionnaire, calibration of survey, etc.the exclusion of monetary and foreign perform impact - Conducts public consultations as part of the RIA policy optionsexchange policy) where there is a need for assessment analysis in identification and assessmentevidence-based policy making, in line with order to better calibrate CB - Submits to CB impact assessments for alternative regulatory optionsEU “better regulation” approach. policy actions2) PUBLIC CONSULTATIONS - Selects EU-wide - Identifies relevant stakeholders regulatory initiatives - Raises awareness of the stakeholders on the issues under discussionEU-wide regulatory initiatives which are (proposals of directives, (round tables, seminars)to be transposed into national legislation regulations, etc.) where - Requests for stakeholders opinionsand which should be calibrated based on SPI could conduct public - Centralizes stakeholders opinions and draws preliminary conclusionsthe national specificities consultations and collects for CB. the opinions of other public and private stakeholders3) SPI PROJECTS PROPOSALS - Invites CB departments - Asks banks to provide - Drafts project selection procedure and questionnaire to identify project project proposals to be -Sets up strategy for project identificationCB issues (with the exclusion of monetary proposals to be undertaken by SPI - Ensures that the project proposals are in line with the projectand foreign exchange policy) where undertaken by SPI identification and selection procedureinvolvement of market players is -Proposes projects based on search in international experience andbeneficial for identification and discussion according to EC prioritiesof the most suitable regulatory solutions - Proposes projects to be -Ensures a balanced project portfolioAAB issues that require public approval undertaken by SPI raised by -Prepares project proposals and sends them for SPI Committee approvalor endorsement are to be proposed as SPI BA members and/or Board that - Identifies the needed expertise and composition of the PMG and PWGprojects. are consistent with the SPI and prepares the Working Group (WG) invitation letters mandate. - Prepares the ToRs of the project and sends them to PMG for preliminary endorsement 22 Page 22 of 335
  • 71. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SOLUTION SEARCHING Description/Comments Central Bank (CB) Banking Association SPI SECRETARIAT (BA) ANALYTICAL SUPPORTPROVIDING EXPERTISE - Provide leadership to Project Management Group -Identifies the needed expertise and composition of the PMG and (PMG) and members to Project Working Groups PWG and prepares the Working Group (WG) invitation lettersCB and BA support SPI projects (PWG) - Prepares the PWG meetingsby mobilizing CB’s and member - Support organization of technical seminars and other - Searches for solutions in international experience and EUbanks’ staff. project-related events legislation - Helps identify local experts - Identifies the needs for international/local consultants - Arranges for the consultants’ support - Prepares documents for discussions - Drafts RIA questionnaire (as part of the SPI Projects RIA) - Collects data and performs calculations - Organizes seminars and other supporting eventsONGOING MONITORING - Ensure ongoing consultations with CB relevant - Collects feedback from SPI stakeholdersAND FEEDBACK departments and with banks and/or Technical - Collects and aggregates individual contributions Commissions - Prepares documents presenting the solutionsCB monitors WG activities and - Provide instructions to their representatives inprovides timely feedback. the PWG and liaise with SPI Secretariat - Supports data collection by sending requests for data on behalf of CB/BA to promote evidence-based policy analysis 23 Page 23 of 335
  • 72. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme CONSENSUS-BUILDING Description/Comments Central Bank Banking SPI SECRETARIAT (CB) Association (BA) CONSENSUS-BUILDING SUPPORTONGOING - Seeks for the representation of all stakeholders in the PWGCONSULTATIONS - Ask CB Departments/banks to review - Supports PMG in running the discussions in the PWG meetings proposed PWG solutions - Outlines the issues where a common solution was not identifiedCB and SPI, BA and SPI consult - Provide input on disputed issues - Looks for international benchmarking in disputed solutionseach other regularly to ensure full - Secure CB/BA Board endorsement for - Asks for independent opinions on the disputed issuesalignment in reaching a common final recommendation - Provides ideas for reaching solutions acceptable to all partiessolution. - Performs RIA for the disputed issues in order to facilitate the best choice - Sends the documents for consultation / endorsement to the principalsPARTICIPATION IN DESIGN - Outlines the benefits of promoting self-regulatory solutions asOF MARKET DRIVEN - Ask CB Departments/Technical part of the “better regulation” approachSOLUTIONS Commissions to review proposed PWG - Ensures that the self-regulatory solutions embed safeguards solutions which are in line with the supervisory approachCB has the opportunity to - Provide input on disputed issues - Supports PMG in running the discussions in the PWG meetingsparticipate in the design of -Seek for the representation of all - Looks for international benchmarking on possible solutionssolutions of private-driven stakeholders in the PWG - Asks for independent opinions on the proposed issuesprojects and industry self- - Performs RIA for proposed issues in order to facilitate the bestregulatory solutions choiceBA has the opportunity toparticipate in the design ofsolutions of public-drivenprojects. 24 Page 24 of 335
  • 73. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme ENACTMENT PROMOTION Description/Comments Central Bank (CB) Banking Association SPI SECRETARIAT (BA) ENACTMENT SUPPORTCOORDINATION OF ACTIONS - Actively participate in promoting the legislative - Prepares the law / regulations initiatives through letters and public interventions enactment packagesCB, BA and SPI Secretariat coordinate - Prepares SPI Committee letters to theactions in respect of full range of SPI - Send CB/BA submission under the public consultation legislative initiator or to the CB Boardprojects process for CB regulations - Provides detailed description of RIA to the legislative initiator or to the CB Board - Follows up with the legislative initiator - Coordinates issuing of - Asks BA members to - Notifies CB on the initiation of the CB regulations that have send opinions under the public consultation process been designed under the public consultation - Sends SPI Secretariat submission SPI process under the public consultation process - Arranges and/or attends the meetings with institutions involved in the enactment process - Prepares other documents as required by the legislative initiator 25 Page 25 of 335
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  • 75. Annex I-2 European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Foreword This presentation is intended to offer a broad image on the SPI partnership, on its objective, governance, processes, methodologies SPI PARTNERSHIP and results. FOR FINANCIAL SECTOR This partnership, which brings together the experience and knowledge of what is desirable and feasible from both a policy and a MODERNIZATION business perspective, can be a powerful engine to promote financial sector modernization. This presentation should enable EBF’’s Associate’s Management to take the decision to undertake some preliminary steps for establishing a SPI platform to support a large financial sector Presentation to EBF’s Associate’s Management modernization program. by [promotor] [date] [place] It is based on the Convergence Program’s experience with SPI Romania and Albania (SPI stands for Special Projects Initiative 1/). 1 More details may be offered by request. 2 1/ www.spi-albania.eu and www.spi-romania.eu have more details.SPI Platform – a Convergence Program’s Product Financial Modernization Launched in July 2005 by the World Bank with support from Italy ’s “Financial modernisation refers to the process of financial Ministry of Economy and Finance, the Convergence Program promotes innovation and organizational improvements that make the public-private financial sector modernization in South-East Europe. financial system more efficient by overcoming a number of frictions such as asymmetric information, incompleteness of Under a “BOT” concept (Build-Operate-Transfer), the Convergence markets, limited opportunities for agents to engage in financial Program helped authorities and market participants set up a transactions through contracts, high transaction costs and partnership (SPI Platform) that strengthens a country institutional limited competition.” infrastructure with incentives and skills (analytical, consultative and implementation) that support large-scale financial sector modernization -Gertrude Tumpel-Gugerell, European Central Bank Executive Board programs using EU Better Regulation methodology. Member, July 2006 speech The SPI Platform has the potential to become a key financial sector modernization hub, coordinating local and international players. 3 4 Page 27 of 335 1
  • 76. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme How to Increase Financial Sector Efficiency? Financial efficiency is the condition under which resources available in SPI Partnership (1) a financial system are allocated towards the most valuable investment opportunities at the lowest possible costs. • SPI Partnership – a public-private cooperation commitment for identifying commonly agreed solutions for financial sector modernization. Informational Incompleteness of Lack of opportunities of Transaction costs Lack ofSources of asymmetries markets engaging in fin. transactions competitioninefficiency1// • SPI Partners - professional associations of the private The different amount The lack of suitable Legal system inefficiencies, Stamp duties, registry Market power of information products and the lack of banking skills, or taxes and other may lead to high financial institutions, regulating and supervising authorities of available to agents services prevents of financial education of administrative costs prices and low (banks and clients) banks and potential both consumers and firms may alter the prices of traded quantities leads to inefficient transactions (both in clients from engaging in financial prevents banks and potential clients from engaging in financial services and products, thus leading the financial market and of other closely related fields, prices and quantities) transactions financial transactions to inefficient transactions (both in academic institutions, international donors, etc. prices and quantities) • Banking Association • Increase of firms’ • Increase of the • Central BankIllustrative • Modernization of legal • Increase of payment / • Moderniza-sources of financial statement transparency number of financial markets systems / procedures settlement systems’ tion of • Ministry of Finance • Improvement of financial Consumer Protection Agency efficiency antitrustefficiency • Increase of credit market responsiveness to • Reduction of regulation •gains history disclosure • Provision of real economy needs • Increase of market administrative costs • Increase of on-line • Antitrust supervision • Financial Market Authority collaterals • SPI Committee – top level representatives of SPI Partners participants’ information banking servicesIllustrative • More(better) marketoutcomes • More lending to • More financial products available • More mortgage lending • Enlargement of banks’ client base customer ensuring the partnership’s management SMEs oriented to exporting firms 5 6 pricing policies1/ Drawn from: European Central Bank, Financial Integration in Europe, Ch.2 ,“Financial Development Concepts and Measures”, April 2008 SPI Partnership (2) SPI Partnership (3) Human resources • Partners’ main responsibilities: – funding partially the financial needs of the SPI Data Funds Financial activities and applying for other donors’ sector support; modernization – SPI projects proposals and leadership; Institutional strengths – members to all PWGs; International expertise – access to data; – empowering their representatives in SPI Committee to endorse SPI documents; Public institutions: human resources, data, institutional strengths Private institutions: human resources, data, funds, international expertise – actions for enactment of regulatory proposals SPI technical partner: human resources, funds, international expertise, endorsed by SPI Committee. institutional strengths MoU 7 8 Page 28 of 335 2
  • 77. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania Partners SPI Romania Partners • Bank of Albania • Albanian Association of Banks • Ministry of Finance • Alpha Bank • National Bank of Romania • Romanian Banking Association • Ministry of Economy, Trade and • Banka Popullore • National Authority for Consumers Protection • Raiffeisen Bank Energy • Credins Bank Ministry of Economy and Finance • Raiffeisen Banca pentru Locuinţe • • OTP Bank • Financial Supervisory Authority • Credit Bank of Albania • Ministry of Agriculture and Rural Development • Banc Post • Ministry of Justice • Emporiki Bank • Ministry of Interior and Administration Reform • Anti-Money Laundering Office • CEC • EURALIUS • First Investment Bank • BCR • TransFonD • Alpha Bank • National Accounting Council • International Commercial Bank • Credit Bureau • BRD-GSG • European Bank for Reconstruction and • Intesa Sanpaolo Bank • National Authority for the Supervision of Personal • UniCredit Ţiriac Bank Development • Italian Bank for Development Data Processing • RIB Romanian International Bank • International Finance Corporation • Credit Europe Bank • National Bank of Greece • Rural Credit Guarantee Fund • ING Romania • Council of Ministers (Donors’ • National Commercial Bank • Grading Commission for Comestible Seeds • Citibank Coordination Unit) • Romanian Commodities Exchange • ABN AMRO • KPMG • Pro Credit Bank • Romanian Stock Exchange • ATE Bank Romania • Price Waterhouse Coopers • Raiffeisen Bank National Securities Comission • Coface Romania • Tirana Bank • • Cargill • Deloitte • The National Association for Consumers’ Protection • KPMG • Ernst &Young • United Bank of Albania and Promotion of Programs and Strategies from • Deloitte • Union Bank Romania • Italian Banking Association • Clifford Chance • Albanian Mobile Communications • Algoritmics • OECD • Bearing Point • Vodafone Albania • International Finance Corporation • World Bank • Financial Ombudsman Service, UK 9 • Goodwood Financial Consulting 10 10Romania’s 2007 Modernization Program SPI Romania 2008 Modernization Program FINANCIAL European Central Bank SECTOR Asymmetric Completeness of Increased Reduced Increased MODERNIZATION information the market opportunities to transaction costs competition CRITERIA engage in financial transactionsItalian Banking Association 1.Rural lending Law on bank Loss-Given-Default Mortgage Loan Business Positive credit 2. Credit Rating guarantees Database Database information development Agencies sharing Stress testing MiFID 1. Prudential IFRS implementation 2. Debit Instruments Industry E-Settlement competitiveness 3. AML Law 4. Law on Safety 1. Ombudsman 2. Consumer education Industry reputation Total 2 3 3 5 1 11 12 BOLD BLUE: NBR Proposals; BOLD RED: RBA Proposals; Black: Other Proposals Page 29 of 335 3
  • 78. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania 2008 Modernization Program SPI Albania 2009 Financial Modernization Program (1) Red: Projects undertaken; Other BoA proposals; Other AAB proposals Projects undertaken: Public-private proposals; AAB proposals; Authorities proposals European Central Bank FINANCIAL European Central Bank Bank of Albania Governor’s Asymmetric Completeness of the Increased Reduced Increased SECTOR Banking Forum Issues information market opportunities to transaction competition MODERNIZATI Asymmetric Completeness of Increased opportunities Reduced transaction Increased engage in financial costs information the market to engage in financial costs competition transactions ON CRITERIA transactions Transparency in bank-customer 1.Corporate relationship 0/1 3. Stock exchange 7.Agricultural lending 14. Strengthening bank staff /consumer lending 2. Scoring card 4. Leasing 8. Lending to tourism Strengthening judicial system on Revising regulatory Business system for transactions 9. Lending to municipalities banking issues 1/8 act on Execution of individuals 5. Securitization 10. Mortgage loans Procedures on Bank development 6. AAB Strengthening accounts 11. Structural lending 27. Consumer credit 12. Lending environment The recognition of and protection from Extension of the credit bureau Enhancing banks’ liquidity Revising Foreign Currency 13. Lending to PPPs the various risks services – 1.database for risk management Open Position 29. FX open positions 5/8 businesses Loan loss provisioning 2. scoring cards for under IFRS 15. Credit risk in 30. Revising capital 18. Expansion of banks 19. Reducing cash individuals; consumer lending adequacy ratio activities transactions 16. Better credit The strengthening of internal control risk management 28. Corporate 20. Auction procedures for 0/1 17. KYC policies governance and buildings requirements for 21. AML reporting Introduction of new products Revising Public Procurement 1/7 Law their administrators 22. Write-off of bad debts Industry 23. Account stopping The functioning of the interbank market Preparing a feasibility study 31. Reviewing guidelines 1/5 for a central depositary competitiveness on banks’ liquidation 32. BoA reporting Establishment of a national 33. Harmonizing The increase of funds circulation settlement scheme for accounting policies through the system 1/2 payments in foreign currency 36. The impact of IFRS Implementation on the The building of full technological Unique and Banking Regulations capacities 1/2 rationalized reporting system 34. Improving 24. Financial 25. “Effective” interest Facilitate lending to excluded groups access to basic ombudsman rate (EIR) 26. 0/3 banking products Consumer financial The increase of ALL denominated Industry education lending 0/3 reputation 35. Enhancing financial Improvement of bank’s governance 13 consumer’s protection 14 Total :10 2 4 2 2 Total 36 6 8 9 10 3 SPI Albania 2009 Financial Modernization Program (2) European Central Bank 2007 SPI Romania Activity Bank of Albania Governor’s Banking Forum Issues Asymmetric information Completeness of the Increased opportunities to Reduced transaction costs Increased competition http://www.spi-romania.eu/spi-secretariat/activity-reports/ market engage in financial transactions Transparency in bank- 1.Regulating bank customer relationship 1/1 communications of “effective” interest rate Total number of projects: 14 (EIR) offered to customersStrengthening judicial system 2.The creation of a 4.Improving stability in the 5.Facilitating expansion of banks 8.Reviewing banking Financial Impact of Finalized SPI Projects (Mln, EUR) – First Full Year on banking issues 7/8 complete regulatory framework on the merge regulating environment activities 6.Increase the number of regulations on licensing Volume Impact (% of 2007 target)  Self regulatory actions completed 1. Expansion of positive information sharing and acquisitions of banks specialized courts 2. Ombudsman 3.Clarification of non- 7.Improving auction procedures 76% 99% 3. Consumer financial education residents’ banking status for movable collateral under 90 foreclosure 4. MiFID 5. Credit exposures stress testing techniquesThe recognition of and 9.Modernizing moveable 11.Improving credit riskprotection from the various collateral registries management in consumer lending 80risks 3/8 10.Better functioning of Electronic Register of 73 IFRS Databases 82%  Regulatory changes underway 6. Law on goods safeguard, values and Commerce 70 persons protectionThe strengthening of internal 12.Improving the lending 7. Electronic processing of debit instruments Bank Ombudsman Cost Savings Impact (% of 2007 target)controls 1/1 environment Rural Lending 8. Amendments of the anti-money laundering 60 lawIntroduction of new products 13.Strengthening the stock 16.Facilitating structural lending 18.Guarantees for SME-s Lending AML Cost Savings6/7 exchange 17.Promote project financing Debit Instruments 9. IFRS loan loss provisioning 14. Developing pension 50 funds 15.Facilitating leasing transactions  Regulatory changes to be initiated 10. Rural lendingThe functioning of the 19.Improving FX market 20.Harmonizing accounting 22.Link deposit insurance 40interbank market 4/5 policies premiums to risk profiles 21.Reducing paper-based documents 30  Proposals to be completed in 2008 11.Law on bank letters of guaranteeThe increase of funds 23.Improving 12.Mortgage loan servicing and loss givencirculation through the transparency and equal Positive Information default databasessystem 1/2 access to guarantee funds 20 13.Roland Berger studyThe building of full 24.Optimizing Anti-Moneytechnological capacities 1/2 Laundering Reporting 10  Abandoned: 1 project 14.Credit rating agenciesFacilitate lending to excluded 25.Improving access to basic 26.Facilitating agricultural lendinggroups banking products 27.Facilitating lending to PPPs Law on Safety 3/3 0The increase of ALL 28.Increasing mortgage loans 0 134 170 182 220 236 240denominated lending 29.Facilitating lending to tourism 15 Additional Lending Volume 16 3/3 30.Lending to municipalitiesTotal: 30 4 5 9 8 4 16 Page 30 of 335 4
  • 79. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania Organizational Chart 2008 SPI Albania Activity At-A-Glance http://www.spi-albania.eu/ Completed projects: 3  1. 2. The impact of IFRS implementation on Banking Regulations Changes and Amendments on the Civil Procedure Code 3. Improvement of Bailiff Services Legislative Outputs:  1. 2. New Law on Liberalization of Bailiff Services Changes and Amendments to the Civil Procedure Code of Albania (reference to the execution of collateral and enforcement of proceedings). Analytical Outputs  1. Recommendations on improving the public bailiff service 2. Recommendations on the draft Law on Private Bailiff 3. Recommendations on amending the Civil Procedure Code 4. Regulatory Impact Assessment on the Civil Procedure Code amendment proposals 5. Recommendations on regulatory changes to be made in order to implement IFRS and an action plan on issuance of the regulatory amendments 6. Summary findings of the survey on the banks’ readiness to implement IFRS  Operational Outputs 1. Project Working Group Meetings held: 13 2. Participating Professionals: 75 3. Public Institutions Represented: 6 4. Private Institutions represented: 27  5. Projects Under Completion: 3 1. Reducing Cash Transactions 2. Reviewing the Capital Adequacy Regulation 3. Improving Consumer Financial Education 17 18 18 17 Italics: Project Working Groups Private Sector Members SPI Committee SPI Project Working Groups – Project Management Team– Members: • Project Owner - top level of the main stakeholder; project oversight • Project Manager – is appointed by the Project Owner (usually out of the • Central Bank- Governor & Hosting Chairperson, PO’s institution management staff) and chairs PWG meetings; • Co- Project Manager(s) – represent(s) the other main stakeholder(s) and • Banking Association - Chairman, second(s) the Project Manager in coordinating PWG meetings. • Other authorities – Senior Officials, – Project Working Group Composition: 6-10 representatives of public and private stakeholders, with– Main responsibilities specific expertise profiles. Responsibilities: • Selecting the analytical projects to be undertaken; – Actively participating in the meetings; • Monitoring and shaping work-in-progress; – Providing contributions (their institutions’ experience, parts of documents); • Endorsing SPI projects recommendations; – Validation of RIA questionnaire; • Monitoring enactment progress of regulatory – Providing data/filling in questionnaires; – Validation of RIA findings; proposals; – Approval of position/policy documents; • Intervening for speedy enactment and – Supporting enactment activities. implementation. – PWG gathering – Meetings: 3-4 meetings over 3 months- Meetings - quarterly 19 20 Page 31 of 335 5
  • 80. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Secretariat – main responsibilities SPI– Structure and Processes » Preparing SPI Committee meetings agenda, keeping meetings records and distributing minutes to members; » Managing relationships with the banking community, • Operating principles: international banks, local experts and other technical assistance providers, etc. – Local ownership » Building up the activity program; – Programmatic focus » Drafting project ToRs; – Mobilization of local expertise » Organizing PWGs and their meetings; – Involvement of foreign experts to fill local knowledge » Preparing background studies based on interviews, research, gaps international benchmark, compilation of regulations; – Disciplined program management » Summarizing individual contributions of the Project Working – Evidence-based analytical methods to search for Group members; solutions » Preparing documents for PWGs discussions; – Full transparency of our work » Preparing draft RIA questionnaire; » Collecting data and performing calculations; – Strong practical impact orientation » Preparing SPI Committee documents; • Operating guidelines » Coordinating actions for promoting, enacting and implementing SPI proposals; 21 22 » Submitting periodical activity reports to stakeholders;SPI Promotes EU Better Regulation Better Regulation Steps in SPI Policy Design Steps Scoping of problem Purpose Projects 1. Problem identification To understand if a market/regulatory failure creates the case for regulatory intervention. =====Scoping of Problem========║====Analysis== =║= Policy║=Conclusion= 2. Definition of policy objectives To identify the effects of the market /regulatory failure to the regulatory Of Impact Consultation objectives. 3. Development of “do nothing option” To identify and state the status quo. Regula P P P C C I P 4. Alternative policy options To identify and state alternative policies (among them the “market solution”). tory r o r o o A W Analysis of impact contex o li o s s A G 5. Costs to users To identify and state the costs borne by consumers t b c p t t D 6. Benefits to users To identify and state the benefits yielded by consumers l y o a a P 7. Costs to regulated firms and regulator To identify and state the costs borne by regulator and regulated firms e o s n n o 8. Benefits to regulated firms and regulator To identify and state the benefits yielded by regulator and regulated firms m b e d d li Consultations I j d B B c 9. Data Questionnaire To collect market structure data to feed into cost and benefit analysis Better regulation - having a full picture of their economic, social and d e r e e y 10. Policy Document To learn market participant opinions on various policy options e environmental impacts through the structured Impact c e n n r Conclusion n Assessment tool. ti g e e e 11. Final Recommendations Final report based on Cost Benefit Analysis and market feedback ti v u fi fi c 23 24Source: CEBS-CESR-CEIOPS Better Regulation Template fi e l t t o c s a a q m Page 32 of 335 6
  • 81. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Why to take the initiative to build up a Romanian Banking Association-SPI SPI? comparative capabilities Low Country BENCHMARKING Banking Community Medium INSTITUTIONAL CONSENSUS ANALYTICS RBA SEMINARS CONVENING BUILDING High IMAGE SPI Industry Financial Modernization Medium Consensus-Building (RIA Analyses & Training) Partnership Vehicle with Low Proprietary Vehicle Authorities and other Partners Association of SPI Platform SPI extends Strong Much Banks RBA Stronger Weak Broader RBA-NBR link stronger SPI for both RBA capabilities SPI with RBA 25 capabilities (RBI) Reach 26 in public sphere MEF/NACP capabilities Benefits out of the participation in the SPI partnership Proposed next steps • Steps for building consensus within the banking community: – EBF Associate’s Management decision to start the assessment of the opportunity for establishing SPI: • bilateral discussions with Associate’s members’ top management• Participation in setting up the regulatory – • seminar for banks’ staff – invitation letter, seminar agenda, long presentation, outline of the memo on the seminar conclusions; EBF Associate’s Management decision on initiating the partnership. agenda • Steps for initiating the partnership:• Active participation in solution design – Bilateral discussions between EBF’s Associate’s Management’s representative and top level representatives of the public authorities – Seminar for public authorities’ staff;• Enhancing the evidence-based practice – Official proposal to Central Bank; – Joint invitation (Central Bank – Banking Association) addressed to other stakeholders• Structuring dialogue with public institutions • - Steps for establishing and running the partnership Executive Committee set up - Preparation of public-private partnership project• Better work efficiency - Submission of request for funding to European Commission• Knowledge sharing with public institutions • - First implementation steps of project when funding has been secured Recruiting SPI Secretariat - Training SPI Secretariat and other market participants - Annual activity program 27 28 Page 33 of 335 7
  • 82. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 34 of 335
  • 83. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Annex I-3 SPI Romania Achievements 2007 Program Updated October 2008 Project Analytical Output Practical ImpactExpansion of Positive • Preliminary RIA on the net benefits of positive  Change in the National Authority for Supervision ofCredit Information information sharing Personal Data Processing intentions to forbid positiveSharing information sharing • Recommendations on expanding positive information sharing through moral suasion  Increase in market share of banks reporting positive information to the Credit Bureau from 27% in July 2006 to 85% by the end of 2007 through self-regulatory decision  EUR 130 mln./year potential increase in lending volumeRural Lending • Preliminary RIA on the net benefits of new rural  Partially enacted through Government Decision no. lending features 520/2008 • Recommendations on revamping the rural lending  Increase in the loans granted to farmers under low risk based on deposit certificates for cereals, including conditions comprehensive package regulatory proposals and implementation plan  Implementation of a real cereal market  EUR 104 mln./year additional loans 1 Page 35 of 335
  • 84. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Project Analytical Output Practical ImpactAnti Money Laundering • RIA on the net effects of changing the AML Law  Enacted by Government Emergency Ordinance no.Law 53/2008 • Recommendations on amending the AML Law by aligning it to the Third Directive and FATF  EUR 11 mln./year net benefits for the banking community  Recommendations and by rationalizing the AML reporting systemElectronic Processing of • Preliminary RIA on the effects of replacing manual  Creating the necessary regulatory framework forDebit Instruments processing with electronic one implementing the electronic solution through Governmental Emergency Ordinances no. 38 and 29 /2008 • Recommendation to implement electronic processing of and NBR Norms no. 7 and 7/2008 on cheques, drafts and debit instruments promissory notes and Technical Norms no. 4 and 5/2008 as endorsed by European Central Bank (CON/2008/7) • Amendment proposals for the regulatory framework  Building industry consensus for the electronic solution  Finalizing the Electronic Payment System  EUR 30 mln./year net benefits for banksIFRS Loan Loss • Recommendations on the general principles for the new  Reaching consensus among stakeholders on the regulatingProvisioning NBR provisioning principles  NBR is drafting new regulations to be issued in 2009 2 Page 36 of 335
  • 85. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme SPI Albania Achievements 2008 Program As of January 2009 Project A nalytical Output Practical Impact Improving  Recommendations on improving the Legislative Outcome Auction public bailiff service  Bailiff: Law approved by Parliament on December 11, 2008 Procedures for  Civil Procedure Code: Amendments approved by Parliament on Immovable  Recommendations on the draft Law on December 29, 2008Collateral under Private Bailiff Economic Impact Foreclosure Civil Procedure Code:  Recommendations on amending the  Reduction in the time for foreclosure of immovable collateral by Civil Procedure Code 120 working days, increasing thus efficiency of the enforcement process  Regulatory Impact Assessment on the  Improvement of the Albania’s rank in the World Bank Doing Civil Procedure Code amendment Business Contract Enforcement section by 7 (seven) places. proposals  Benefits or cost savings for the creditor would be achieved through the increased debt recovery ratio and the earlier usage of “frozen” funds i.e. bad loans under foreclosure. The benefits for the banking community would vary from 15.5 million to 18.5 million euros. In an annual basis these benefits amount to 5 - 7% of banks’ operational expenses depending on the recovery moment (in the first or in the second auction).  Benefits and cost savings for the debtor would be achieved firstly, through benefit transfers from banks / creditors to consumers / debtor. Over a five year period a sustainable portion of these benefits will be transferred to consumers in the form of lower interest rates or higher funds available for loans. Secondly, debtors will benefit from the improved enforcement system through reduced fees and other payments 3 Page 37 of 335
  • 86. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Project A nalytical Output Practical Impact and accrued interest paid to the creditor. A slight improvement in the efficiency of the process would save 0.4 million euros for the debtors. Cost saved through reduced fees and payments would be in addition to the costs saved in the form of accumulated accrued interests (the interest accrued until the debt is recovered). IFRS  Recommendations on regulatory Regulatory Outcomeimplementation changes to be made in order to  Discussed by Ban k o f Alba nia Su pervisory Council in Novemb er in Bank of implement IFRS and an action plan on 2008 and forw arded to th e Supervision Departmen t for Albania Rule issuance of the regulatory amendments implementation in November 2008. Book  Summary findings of the survey on the Other Impact banks’ readiness to implement IFRS  The categorization of the regulations to be changed by BoA for IFRS implementation, with reference on amending priority and on depth of impact, giving also the sense of change.  The action plan for the issuing the amendments in order to harmonize the banking framework with the IFRS platform, adjusted by the necessary prudential concerns.  Clarification on IFRS implementation time and procedures issued by the National Accounting Council in July 2008 4 Page 38 of 335
  • 87. Annex I- 4 European Banking Federation A Financial Modernization Hub SPI Platform Toolkit World Banks "Convergence" ProgrammeDonor Project Technical Support: Major, Focused, Nil Donor Program Support: Build-Operate-TransferDonor A Donor 1Donor B Market Completeness Donor 2 Lower Costs and Higher CompetitionDonor C SPI Project Working Groups ….Donor D Robust Financial Contracts….. Project 12 Project 2 Project 1 Project 11 Project 3 SPI Platform Project 10 Project 4 SPI Committee SPI Secretariat Project 9 Project 5 Project 8 Project 7 Project 6 Asymmetry of Information SPI Secretariat supports SPI Project Working Group without external technical support SPI Secretariat supports SPI Project Working Group with limited external technical support Page 39 of 335External experts prepare project with SPI Project Working Group support based on SPI methodologies
  • 88. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 40 of 335
  • 89. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex III-1 Questions and Answers discussion instrument This document is intended to help the idea promoter in providing more details and clarifications to the EBF” Associate’s Management during or at the end of the presentation. Question Why should EBF Associate be interested in SPI concept? Answer SPI deals with issues that have an ex-ante agreement of importance for both market and authorities. Banking Association do not waste resources on issues that may not be finally of interest to the authorities. Furthermore, SPI tackles these issues through working groups where experts from the authorities work together with banking experts, exchanging opinion and reaching agreements. Given this context, SPI regulatory proposals have therefore better chances for enactment than proposals coming only from the Banking Association. Question Is SPI an institution or only an agreement? Answer SPI can be either a legal entity or only an agreement between its partners. Operating based on the agreement provides more flexibility, while a clear legal status brings more sustainability in time. The clear legal status also makes it possible to organize revenue-generating activities and to raise contributions from domestic and international sources. As a legal entity, it can be a separate one or incorporated in one of the partner institutions (Banking Institute or Association). Question What previous experiences are with SPI partnerships? Answer SPI has been established and operated in Romania and in Albania, the promoter being World Bank’s Convergence Program. Convergence Program ensured also major part of financing, management of the SPI Secretariat and knowledge transfer. Question Where there any achievements in these 2 cases? Answer Both SPI Romania and Albania had notable achievements, in terms of outcomes (regulatory and self regulatory proposals), outputs (increase in banks’ business or decrease in the operating costs, measured through Regulatory Impact Assessment), and convening capacity (an impressive number of experts from a large spectacle of institutions). Question What happened with SPI in Romania and in Albania? Answer After about 2 years of operations, Convergence Program transferred the financial and executive management to the local stakeholders. In Romania, SPI became an organizational unit in the Romanian Banking Institute (an existing entity having as shareholders 1 Page 41 of 335
  • 90. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Romanian Banking Association and National Bank of Romania). In Albania, SPI has been absorbed by Albanian Banking Association by hiring as Secretary General the SPI Director for Financial Modernization Program and Analytics. Question Why Convergence Program withdrew from these 2 countries? Is it still a promoter of the SPI platform? Answer Convergence Program principle is to Build-Operate-Transfer and it’s main objective is to transfer knowledge and practice of operating the partnership for a country financial modernization. Convergence Program had a limited mandate, but the it left a valuable legacy in terms of a comprehensive library of documents available on its website (www. convergence-see.eu) and on the SPI websites (www.spi-romania.eu, www.spi-albania.eu) and a practical toolkit for establishing and running SPI platform. Question Are there any other simultaneous initiatives in other countries? Answer The toolkit on how to establish and run the SPI platform has been offered by Convergence and EBF to all EBF Associates from South Eastern Europe and EBF will support the initiaves, playing also the role of information center in this respect. Question How is going EBF to support the initiative of establishing SPI? Answer Question How much does it cost to run a SPI partnership by year? What costs are to be covered? Answer The costs of an SPI platform comprise salary costs for the SPI Secretariat, equipment purchase and operating cost (office costs, event organizing costs, procurement costs, etc). The annual budget of an SPI platform with a minimum SPI Secretariat formula and with the punctual involvement of foreign consultants is estimated to about EUR 100,000. For a 10 project annual program, this translates in about EUR 10,000/project. Question What have been the funding sources in Romania and in Albania? Answer Convergence Program covered the costs of SPI Secretariat and of the foreign expertise used, while the Banking Association undertook office and events costs. When SPI was transferred, in Romania, Central Bank covered 60% and Banking Association 40% of the annual SPI budget. In Albania, the Banking Association covered all costs. Question Who is going to cover the establishing costs? Answer EBF’s Associates are expected to cover the establishing costs that consist of organizing 2 awareness – raising events. EBF will cover 2 Page 42 of 335
  • 91. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme its participations in meetings and in seminars. The costs might encompass also the participation of experts in SPI partnership, Better Regulation and Regulatory Impact Assessment, if needed. Question What would be the financing scheme for running an SPI platform? Answer Knowing the financial constraints of a banking association, attracting EU funding for financing the major part of the needs is envisaged for SPI platform. The toolkit provides a complete package on the request for funding. A part of the annual budget is to be provided by SPI partners and it can take the form of cash or of in-kind contributions (participation of experts, etc). Question How many staff has the SPI Secretariat? Answer A 3 persons formula is the minimum one to cover needs and consists of a General Manager with analytical and PR skills and executive responsibilities, a Director for Analytics and Policy (or similar) and a junior covering the office management needs. Question Who is going to undertake responsibility of the next steps? Answer The Chairman of the Banking Association and/or the Secretary General/Executive Director are to take actions for raising awareness on SPI platform and for building consensus on its establishment. Question Isn’t SPI overlapping the banking association activities? Answer SPI complements and expands the Banking Association’s work which consists of building an industry position on various issues. The experiences in Romania and in Albania showed that SPIs and the Banking Associations used their competitive advantages to cooperate and leverage effects of their activities. SPI operating guidelines provide a clear cooperation framework, showing by stage of a project what the each institution should do. Furthermore, projects selected have demonstrable strong public and private gains, not only industry benefits. Question Who is going to train SPI Secretariat on project management, Better Regulation and Regulatory Impact Assessment? Answer If the toolkit and the document library are not considered to be enough to allow a self-learning process, experts from the other SPI platforms, from Convergence Program and out of the Convergence Program’s collaborators may be invited for training sessions. Question What is the most critical factor for SPI success? Answer From Convergence experience in Romania and Albania, the most critical success factor is the commitment by the banking community to support an instrument that addresses the community’s objectives to have a modern regulatory framework that allows the development of business opportunities. 3 Page 43 of 335
  • 92. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 44 of 335
  • 93. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex III-2 Draft communication to Banks’ management on assessing the opportunity of establishing a public – private partnership for financial sector modernization To: Banks’CEOs Dear Banking Association Member, Special Projects Initiative – SPI is a public – private partnership for the financial sector modernization by promoting regulatory and self regulatory measures. SPI undertakes projects that reduce asymmetric information, reduce costs of transactions, increase opportunities for transactions, contribute to complete the market and improve competition, in a structured and effective manner. Please find attached a presentation providing more details on SPI concept, object, procedures and methodologies. The [Management] of the Banking Association, in their meeting of …., recognizing the merits of the SPI platform and given the EBF’s offered support, has decided to take preliminary steps in order to assess the opportunity of establishing the public – private partnership. We would like to run a series of bilateral meetings for getting your institutions’ opinions on the projects that could be tackled by an SPI platform, the benefits, concerns and critical points in establishing and operating an SPI platform. We would like also to assess your institutions’ availability to support the activity of the public – private partnership. Our secretariat will contact your offices for setting up the details of the meetings. We send you herewith enclosed also a questionnaire to help you in formulating project ideas that could be handled by an SPI. We will inform you on the results of this consultation session and on the respective further steps. Thank you for your availability. Best regards, … Page 45 of 335
  • 94. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 46 of 335
  • 95. Annex III-3 European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Foreword This presentation is intended to offer a broad image on the SPI partnership, on its objective, governance, processes, methodologies SPI PARTNERSHIP and results. FOR FINANCIAL SECTOR This partnership, which brings together the experience and knowledge of what is desirable and feasible from both a policy and a MODERNIZATION business perspective, can be a powerful engine to promote financial sector modernization. This presentation should enable EBF’’s Associate’s Management to take the decision to undertake some preliminary steps for establishing a SPI platform to support a large financial sector Presentation to banks’ top management modernization program. by [promotor] [date] [place] It is based on the Convergence Program’s experience with SPI Romania and Albania (SPI stands for Special Projects Initiative 1/). 1 More details may be offered by request. 2 1/ www.spi-albania.eu and www.spi-romania.eu have more details. SPI Partnership (1) SPI Partnership (2)• SPI Partnership – a public-private cooperation • Partners’ main responsibilities: commitment for identifying commonly agreed solutions for financial sector modernization. – funding partially the financial needs of the SPI activities and applying for other donors’• SPI Partners - professional associations of the support; private financial institutions, regulating and – SPI projects proposals and leadership; supervising authorities of the financial market and of other closely related fields, academic institutions, – members to all PWGs; international donors, etc. – access to data; • Banking Association – empowering their representatives in SPI • Central Bank Committee to endorse SPI documents; • Ministry of Finance – actions for enactment of regulatory proposals • Consumer Protection Agency endorsed by SPI Committee. • Financial Market Authority 3 4 Page 47 of 335 1
  • 96. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Romania 2008 Modernization Program Romania’s 2007 Modernization Program FINANCIAL European Central Bank SECTOR Asymmetric Completeness of Increased Reduced Increased MODERNIZATIONItalian Banking Association information the market opportunities to transaction costs competition CRITERIA engage in financial transactions 1.Rural lending Law on bank Loss-Given-Default Mortgage Loan Business Positive credit 2. Credit Rating guarantees Database Database information Agencies development sharing Stress testing MiFID 1. Prudential IFRS implementation 2. Debit Instruments Industry E-Settlement competitiveness 3. AML Law 4. Law on Safety 1. Ombudsman 2. Consumer education Industry reputation Total 2 3 3 5 1 5 6 BOLD BLUE: NBR Proposals; BOLD RED: RBA Proposals; Black: Other Proposals SPI Albania 2008 Modernization Program SPI Albania 2009 Financial Modernization Program (1) Red: Projects undertaken; Other BoA proposals; Other AAB proposals Projects undertaken: Public-private proposals; AAB proposals; Authorities proposals European Central Bank FINANCIAL European Central Bank Bank of Albania Governor’s Asymmetric Completeness of the Increased Reduced Increased SECTOR Banking Forum Issues information market opportunities to transaction competition MODERNIZATI Asymmetric Completeness of Increased opportunities Reduced transaction Increased engage in financial costs information the market to engage in financial costs competition transactions ON CRITERIA transactions Transparency in bank-customer 1.Corporate relationship 0/1 3. Stock exchange 7.Agricultural lending 14. Strengthening bank staff /consumer lending 8. Lending to tourism 2. Scoring card 4. Leasing Strengthening judicial system on Revising regulatory Business system for transactions 9. Lending to municipalities banking issues 1/8 act on Execution of individuals 5. Securitization 10. Mortgage loans Procedures on Bank development 6. AAB Strengthening accounts 11. Structural lending 27. Consumer credit 12. Lending environment The recognition of and protection from Extension of the credit bureau Enhancing banks’ liquidity Revising Foreign Currency 13. Lending to PPPs the various risks services – 1.database for risk management Open Position 29. FX open positions 5/8 businesses Loan loss provisioning 2. scoring cards for under IFRS 15. Credit risk in 30. Revising capital 18. Expansion of banks 19. Reducing cash individuals; consumer lending adequacy ratio activities transactions 16. Better credit The strengthening of internal control risk management 28. Corporate 20. Auction procedures for 0/1 17. KYC policies governance and buildings requirements for 21. AML reporting Introduction of new products Revising Public Procurement 22. Write-off of bad debts 1/7 Law their administrators Industry 23. Account stopping The functioning of the interbank market Preparing a feasibility study 31. Reviewing guidelines 1/5 for a central depositary competitiveness on banks’ liquidation 32. BoA reporting Establishment of a national 33. Harmonizing The increase of funds circulation settlement scheme for accounting policies through the system 1/2 payments in foreign currency 36. The impact of IFRS Implementation on the The building of full technological Unique and Banking Regulations capacities 1/2 rationalized reporting system 34. Improving 24. Financial 25. “Effective” interest Facilitate lending to excluded groups access to basic ombudsman rate (EIR) 26. 0/3 banking products Consumer financial The increase of ALL denominated Industry education lending 0/3 reputation 35. Enhancing financial 7 consumer’s protection Improvement of bank’s governance 8 Total :10 2 4 2 2 Total 36 6 8 9 10 3 Page 48 of 335 2
  • 97. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania 2009 Financial Modernization Program (2) European Central Bank 2007 SPI Romania Activity Bank of Albania Governor’s Asymmetric information Completeness of the Increased opportunities to Reduced transaction costs Increased competition http://www.spi-romania.eu/spi-secretariat/activity-reports/ Banking Forum Issues market engage in financial transactions Transparency in bank- 1.Regulating bank customer relationship communications of 1/1 “effective” interest rate (EIR) offered to customers Total number of projects: 14Strengthening judicial system 2.The creation of a 4.Improving stability in the 5.Facilitating expansion of banks 8.Reviewing banking Financial Impact of Finalized SPI Projects (Mln, EUR) – First Full Year  on banking issues complete regulatory regulating environment activities regulations on licensing 7/8 framework on the merge 6.Increase the number of Volume Impact (% of 2007 target) Self regulatory actions completed and acquisitions of banks specialized courts 1. Expansion of positive information sharing 3.Clarification of non- 7.Improving auction procedures 76% 99% 2. Ombudsman residents’ banking status for movable collateral under 90 foreclosure 3. Consumer financial education 4. MiFIDThe recognition of and 9.Modernizing moveable 11.Improving credit risk 80 5. Credit exposures stress testing techniques  Regulatory changes underwayprotection from the various collateral registries management in consumer lending Databasesrisks 3/8 10.Better functioning of 73 IFRS 82% Electronic Register of Commerce 70 6. Law on goods safeguard, values and persons protectionThe strengthening of internal 12.Improving the lending Bank Ombudsman Cost Savings Impact (% of 2007 target)controls 1/1 environment Rural Lending 7. Electronic processing of debit instruments 60 8. Amendments of the anti-money launderingIntroduction of new products 13.Strengthening the stock 16.Facilitating structural lending 18.Guarantees for SME-s Lending AML Cost Savings6/7 exchange 17.Promote project financing Debit Instruments law 14. Developing pension 9. IFRS loan loss provisioning 50 funds 15.Facilitating leasing transactions  Regulatory changes to be initiatedThe functioning of the 19.Improving FX market 20.Harmonizing accounting 22.Link deposit insurance 40 10. Rural lendinginterbank market 4/5 policies premiums to risk profiles 21.Reducing paper-basedThe increase of funds documents 23.Improving 30  Proposals to be completed in 2008 11.Law on bank letters of guaranteecirculation through the transparency and equal Positive Information 12.Mortgage loan servicing and loss givensystem 1/2 access to guarantee funds 20 default databasesThe building of full 24.Optimizing Anti-Money 13.Roland Berger studytechnological capacities Laundering Reportinggroups 1/2Facilitate lending to excluded 25.Improving access to basic banking products 26.Facilitating agricultural lending 27.Facilitating lending to PPPs 10 Law on Safety  Abandoned: 1 project 14.Credit rating agencies 3/3 0The increase of ALL 28.Increasing mortgage loans 0 134 170 182 220 236 240denominated lending 29.Facilitating lending to tourism 9 Additional Lending Volume 10 3/3 30.Lending to municipalitiesTotal: 30 4 5 9 8 4 10 SPI Albania Organizational Chart 2008 SPI Albania Activity At-A-Glance http://www.spi-albania.eu/ Completed projects: 3  1. 2. The impact of IFRS implementation on Banking Regulations Changes and Amendments on the Civil Procedure Code 3. Improvement of Bailiff Services Legislative Outputs:  1. 2. New Law on Liberalization of Bailiff Services Changes and Amendments to the Civil Procedure Code of Albania (reference to the execution of collateral and enforcement of proceedings). Analytical Outputs  1. Recommendations on improving the public bailiff service 2. Recommendations on the draft Law on Private Bailiff 3. Recommendations on amending the Civil Procedure Code 4. Regulatory Impact Assessment on the Civil Procedure Code amendment proposals 5. Recommendations on regulatory changes to be made in order to implement IFRS and an action plan on issuance of the regulatory amendments 6. Summary findings of the survey on the banks’ readiness to implement IFRS  Operational Outputs 1. Project Working Group Meetings held: 13 2. Participating Professionals: 75 3. Public Institutions Represented: 6 4. Private Institutions represented: 27  5. Projects Under Completion: 3 1. Reducing Cash Transactions 2. Reviewing the Capital Adequacy Regulation 3. Improving Consumer Financial Education 11 12 12 11 Italics: Project Working Groups Private Sector Members Page 49 of 335 3
  • 98. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Committee SPI Project Working Groups – Project Management Team – Members: top level representatives of the SPI • Project Owner - top level of the main stakeholder; project oversight • Project Manager – is appointed by the Project Owner (usually out of the Partners PO’s institution management staff) and chairs PWG meetings; • Central Bank- Governor & Hosting Chairperson, • Co- Project Manager(s) – represent(s) the other main stakeholder(s) and second(s) the Project Manager in coordinating PWG meetings. • Banking Association - Chairman, – Project Working Group • Other authorities – Senior Officials, Composition: 6-10 representatives of public and private stakeholders, with specific expertise profiles. – Main responsibilities Responsibilities: – Actively participating in the meetings; • Selecting the analytical projects to be undertaken; – Providing contributions (their institutions’ experience, parts of • Monitoring and shaping work-in-progress; documents); – Validation of RIA questionnaire; • Endorsing SPI projects recommendations; – Providing data/filling in questionnaires; • Monitoring enactment progress of regulatory proposals; – Validation of RIA findings; • Intervening for speedy enactment and implementation. – Approval of position/policy documents; – Supporting enactment activities. - Meetings - quarterly – PWG gathering – Meetings: 3-4 meetings over 3 months 13 14SPI Secretariat – main responsibilities SPI– Structure and Processes » Preparing SPI Committee meetings agenda, keeping meetings records and distributing minutes to members; » Managing relationships with the banking community, • Operating principles: international banks, local experts and other technical assistance providers, etc. – Local ownership » Building up the activity program; – Programmatic focus » Drafting project ToRs; – Mobilization of local expertise » Organizing PWGs and their meetings; – Involvement of foreign experts to fill local knowledge » Preparing background studies based on interviews, research, gaps international benchmark, compilation of regulations; – Disciplined program management » Summarizing individual contributions of the Project Working – Evidence-based analytical methods to search for Group members; solutions » Preparing documents for PWGs discussions; – Full transparency of our work » Preparing draft RIA questionnaire; » Collecting data and performing calculations; – Strong practical impact orientation » Preparing SPI Committee documents; • Operating guidelines » Coordinating actions for promoting, enacting and implementing SPI proposals; 15 16 » Submitting periodical activity reports to stakeholders; Page 50 of 335 4
  • 99. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Romanian Banking Association-SPI Better Regulation Steps in SPI comparative capabilities Projects Low=====Scoping of Problem========║====Analysis== =║= Policy║=Conclusion= BENCHMARKING Of Impact Consultation Medium INSTITUTIONAL CONSENSUS ANALYTICS RBA SEMINARS CONVENING BUILDINGRegula Prob Poli Prop Cost Cost IAA PW High IMAGEtory lem cy osed and and D Gcontext Iden obje regu Ben Ben Poli SPI tific ctive lator efit efit cy ation s y anal ques reco Medium actio ysis tion mme n naire ndati on Low Better regulation - having a full picture of their economic, social and environmental impacts through the structured Impact Assessment tool. SPI extends Stronger Strong Weak Much Broader RBA RBA-NBR link stronger SPI for both RBA capabilities SPI with RBA 17 capabilities (RBI) Reach 18 in public sphere MEF/NACP capabilities Benefits out of the participation in the SPI Platform - Costs and funding SPI partnership sources • Annual budget - about EUR 100,000 • Participation in setting up the regulatory – SPI Secretariat agenda – Events • Active participation in solution design – Office costs • Enhancing the evidence-based practice – International consultants • Funding costs – major part EU funding • Structuring dialogue with public institutions - small participation of the Banking • Better work efficiency Association • Knowledge sharing with public institutions - in kind contributions of the other stakeholders and other market participants 19 20 Page 51 of 335 5
  • 100. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Proposed next steps• Steps for building consensus within the banking community: – EBF Associate’s Management decision to start the assessment of the opportunity for establishing SPI: • bilateral discussions with Associate’s members’ top management • seminar for banks’ staff – invitation letter, seminar agenda, long presentation, outline of the memo on the seminar conclusions; – EBF Associate’s Management decision on initiating the partnership.• Steps for initiating the partnership: – Bilateral discussions between EBF’s Associate’s Management’s representative and top Q & A session level representatives of the public authorities – Seminar for public authorities’ staff; – Official proposal to Central Bank; – Joint invitation (Central Bank – Banking Association) addressed to other stakeholders• Steps for establishing and running the partnership - Executive Committee set up - Preparation of public-private partnership project - Submission of request for funding to European Commission• First implementation steps of project after securing EU funding – Recruiting SPI Secretariat - Training SPI Secretariat - Annual activity program 21 22 Page 52 of 335 6
  • 101. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex III-4 FINANCIAL SECTOR MODERNIZATION PUBLIC CONSULTATION QUESTIONNAIRE Financial sector modernization “Financial modernization refers to the process of financial innovation and organizational improvements in the financial system that reduces asymmetric information, increases the completeness of markets, increases opportunities for agents to engage in financial transactions through (explicit or implicit) contracts, reduces transaction costs and increases competition.” – An ECB Executive Board Member Dear Banking Association Member, Banking Association is interested in hearing the market’s opinion on practices, norms and regulations presently applicable in the our financial market that may need to be updated to enable the delivery of financial services activities at conditions that prevail in more developed EU countries. The changes should help meet one or more of the five major modernization objectives outlined by the European Central Bank, as summarized in the statement placed at the opening of this document. In line with the EU Better Regulation principles, we may consider setting up a structured platform to analyze these modernization proposals in partnership with regulatory authorities and with support from European Banking Federation. European Banking Federation and the World Bank’s Convergence Program put at our disposal a comprehensive toolkit in this respect. Similar platforms have been established in Romania (www.spi-romania.eu) and in Albania (www.spi-albania.eu). We cordially invite you to give your opinion by returning to the Banking Association the attached questionnaire duly filled. Section A offers a list of projects that were undertaken or were proposed in Romania and Albania cases by SPI stakeholders; we invite you to tick in the projects that might be of interest for our economy also. Section B gives you the possibility to formulate project proposals by market area. After consolidating your answers, the Banking Association will organize a public consultation with banks’ staff to discuss the possible elements of a modernization program and the feasibility to carry on proposed analytical initiatives in partnership with relevant public and private stakeholders. For any question you may have, please contact us at our secretariat. Sincerely, Banking Association   1 Page 53 of 335
  • 102. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Section A: SPI Platforms portfolio of projects/project proposals No Project Proposal Yes Comments A. Projects undertaken in Romania in 2007 Reducing asymmetric information 1. Positive credit information reporting 2. Credit exposures stress testing techniques Completeness of the market 3. Revamping rural lending based on deposit certificates 4. Credit rating agencies 5. M iFID implementation Increased opportunities for business 6. C onsumer financial education 7. B anking Ombudsman Reduced transaction costs 8. I mproving AML reporting 9. Electronic processing of debit instruments 10. Loss Given Default databases 11. Provisi oning under IFRS 12. Opti mizing banks’ security Increased competition 13. Mortgage loan database B. Projects undertaken in Albania in 2008 Reducing asymmetric information 14. Impact of IFRS implementation on banking regulation Completeness of the market 15. Capital adequacy to credit and operational risks Reduced transaction costs 16. Redu cing cash transactions 17. Improving auction procedures under collateral foreclosure C. SPI Albania 2009 activity program Reducing asymmetric information 18. Extension of the credit bureau services – 1.database for businesses 2. scoring cards for individuals; Completeness of the market 19. Enhancing banks’ liquidity risk management   2 Page 54 of 335
  • 103. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme No Project Proposal Yes Comments 20. Revising Public Procurement Law 21. Preparing a fe asibility study for a ce ntral depositary 22. Establishment of a national settlement scheme for payments in foreign currency Increased opportunities for business 23. Revising Foreign Currency Open Position 24. Loan loss provisioning under IFRS Reduced transaction costs 25. Revising regulatory act on Execution of Procedures on Bank accounts 26. Unique and rationalized reporting system D. Other SPI Albania 2009 project proposals Reducing asymmetric information 27. Modernizin g moveable collateral registries 28. Improving the lending environment 29. Better functioning of Electronic Register of Commerce 30. Improving access to basic banking products Completeness of the market 31. The creation of a complete regulatory framework on the merge and acquisitions of banks 32. Clarification of non-residents’ banking status 33. Strengthening the stock exchange 34. Developing pension funds 35. Facilitating leasing transactions Increased opportunities for business 36. Improving stability in the regulating environment 37. Facilitating structural lending 38. Promote project financing 39. I mproving FX market 40. Facilitating lending to PPPs 41. Facilitating agricultural lending 42. Facilitating lending to tourism 43. Lending to municipalities Reduced transaction costs 44. Facilitating expansion of banks activities 45. Increase the number of specialized courts 46. Improving auction procedures for movable collateral under foreclosure 47. Improving credit risk management in consumer lending 48. Guarantees for SME-s Lending   3 Page 55 of 335
  • 104. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme No Project Proposal Yes Comments 49. Harmonizing accounting policies 50. R educing paper-based documents Increased competition 51. .Regulating bank communications of “effective” interest rate (EIR) offered to customers 52. Reviewing banking regulations on licensing 53. Link deposit insurance premiums to risk profiles 54. Improving transparency and equal access to guarantee funds   4 Page 56 of 335
  • 105. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Section B: Identification of project proposals by market area B1. Lending Examples of sources Reducing Completeness of the Opportunities to Reducing Increase of efficiency gains information market engage in financial transaction costs competition asymmetries transactionsIncrease of firms’financial statementtransparencyIncrease of credithistory disclosureProvision of collateral Increase of the number of markets Modernization of legal systems/procedures Improvement of financial markets responsiveness to real economy Increase of market participants’ information  6 Page 57 of 335
  • 106. European Banking Federation SPI Platform Toolkit World Banks "Convergence" ProgrammeExamples of sources Reducing Completeness of the Opportunities to Reducing Increase of efficiency gains information market engage in financial transaction costs competition asymmetries transactions Reduction of administrative costs Increase of on-line banking services Modernization of antitrust regulation Antitrust supervision Support of national/international competitionOther projectproposals  7 Page 58 of 335
  • 107. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme B2. Payments Examples of sources Reducing Completeness of the Opportunities to Reducing Increase of efficiency gains information market engage in financial transaction costs competition asymmetries transactionsIncrease of credithistory disclosure Increase of the number of markets Modernization of legal systems/procedures Improvement of financial market responsiveness to real economy Increase of market participants’ information Increase of payment/settlement systems efficiency Reduction of administrative costs Increase of on-line banking services  8 Page 59 of 335
  • 108. European Banking Federation SPI Platform Toolkit World Banks "Convergence" ProgrammeExamples of sources Reducing Completeness of the Opportunities to Reducing Increase of efficiency gains information market engage in financial transaction costs competition asymmetries transactions Modernization of antitrust regulation Antitrust supervision Support of national/international competitionOther projectproposals  9 Page 60 of 335
  • 109. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme B3. Deposits Examples of sources Reducing Completeness of the Opportunities to Reducing Increase of efficiency gains information market engage in financial transaction costs competition asymmetries transactionsProvision of collaterals Supply of innovative financial products and services Improvement of financial market responsiveness to real economy Increase of market participants’ information Reduction of administrative costs Increase of on-line banking services Modernization of antitrust regulation Antitrust supervision Support of national/international competition  10 Page 61 of 335
  • 110. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Redu cing Completeness of the Opportunities to Reducing Increase information market engage in financial transaction costs competition asymmetries transactionsOther projectproposals  11 Page 62 of 335
  • 111. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex III-5 Check list for the bilateral meetings with the banking community No. Issue to be checked Notes 1. Understanding SPI Platform 2. Valuable aspects of a SPI Platform 3. Negative aspects 4. Concerns 5. Critical aspects 6. Potential projects 7. Opportunity to establish SPI Platform 8. Feasibility (with EU funding) 9. Availability to contribute to SPI Platform’s activities, including undertaking ownership for projects 10. Various suggestions (on strategy, future steps, etc.) Page 63 of 335
  • 112. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 64 of 335
  • 113. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex III-6 Invitation letter to the seminar on SPI Platform for the banking community Dear Sir/Madam, Invitation to the Banking Association’s Seminar on SPI Platform – a Private - Public Partnership for Financial Sector Modernization Special Projects Initiative – SPI is a public – private partnership for the financial sector modernization by promoting regulatory and self regulatory measures. SPI undertakes projects that reduce asymmetric information, reduce costs of transactions, increase opportunities for transactions, contribute to complete the market and improve competition, in a structured and effective manner. The concept has been developed and implemented by World Bank’s Convergence Program in Romania and in Albania. The Banking Association is organizing public consultations on the opportunity and feasibility of adopting this cooperation platform in our country, one of the actions under these being a seminar on SPI Platform. The objective of the seminar is to introduce SPI Platform’s object, organization, projects, procedures and methodologies to the banking community and to have a prompt feedback on benefits and concerns, and on potential projects to be handled under such a public- private partnership framework. Please find enclosed the agenda of the seminar. The Banking Association has the pleasure to invite your institution to attend the seminar on SPI Platform that is to be held on [date] at [place]. As the seminar will detail more on technical aspects of the SPI Platform, the targeted audience is institutions’ middle management. Please confirm your attendance by [date] to the Banking Association’s Secretariat [phone, email address, persons]. We are looking forward to seeing you at the seminar. Page 65 of 335
  • 114. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 66 of 335
  • 115. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex III-7 Agenda Seminar SPI Platform – a Private – Public Partnership for Financial Sector Modernization [place, date, time] 09:00 – 09:15 Distribution of Seminar Agenda and copies of the documents available 09:15 – 09:30 Welcome Speech (Banking Association Chairman) 09:30 – 12:00 First Session of the Seminar – Introducing SPI Platform a. SPI Objective, Organization, Object and Achievements in other countries b. SPI Methodologies and Procedures – Project Management and Better Regulation 12:00 – 12:15 Coffee Break 12:15 – 13:00 Second Session – Brainstorming on SPI Platform a. SWOT Analysis of SPI Platform b. Potential SPI Projects 13:15- 13:30 Closing Remarks (SPI Committee Members) Page 67 of 335
  • 116. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 68 of 335
  • 117. Annex III-8 European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme 8 Foreword This presentation is intended to offer a comprehensive image on the SPI partnership, on its objective, governance, processes, SPI Platform methodologies and results. It is based on the Convergence Program’s experience with SPIa Private – Public Partnership for Romania and Albania (SPI stands for Special Projects Initiative 1/). Financial Sector Modernization This partnership, which brings together the experience and knowledge of what is desirable and feasible from both a policy and a business perspective, can be a powerful engine to promote financial sector modernization. Presentation to the banking community This presentation should enable the banking community to exercise a By Banking Association SWOT analysis of the SPI Platform in the particular national context [date, place] and a project pipeline for an eventual country platform. 1 2 1/ www.spi-albania.eu and www.spi-romania.eu have more details. SPI Platform – a Convergence Program’s Product Launched in July 2005 by the World Bank with support from Italy ’s Ministry of Economy and Finance, the Convergence Program promotes First Session public-private financial sector modernization in South-East Europe. Under a “BOT” concept (Build-Operate-Transfer), the Convergence Introducing SPI Platform Program helped authorities and market participants set up a partnership (SPI Platform) that strengthens a country institutional infrastructure with incentives and skills (analytical, consultative and a.Objective, Organization, Object and implementation) that support large-scale financial sector modernization programs using EU Better Regulation methodology. Achievements in other countries The SPI Platform has the potential to become a key financial sector modernization hub, coordinating local and international players. 3 4 Page 69 of 335 1
  • 118. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Financial Stability and Financial Efficiency Financial Modernization Financial Stability Governance, Risk Management, Capital and Liquidity ―Financial modernisation refers to the process of financial Central Bank innovation and organizational improvements that make the financial system more efficient by overcoming a number of Legislative and frictions such as asymmetric information, incompleteness of Legal systems regulatory authorities markets, limited opportunities for agents to engage in financial Financial Efficiency Central transactions through contracts, high transaction costs and markets limited competition.” authorities Optimal Bank Supply-Demand Match -Gertrude Tumpel-Gugerell, European Central Bank Executive Board Consumers / Member, July 2006 speech Associations of Financial Institutions consumers Firms / Associations of firms 5 6 How to Increase Financial Sector Efficiency? Financial Modernisation Challenges Financial efficiency is the condition under which resources available in Illustrative Comparative Dimensions a financial system are allocated towards the most valuable investment opportunities at the lowest possible costs. Financial Stability Financial Efficiency Sources of Informational Incompleteness of Lack of opportunities of Transaction costs Lack of Authority vested in a small Authority dispersed across many asymmetries markets engaging in fin. transactions competition• • inefficiency1// number of institutions institutions The different amount The lack of suitable Legal system inefficiencies, Stamp duties, registry Market power of information products and the lack of banking skills, or taxes and other may lead to high• ―Risk prevention‖ focus • ―Enabling‖ focus available to agents (banks and clients) services prevents banks and potential of financial education of both consumers and firms administrative costs may alter the prices of prices and low traded quantities• Codified best practice • No established conceptual leads to inefficient transactions (both in clients from engaging in financial prevents banks and potential clients from engaging in financial services and products, thus leading (international standards & codes) framework prices and quantities) transactions financial transactions to inefficient Close institutional coordination transactions (both in• ―Super-equivalency‖ approach • prices and quantities)• Regulation and supervision • Limited implementation monitoring mutually reinforcing feedback Illustrative • Increase of firms’ • Increase of the • Modernization of legal • Increase of payment / • Moderniza- financial statement number of financial systems / procedures settlement systems’ tion of• ―Better Regulation‖ creates more • ―Better Regulation‖ not sufficient to sources of transparency markets • Improvement of financial efficiency antitrust efficiency accountability capture efficiency gains gains • Increase of credit history disclosure market responsiveness to • Reduction of regulation real economy needs administrative costs • Antitrust• Core sovereignty responsibility • Users’ bottom-up advocacy • Provision of collaterals • Increase of market • Increase of on-line supervision needed Illustrative participants’ information banking services (better) market • Enlargement of • More • More lending to • More financial • More mortgage lending outcomes banks’ client base customer SMEs products available oriented 7 to exporting firms 8 pricing policies 1/ Drawn from: European Central Bank, Financial Integration in Europe, Ch.2 ,―Financial Development Concepts and Measures‖, April 2008 Page 70 of 335 2
  • 119. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Partnership (1) SPI Partnership (2)• SPI Partnership – a public-private cooperation Human resources commitment for identifying commonly agreed solutions for financial sector modernization. Funds Data• SPI Partners Financial sector • Central Bank modernization • Banking Association • Ministry of Finance Institutional strengths International expertise • Consumer Protection Agency • Financial Market Authority • [SPI Technical Partner] Public institutions: human resources, data, institutional strengths• SPI Committee – top level representatives of SPI Private institutions: human resources, data, funds, international expertise Partners ensuring the partnership’s management SPI technical partner: human resources, funds, international expertise, institutional strengths 9 MoU10 SPI Partnership (3) • Partners’ main responsibilities: SPI Romania Partners • National Bank of Romania • Romanian Banking Association • • • Partial costs of SPI Secretariat activities (banking National Authority for Consumers Protection Raiffeisen Bank • Ministry of Economy and Finance • Raiffeisen Banca pentru Locuinţe association); • Ministry of Agriculture and Rural Development • OTP Bank • Banc Post • Ministry of Interior and Administration Reform • • SPI projects proposals and leadership; CEC • Anti-Money Laundering Office • BCR • TransFonD • Alpha Bank • members to all PWGs; • Credit Bureau • • BRD-GSG UniCredit Ţiriac Bank • • access to data; National Authority for the Supervision of Personal Data Processing • RIB Romanian International Bank • Credit Europe Bank • • empowering their representatives in SPI Rural Credit Guarantee Fund • ING Romania • Grading Commission for Comestible Seeds • Citibank Committee to endorse SPI documents; • • Romanian Commodities Exchange Romanian Stock Exchange • • ABN AMRO ATE Bank Romania • actions for enactment of regulatory proposals • National Securities Comission • • Coface Romania Cargill endorsed by SPI Committee. • The National Association for Consumers’ Protection • KPMG and Promotion of Programs and Strategies from • Deloitte Romania • Clifford Chance • Italian Banking Association • OECD • Algoritmics • International Finance Corporation • Bearing Point 11 • World Bank • Financial Ombudsman Service, UK 12 • Goodwood Financial Consulting Page 71 of 335 3
  • 120. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania Organizational Chart SOLUTION ENDORSEMENT AND ENACTMENT SPI Albania Partners SPI Committee Mr. Fatos Ibrahimi, First Deputy Governor, Bank of Albania Mr. Nezir Haldedaj, General Treasury Director, Ministry of Finance Banks Mr. Libero Catalano, Chairman, Association of Albanian Mr. Keler Gjika, Deputy Chairman, Financial Supervisory Ms. Anila Jani, Market Surveillance Director, Ministry of Economy, Trade Authority and Energy Mr. Luigi Passamonti, Head of Convergence Program, The• Bank of Albania • Albanian Association of Banks Mr. Pierfrancesco Gaggi, Italian Banking Association World Bank• Ministry of Finance • Alpha Bank Prof. Dr. Adrian Civici, Rector, European University of Tirana• Ministry of Economy, Trade and • Banka Popullore TECHNICAL CONSENSUS-BUILDING Energy • Credins Bank• Financial Supervisory Authority • Credit Bank of Albania SPI Secretariat Mrs. Ramona Bratu, Head, SPI Regional Operations• Ministry of Justice • Emporiki Bank Director Mrs. Anuela Ristani, Director of Operations Mrs. Endrita Xhaferaj, Director Financial• EURALIUS • First Investment Bank Mrs. Evis Gjebrea, Consultant Modernization Program and Analytics• National Accounting Council • International Commercial Bank• European Bank for Reconstruction and SPI Project Working Groups • Intesa Sanpaolo Bank Development • Italian Bank for Development• International Finance Corporation • National Bank of Greece• Council of Ministers (Donors’ • National Commercial Bank Coordination Unit)• KPMG • Pro Credit Bank• Price Waterhouse Coopers • Raiffeisen Bank • Tirana Bank• Deloitte• Ernst &Young • United Bank of Albania • Union Bank • Albanian Mobile Communications • Vodafone Albania Italics: Project Working Groups Private Sector 14 13 14 13 Members SOLUTION FINDING (Based on RIA-based public-private consultations) SPI Committee SPI Project Working Groups – Project Management Team – Members: • Project Owner - represents the main stakeholder at top management level and ensures project oversight • Central Bank- Governor & Hosting Chairperson, » including signing off final SPI Committee recommendations; • Project Manager – is appointed by the Project Owner (usually out of the PO’s • Banking Association - Chairman, institution management staff) and chairs PWG meetings; • Other authorities – Senior Officials, • Deputy Project Manager(s) – represent(s) the other main stakeholder(s) and second(s) the Project Manager in coordinating PWG meetings. • SPI Technical Partner (non voting) – Project Working Group – The nominal list of SPI Committee members and observers and Composition: 6-10 representatives of public and private stakeholders, with specific expertise profiles. of their alternates is attached to the operating guidelines. Responsibilities: – Main responsibilities – Actively participating in the meetings; – Providing contributions (their institutions’ experience, parts of documents); • Selecting the analytical projects to be undertaken; – Validation of RIA questionnaire; – Providing data/filling in questionnaires; • Monitoring and shaping work-in-progress; – Validation of RIA findings; • Endorsing SPI projects recommendations; – Approval of position/policy documents; – Supporting enactment activities. • Monitoring enactment progress of regulatory proposals; – PWG gathering • Intervening for speedy enactment and implementation. • ToRs • List of eligible persons – in consultation with stakeholders - Meetings - quarterly 15 • Invitation letters – to be signed by SPI Committee members 16 – Meetings: 3-4 meetings over 3 months Page 72 of 335 4
  • 121. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Secretariat (1) SPI Secretariat (2) • Director for Financial Modernization Program and Analytics – Project-related responsibilities: • Run consultations for proposing the annual financial ,modernization program • Project ToRs drafting SPI General •Commercial • Drafting list of eligible persons/project in consultation with stakeholders; Drafting, getting signatures and sending invitation letters banking background Manager • Preparing background studies •Analytical skills • Summarizing individual contributions • Preparing documents for PWG discussions •Strategic thinking • Preparing draft RIA questionnaire • Collecting data and performing calculations • Preparing draft ToRs for the expert • Preparing SPI Committee summary documents Experts • Office Manager SPI Director, – Project-related responsibilities: Financial Modernization Office manager • Organizing PWGs meetings • Preparing PWG meeting minutes Program and Analytics • Mobilizing International expertise — Other responsibilities • Planning and reporting •Central Bank •Excellent • Organizing events background organization skills • Taking care of logistics • SPI Committee secretary •Policy design •Communications experience 17 18 • About 30 documents/month and about 60 different actions/month •Good writing skills SPI Secretariat (3) 10 GOLDEN RULES FOR CONSENSUS - BUILDING• Gaining PWGs confidence through a very good Romania’s 2007 Modernization Program European Central Bank preparation of the project papers and of PWG meetings FINANCIAL SECTOR Asymmetric Completeness of Increased Reduced Increased• Maintaining a neutral position in PWG meetings MODERNIZATION Italian Banking Association information the market opportunities to transaction costs competition CRITERIA engage in financial• Focusing PWGs discussions 1.Rural lending transactions Law on bank Loss-Given-Default Mortgage Loan• Accurate minutes of PWGs meetings Business development Positive credit information 2. Credit Rating Agencies guarantees Database Database• Keeping a clear track on disputed issues sharing• Asking each party’s arguments on disputed issues Stress testing MiFID 1. Prudential IFRS• Looking for international experience for disputed issues implementation 2. Debit Instruments Industry E-Settlement competitiveness 3. AML Law• Asking for third parties’ opinions on disputed issues 4. Law on Safety• Searching for middle-way solutions 1. Ombudsman 2. Consumer education Industry• Asking for PWGs’ approval on documents, particularly reputation for SPI Committee recommendations. Total 2 3 3 5 1 19 20 BOLD BLUE: NBR Proposals; BOLD RED: RBA Proposals; Black: Other Proposals Page 73 of 335 5
  • 122. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania 2008 Modernization ProgramSPI Romania 2008 Modernization Program Red: Projects undertaken; Other BoA proposals; Other AAB proposals FINANCIAL European Central Bank SECTOR MODERNIZATI Asymmetric Completeness of Increased opportunities Reduced transaction Increased information the market to engage in financial costs competition ON CRITERIA transactions 1.Corporate 3. Stock exchange 7.Agricultural lending 14. Strengthening bank staff /consumer lending 8. Lending to tourism 2. Scoring card 4. Leasing Business system for transactions 9. Lending to municipalities individuals 5. Securitization 10. Mortgage loans development 6. AAB Strengthening 11. Structural lending 27. Consumer credit 12. Lending environment 13. Lending to PPPs 29. FX open positions 15. Credit risk in 30. Revising capital 18. Expansion of banks 19. Reducing cash consumer lending adequacy ratio activities transactions 16. Better credit risk management 28. Corporate 20. Auction procedures for 17. KYC policies governance and buildings requirements for 21. AML reporting their administrators 22. Write-off of bad debts Industry 23. Account stopping 31. Reviewing guidelines competitiveness on banks’ liquidation 32. BoA reporting 33. Harmonizing accounting policies 36. The impact of IFRS Implementation on the Banking Regulations 34. Improving 24. Financial 25. “Effective” interest access to basic ombudsman rate (EIR) 26. banking products Consumer financial Industry education reputation 35. Enhancing financial 21 22 consumer’s protection Total 36 6 8 9 10 3SPI Albania 2009 Financial Modernization Program (1) SPI Albania 2009 Financial Modernization Program (2) European Central Bank Projects undertaken: Public-private proposals; AAB proposals; Authorities proposals Bank of Albania Governor’s Asymmetric information Completeness of the Increased opportunities to Reduced transaction costs Increased competition Banking Forum Issues market engage in financial transactions European Central Bank Transparency in bank- 1.Regulating bank Asymmetric Completeness of the Increased Reduced Increased customer relationship communications of Bank of Albania Governor’s information market opportunities to transaction competition 1/1 “effective” interest rate Banking Forum Issues engage in financial costs (EIR) offered to customers transactions Strengthening judicial system 2.The creation of a 4.Improving stability in the 5.Facilitating expansion of banks 8.Reviewing banking on banking issues complete regulatory regulating environment activities regulations on licensing Transparency in bank-customer 7/8 framework on the merge 6.Increase the number of relationship 0/1 and acquisitions of banks specialized courts 3.Clarification of non- 7.Improving auction procedures Strengthening judicial system on Revising regulatory residents’ banking status for movable collateral under banking issues 1/8 act on Execution of foreclosure Procedures on Bank accounts The recognition of and 9.Modernizing moveable 11.Improving credit risk protection from the various collateral registries management in consumer lending The recognition of and protection from Extension of the credit bureau Enhancing banks’ liquidity Revising Foreign Currency risks 3/8 10.Better functioning of the various risks services – 1.database for risk management Open Position Electronic Register of 5/8 businesses Loan loss provisioning Commerce 2. scoring cards for under IFRS The strengthening of internal 12.Improving the lending individuals; controls 1/1 environment The strengthening of internal control Introduction of new products 13.Strengthening the stock 16.Facilitating structural lending 18.Guarantees for SME-s Lending 0/1 6/7 exchange 17.Promote project financing 14. Developing pension Introduction of new products Revising Public Procurement funds 15.Facilitating 1/7 Law leasing transactions The functioning of the interbank market Preparing a feasibility study The functioning of the 19.Improving FX market 20.Harmonizing accounting 22.Link deposit insurance 1/5 for a central depositary interbank market 4/5 policies premiums to risk profiles 21.Reducing paper-based Establishment of a national documents The increase of funds circulation settlement scheme for through the system 1/2 The increase of funds 23.Improving payments in foreign currency circulation through the transparency and equal system 1/2 access to guarantee funds The building of full technological Unique and capacities 1/2 rationalized The building of full 24.Optimizing Anti-Money reporting system technological capacities Laundering Reporting 1/2 Facilitate lending to excluded groups 0/3 Facilitate lending to excluded 25.Improving access to basic 26.Facilitating agricultural lending groups banking products 27.Facilitating lending to PPPs The increase of ALL denominated 3/3 lending 0/3 The increase of ALL 28.Increasing mortgage loans Improvement of bank’s governance 23 denominated lending 29.Facilitating lending to tourism 24 3/3 30.Lending to municipalities Total :10 2 4 2 2 Total: 30 4 5 9 8 4 Page 74 of 335 6
  • 123. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme 2007 SPI Romania Activity 2008 SPI Albania Activity At-A-Glance http://www.spi-romania.eu/spi-secretariat/activity-reports/ Total number of projects: 14 http://www.spi-albania.eu/ Financial Impact of Finalized SPI Projects (Mln, EUR) – First Full Year Volume Impact (% of 2007 target)  Self regulatory actions completed 1. Expansion of positive information sharing  Completed projects: 3 1. The impact of IFRS implementation on Banking Regulations 2. Ombudsman 2. Changes and Amendments on the Civil Procedure Code 76% 99% 3. Consumer financial education 90 3. Improvement of Bailiff Services 4. MiFID 5. Credit exposures stress testing techniques Legislative Outputs: 80 IFRS Databases  Regulatory changes underway  1. 2. New Law on Liberalization of Bailiff Services Changes and Amendments to the Civil Procedure Code of Albania (reference to the execution of collateral 73 82% 6. Law on goods safeguard, values and 70 and enforcement of proceedings). persons protection 7. Electronic processing of debit instruments Bank Ombudsman Cost Savings Impact (% of 2007 target) 8. Amendments of the anti-money laundering  Rural Lending Analytical Outputs 60 law 1. Recommendations on improving the public bailiff service AMLCost Savings Debit Instruments 9. IFRS loan loss provisioning 2. Recommendations on the draft Law on Private Bailiff 3. Recommendations on amending the Civil Procedure Code 50  Regulatory changes to be initiated 10. Rural lending 4. 5. Regulatory Impact Assessment on the Civil Procedure Code amendment proposals Recommendations on regulatory changes to be made in order to implement IFRS and an action plan on 40 issuance of the regulatory amendments 6. Summary findings of the survey on the banks’ readiness to implement IFRS  Proposals to be completed in 2008 30 Positive Information 11.Law on bank letters of guarantee 12.Mortgage loan servicing and loss given  Operational Outputs 1. Project Working Group Meetings held: 13 default databases 2. Participating Professionals: 75 20 13.Roland Berger study 3. Public Institutions Represented: 6 10  Abandoned: 1 project 14.Credit rating agencies 4. Private Institutions represented: 27 0 Law on Safety  5. Projects Under Completion: 3 1. Reducing Cash Transactions 2. Reviewing the Capital Adequacy Regulation 0 134 170 182 220 236 240 3. Improving Consumer Financial Education Additional Lending Volume 25 26 25 26 SPI– Structure and Processes • Operating principles: – Local ownership – Programmatic focus First Session – Mobilization of local expertise – Involvement of foreign experts to fill local knowledge Introducing SPI Platform gaps – Disciplined program management – Evidence-based analytical methods to search for b. Methodologies and Procedures solutions – Full transparency of our work – Strong practical impact orientation • Operating guidelines – please see www.spi- albania.eu 27 28 Page 75 of 335 7
  • 124. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Promotes EU Better Regulation Better Regulation Steps in SPI Policy Design Steps Scoping of problem Purpose Projects 1. Problem identification To understand if a market/regulatory failure creates the case for regulatory intervention. =====Scoping of Problem========║====Analysis== =║= Policy║=Conclusion= 2. Definition of policy objectives To identify the effects of the market /regulatory failure to the regulatory Of Impact Consultation objectives. 3. Development of “do nothing option” To identify and state the status quo. Regula Prob Poli Prop Cost Cost IAA PW 4. Alternative policy options To identify and state alternative policies (among them the “market solution”). tory lem cy osed and and D G Analysis of impact context Iden obje regu Ben Ben Poli 5. Costs to users To identify and state the costs borne by consumers tific ctive lator efit efit cy 6. Benefits to users To identify and state the benefits yielded by consumers ation s y anal ques reco 7. Costs to regulated firms and regulator To identify and state the costs borne by regulator and regulated firms actio ysis tion mme 8. Benefits to regulated firms and regulator To identify and state the benefits yielded by regulator and regulated firms n naire ndati Consultations on 9. Data Questionnaire To collect market structure data to feed into cost and benefit analysis Better regulation - having a full picture of their economic, social and 10. Policy Document To learn market participant opinions on various policy options environmental impacts through the structured Impact Conclusion Assessment tool. 11. Final Recommendations Final report based on Cost Benefit Analysis and market feedback 29 30 Source: CEBS-CESR-CEIOPS Better Regulation Template SPI Project Phases (1) SPI Project Phases (2) 1. Issue identification and selection 2. Solution searching Banks Other SPIBanking Association Partners SPICentral Bank Secretariat -Experts for PWG SPI partners -Support for data collection and consultations -Consult with authorities on their plans EU priorities, other for regulatory changes -RIA findings validation countries, interviews, -Consult with entire banking system through a questionnaire research -Conduct interviews with selected banks -Identifies the needed expertise to identify the most critical issues that -Searches for solutions in international experience SPI pipeline need a resolution in collaboration with /EU legislation projects of public-private authorities - Identifies the needs for international/local consultants interest -Post the preliminary list of projects on - Arranges for the consultants’ support website for public consultations SPI Secretariat - Prepares documents for discussions -Use preliminary RIA to prioritize issues - Drafts RIA questionnaire (as part of the RIA) - Collects data and performs RIA calculations - Organizes seminars and other supporting events - Collects feedback from SPI stakeholders SPI Committee - Collects and aggregates individual contributions – project approval - Prepares documents presenting the solutions 31 32 SPI Projects Page 76 of 335 8
  • 125. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Project Phases (3) SPI Project Phases (4) 3. Consensus building 4. Solution NBR, RBA and SPI Secretariat coordinate actions in respect of full range of SPIBanking Association Central Bank enactment projects- Banks review solutions- Provide input on disputed issues - Revizes proposed solutions-BA Board endorsement for - Provides input on disputed issues SPI Secretariatfinal recommendation - NBR Board endorsement for final recommendation -Prepares the law / regulations enactment packages -Prepares SPI Committee letters to the legislative initiator or to the Central Bank for its specific regulations - Provides detailed description of RIA to the legislative initiator or to the Central Bank Board SPI Secretariat - Follows up with the legislative initiator - Notifies Central Bank on the initiation of the public consultation process - Looks for international benchmarking in disputed solutions - Sends SPI Secretariat’s submission under the public - Asks for independent opinions on disputed issues consultation process - Provides ideas for reaching solutions acceptable to all parties - Arranges and/or attends the meetings with institutions -Performs RIA for disputed issues in order to facilitate the best involved in the enactment process choice - Prepares other documents as required by the legislative 33 initiator 34 Summary Benefits out of the participation in the SPI partnership • SPI – public – private partnership for financial sector modernization • Local ownership • Participation in setting up the regulatory agenda • Local expertise • Active participation in solution design • Sound governance • Enhancing the evidence-based practice • Programmatic approach • Structuring dialogue with public institutions • Result oriented • Better work efficiency • Disciplined program management • Knowledge sharing with public institutions • Evidence-based methodology and other market participants 35 36 Page 77 of 335 9
  • 126. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SWOT Analysis of SPI Platform (1) • Strengths - attributes that are helpful to achieving the objective – …… – …… Second Session – ….. Brainstorming on SPI Platform – ….. 37 38SWOT Analysis of SPI Platform (2) SWOT Analysis of SPI Platform (3)• Weaknesses - attributes that are harmful • Opportunities - external conditions that to achieving the objective are helpful to achieving the objective – ….. – ….. – ….. – ….. – ….. – ….. – ….. – ….. 39 40 Page 78 of 335 10
  • 127. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SWOT Analysis of SPI Platform (4) SWOT Analysis - Summary • Threats - external conditions which could do damage to the objective Strengths Weaknesses – ….. – ….. – ….. – ….. Opportunities Threats 41 42 Potential SPI Projects European Central Bank Asymmetric Completeness of Increased Reduced Increased information the market opportunities to transaction costs competitionFINANCIAL SECTOR SPI Platform engage in financialMODERNIZATION transactionsCRITERIA a Private – Public Partnership for Financial Sector Modernization Business development Thank you for your participation! Industry competitiveness Industry reputation 43 44 Page 79 of 335 11
  • 128. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 80 of 335
  • 129. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex III-9 Outline of the Memo on the results of the consultation session on the opportunity and feasibility of establishing a SPI platform I. Summary of the consultations - Relevance of the consultations - Consultation - Main findings of the consultation session - Conclusions II. Details of the consultations - Statistics of the consultations (number of banks participating in the consultations out of total number of banks, number of staff participating, etc.) - Bilateral meetings with banks’ top management o Instruments used o Feedback  Opportunity  Concerns  Potential pipeline  Other issues - Seminar with banks’ mid level management o Instruments used o Feedback  Opportunities  Threats  Potential pipeline  Other issues Page 81 of 335
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  • 131. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex IV-1 Outline of the Memo on the results of the consultation session on the opportunity and feasibility of establishing a SPI platform I. Summary of the consultations - Relevance of the consultations - Consultation - Main findings of the consultation session - Conclusions II. Details of the consultations - Statistics of the consultations (number of authorities participating in the consultations out of total number of public authorities, number of staff participating, etc.) - Bilateral meetings with authorities top management o Instruments used o Feedback  Opportunity  Concerns  Potential pipeline  Other issues - Seminar with authorities mid level management o Instruments used o Feedback  Opportunities  Threats  Potential pipeline  Other issues Page 83 of 335
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  • 133. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex IV-2 Draft letter to public authorities on assessing the opportunity of establishing a public – private partnership for financial sector modernization To: Top level of the public authorities (Governor, Minister, President) Dear Sir, Special Projects Initiative – SPI is a public – private partnership for the financial sector modernization by promoting regulatory and self regulatory measures. SPI undertakes projects that reduce asymmetric information, reduce costs of transactions, increase opportunities for transactions, contribute to complete the market and improve competition, considered as priorities by both market participants and public authorities. SPI Platforms have been implemented in Romania and in Albania. The Banking Association, in consultation with the banking community, recognizing the merits of the SPI platform, would like to discuss with potential partners on the opportunity and feasibility of establishing an SPI Platform in our country. We would like to run a series of bilateral meetings with the regulatory authorities in order to assess the potential of this initiative in our country. We would highly appreciate the chance to meet you and to present details on how the partnership could be operated and the benefits of this cooperation framework. Thank you for your availability. Sincerely, … Page 85 of 335
  • 134. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 86 of 335
  • 135. Annex IV-3 European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Foreword This presentation is intended to offer a broad image on the SPI partnership, on its objective, governance, processes, methodologies SPI Platform and results. a Private – Public Partnership for This partnership, which brings together the experience and knowledge of what is desirable and feasible from both a policy and a Financial Sector Modernization business perspective, can be a powerful engine to promote financial sector modernization. This presentation should enable public authorities’ management to have a first reaction to the introduced idea of establishing a SPI platform to support a large financial sector modernization program. Presentation to the public authorities’ top management By Banking Association It is based on the Convergence Program’s experience with SPI [date, place] Romania and Albania (SPI stands for Special Projects Initiative 1/). More details may be offered by request. 1 2 1/ www.spi-albania.eu and www.spi-romania.eu have more details.SPI Platform – a Convergence Program’s Product Financial Modernization Launched in July 2005 by the World Bank with support from Italy ’s “Financial modernisation refers to the process of financial Ministry of Economy and Finance, the Convergence Program promotes innovation and organizational improvements that make the public-private financial sector modernization in South-East Europe. financial system more efficient by overcoming a number of frictions such as asymmetric information, incompleteness of Under a “BOT” concept (Build-Operate-Transfer), the Convergence markets, limited opportunities for agents to engage in financial Program helped authorities and market participants set up a partnership transactions through contracts, high transaction costs and (SPI Platform) that strengthens a country institutional infrastructure with limited competition.” incentives and skills (analytical, consultative and implementation) that support large-scale financial sector modernization programs using EU -Gertrude Tumpel-Gugerell, European Central Bank Executive Board Better Regulation methodology. Member, July 2006 speech The SPI Platform has the potential to become a key financial sector modernization hub, coordinating local and international players. 3 4 Page 87 of 335 1
  • 136. European Banking Federation SPI Platform Toolkit World Banks "Convergence" ProgrammeFinancial Stability and Financial Efficiency Financial Modernization Challenges Financial Stability Governance, Risk Management, Capital and Liquidity Illustrative Comparative Dimensions Central Bank Financial Stability Financial Efficiency • Authority vested in a small • Authority dispersed across many number of institutions institutions Legislative and Legal systems regulatory • “Risk prevention” focus • “Enabling” focus authorities Financial • Codified best practice • No established conceptual Efficiency Central (international standards & codes) framework marketsauthorities Optimal Bank • “Super-equivalency” approach • Close institutional coordination Supply-Demand Match • Regulation and supervision • Limited implementation monitoring Consumers / Financial mutually reinforcing feedback Associations of Institutions consumers • “Better Regulation” creates more • “Better Regulation” not sufficient to accountability capture efficiency gains Firms / Associations of • Core sovereignty responsibility • Users’ bottom-up advocacy firms needed 5 6 SPI Partnership (1) SPI Partnership (2)• SPI Partnership – a public-private cooperation • Partners’ main responsibilities: commitment for identifying commonly agreed solutions for financial sector modernization. • Partial costs of SPI Secretariat activities (banking• SPI Partners association); • Central Bank • SPI projects proposals and leadership; • Banking Association • members to all PWGs; • Ministry of Finance • access to data; • Consumer Protection Agency • Financial Market Authority • empowering their representatives in SPI Committee to endorse SPI documents; • [SPI Technical Partner] • actions for enactment of regulatory proposals• SPI Committee – top level representatives of SPI endorsed by SPI Committee. Partners ensuring the partnership’s management 7 8 Page 88 of 335 2
  • 137. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania Partners SPI Romania Partners • Bank of Albania • Albanian Association of Banks • Ministry of Finance • Alpha Bank • National Bank of Romania • Romanian Banking Association • Ministry of Economy, Trade and • Banka Popullore • National Authority for Consumers Protection • Raiffeisen Bank Energy • Credins Bank Ministry of Economy and Finance • Raiffeisen Banca pentru Locuinţe • • OTP Bank • Financial Supervisory Authority • Credit Bank of Albania • Ministry of Agriculture and Rural Development • Banc Post • Ministry of Justice • Emporiki Bank • Ministry of Interior and Administration Reform • Anti-Money Laundering Office • CEC • EURALIUS • First Investment Bank • BCR • TransFonD • Alpha Bank • National Accounting Council • International Commercial Bank • Credit Bureau • BRD-GSG • European Bank for Reconstruction and • Intesa Sanpaolo Bank • National Authority for the Supervision of Personal • UniCredit Ţiriac Bank Development • Italian Bank for Development Data Processing • RIB Romanian International Bank • International Finance Corporation • Credit Europe Bank • National Bank of Greece • Rural Credit Guarantee Fund • ING Romania • Council of Ministers (Donors’ • National Commercial Bank • Grading Commission for Comestible Seeds • Citibank Coordination Unit) • Romanian Commodities Exchange • ABN AMRO • KPMG • Pro Credit Bank • Romanian Stock Exchange • ATE Bank Romania • Price Waterhouse Coopers • Raiffeisen Bank National Securities Comission • Coface Romania • Tirana Bank • • Cargill • Deloitte • The National Association for Consumers’ Protection • KPMG • Ernst &Young • United Bank of Albania and Promotion of Programs and Strategies from • Deloitte • Union Bank Romania • Italian Banking Association • Clifford Chance • Albanian Mobile Communications • Algoritmics • OECD • Bearing Point • Vodafone Albania • International Finance Corporation • World Bank • Financial Ombudsman Service, UK 9 • Goodwood Financial Consulting 10 10 SPI Albania Organizational Chart SOLUTION ENDORSEMENT AND ENACTMENT SPI Committee SPI CommitteeMr. Fatos Ibrahimi, First Deputy Governor, Bank of Albania Mr. Libero Catalano, Chairman, Association of Albanian – Members: BanksMr. Nezir Haldedaj, General Treasury Director, Ministry of Finance Mr. Keler Gjika, Deputy Chairman, Financial SupervisoryMs. Anila Jani, Market Surveillance Director, Ministry of Economy, Trade Authorityand Energy Mr. Luigi Passamonti, Head of Convergence Program, The World BankMr. Pierfrancesco Gaggi, Italian Banking Association Prof. Dr. Adrian Civici, Rector, European University of Tirana • Central Bank- Governor & Hosting Chairperson, TECHNICAL CONSENSUS-BUILDING • Banking Association - Chairman, SPI Secretariat • Other authorities – Senior Officials, Mrs. Ramona Bratu, Head, SPI Regional Operations Director Mrs. Anuela Ristani, Director of Operations Mrs. Endrita Xhaferaj, Director Financial • SPI Technical Partner (non voting) Mrs. Evis Gjebrea, Consultant Modernization Program and Analytics – The nominal list of SPI Committee members and observers and SPI Project Working Groups of their alternates is attached to the operating guidelines. – Main responsibilities • Selecting the analytical projects to be undertaken; • Monitoring and shaping work-in-progress; • Endorsing SPI projects recommendations; • Monitoring enactment progress of regulatory proposals; • Intervening for speedy enactment and implementation.Italics: Project Working Groups Private Sector 11 - Meetings - quarterly 12 11 Members SOLUTION FINDING (Based on RIA-based public-private consultations) Page 89 of 335 3
  • 138. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Project Working Groups SPI Secretariat – main responsibilities – Project Management Team » Preparing SPI Committee meetings agenda, keeping meetings • Project Owner - represents the main stakeholder at top management level and records and distributing minutes to members; ensures project oversight » including signing off final SPI Committee recommendations; » Managing relationships with the banking community, • Project Manager – is appointed by the Project Owner (usually out of the PO’s international banks, local experts and other technical institution management staff) and chairs PWG meetings; assistance providers, etc. • Deputy Project Manager(s) – represent(s) the other main stakeholder(s) and » Building up the activity program; second(s) the Project Manager in coordinating PWG meetings. – Project Working Group » Drafting project ToRs; Composition: 6-10 representatives of public and private stakeholders, with specific » Organizing PWGs and their meetings; expertise profiles. » Preparing background studies based on interviews, research, Responsibilities: – Actively participating in the meetings; international benchmark, compilation of regulations; – Providing contributions (their institutions’ experience, parts of documents); » Summarizing individual contributions of the Project Working – Validation of RIA questionnaire; Group members; – Providing data/filling in questionnaires; » Preparing documents for PWGs discussions; – Validation of RIA findings; – Approval of position/policy documents; » Preparing draft RIA questionnaire; – Supporting enactment activities. » Collecting data and performing calculations; – PWG gathering » Preparing SPI Committee documents; • ToRs • List of eligible persons – in consultation with stakeholders » Coordinating actions for promoting, enacting and implementing • Invitation letters – to be signed by SPI Committee members 13 SPI proposals; 14 – Meetings: 3-4 meetings over 3 months » Submitting periodical activity reports to stakeholders; SPI Romania 2008 Modernization Program Romania’s 2007 Modernization Program FINANCIAL European Central Bank SECTOR Asymmetric Completeness of Increased Reduced Increased MODERNIZATIONItalian Banking Association information the market opportunities to transaction costs competition CRITERIA engage in financial transactions 1.Rural lending Law on bank Loss-Given-Default Mortgage Loan Business Positive credit 2. Credit Rating guarantees Database Database information Agencies development sharing Stress testing MiFID 1. Prudential IFRS implementation 2. Debit Instruments Industry E-Settlement competitiveness 3. AML Law 4. Law on Safety 1. Ombudsman 2. Consumer education Industry reputation Total 2 3 3 5 1 15 16 BOLD BLUE: NBR Proposals; BOLD RED: RBA Proposals; Black: Other Proposals Page 90 of 335 4
  • 139. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme SPI Albania 2008 Modernization Program SPI Albania 2009 Financial Modernization Program (1) Red: Projects undertaken; Other BoA proposals; Other AAB proposals Projects undertaken: Public-private proposals; AAB proposals; Authorities proposals European Central Bank FINANCIAL European Central Bank Bank of Albania Governor’s Asymmetric Completeness of the Increased Reduced Increased SECTOR information market opportunities to transaction competition Asymmetric Completeness of Increased opportunities Reduced transaction Increased Banking Forum Issues engage in financial costs MODERNIZATI information the market to engage in financial costs competition transactions ON CRITERIA transactions Transparency in bank-customer 1.Corporate relationship 0/1 3. Stock exchange 7.Agricultural lending 14. Strengthening bank staff /consumer lending 8. Lending to tourism 2. Scoring card 4. Leasing Strengthening judicial system on Revising regulatory Business system for transactions 9. Lending to municipalities banking issues 1/8 act on Execution of individuals 5. Securitization 10. Mortgage loans Procedures on Bank development 6. AAB Strengthening accounts 11. Structural lending 27. Consumer credit 12. Lending environment The recognition of and protection from Extension of the credit bureau Enhancing banks’ liquidity Revising Foreign Currency 13. Lending to PPPs the various risks services – 1.database for risk management Open Position 29. FX open positions 5/8 businesses Loan loss provisioning 2. scoring cards for under IFRS 15. Credit risk in 30. Revising capital 18. Expansion of banks 19. Reducing cash individuals; consumer lending adequacy ratio activities transactions 16. Better credit The strengthening of internal control risk management 28. Corporate 20. Auction procedures for 0/1 17. KYC policies governance and buildings requirements for 21. AML reporting Introduction of new products Revising Public Procurement 22. Write-off of bad debts 1/7 Law their administrators Industry 23. Account stopping The functioning of the interbank market Preparing a feasibility study 31. Reviewing guidelines 1/5 for a central depositary competitiveness on banks’ liquidation 32. BoA reporting Establishment of a national 33. Harmonizing The increase of funds circulation settlement scheme for accounting policies through the system 1/2 payments in foreign currency 36. The impact of IFRS Implementation on the The building of full technological Unique and Banking Regulations capacities 1/2 rationalized reporting system 34. Improving 24. Financial 25. “Effective” interest Facilitate lending to excluded groups access to basic ombudsman rate (EIR) 26. 0/3 banking products Consumer financial The increase of ALL denominated Industry education lending 0/3 reputation 35. Enhancing financial 17 consumer’s protection Improvement of bank’s governance 18 Total :10 2 4 2 2 Total 36 6 8 9 10 3 SPI Albania 2009 Financial Modernization Program (2) Bank of Albania Governor’s Asymmetric information Completeness of the European Central Bank Increased opportunities to Reduced transaction costs Increased competition SPI Projects proposed by Public Authorities Banking Forum Issues market engage in financial transactions Transparency in bank- 1.Regulating bank European Central Bank customer relationship communications of 1/1 “effective” interest rate (EIR) offered to customers Asymmetric Completeness of Increased Reduced IncreasedStrengthening judicial system 2.The creation of a 4.Improving stability in the 5.Facilitating expansion of banks 8.Reviewing banking information the market opportunities to transaction costs competition FINANCIAL SECTOR on banking issues complete regulatory regulating environment activities regulations on licensing engage in financial 7/8 framework on the merge 6.Increase the number of MODERNIZATION and acquisitions of banks specialized courts transactions CRITERIA 3.Clarification of non- 7.Improving auction procedures residents’ banking status for movable collateral under foreclosureThe recognition of and 9.Modernizing moveable 11.Improving credit riskprotection from the various collateral registries management in consumer lendingrisks 3/8 10.Better functioning of Electronic Register of Commerce Information on basic Credit Rating Loan loss provisioning Loss-Given-Default bank products Agencies under IFRS DatabaseThe strengthening of internal 12.Improving the lendingcontrols 1/1 environment Business development TBills OTC market Revising Foreign Banks’ contributions Currency Open Position to DGFIntroduction of new products 13.Strengthening the stock 16.Facilitating structural lending 18.Guarantees for SME-s Lending6/7 exchange 17.Promote project financing 14. Developing pension funds 15.Facilitating Stress testing Enhancing banks’ Revising Public Prudential IFRS leasing transactions liquidity risk Procurement Law Impact of IFRS on management Preparing a feasibility banking regulationsThe functioning of the 19.Improving FX market 20.Harmonizing accounting 22.Link deposit insuranceinterbank market 4/5 policies premiums to risk profiles Revising capital study for a central 21.Reducing paper-based Industry competitiveness adequacy ratio depositary documents CorporateThe increase of funds 23.Improving governance andcirculation through the transparency and equal requirements forsystem 1/2 access to guarantee funds their administratorsThe building of full 24.Optimizing Anti-Moneytechnological capacities Laundering Reporting The creation of a Responsible 1/2 complete regulatory borrowing framework on theFacilitate lending to excluded 25.Improving access to basic 26.Facilitating agricultural lendinggroups banking products 27.Facilitating lending to PPPs Industry reputation merge and 3/3 acquisitions of banksThe increase of ALL 28.Increasing mortgage loansdenominated lending 29.Facilitating lending to tourism 19 20 3/3 30.Lending to municipalitiesTotal: 30 4 5 9 8 4 Page 91 of 335 5
  • 140. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme 2007 SPI Romania Activity 2008 SPI Albania Activity At-A-Glance http://www.spi-romania.eu/spi-secretariat/activity-reports/ Total number of projects: 14 http://www.spi-albania.eu/ Financial Impact of Finalized SPI Projects (Mln, EUR) – First Full Year Volume Impact (% of 2007 target)  Self regulatory actions completed 1. Expansion of positive information sharing  Completed projects: 3 1. The impact of IFRS implementation on Banking Regulations 2. Ombudsman 2. Changes and Amendments on the Civil Procedure Code 76% 99% 3. Consumer financial education 90 3. Improvement of Bailiff Services 4. MiFID 5. Credit exposures stress testing techniques Legislative Outputs: 80 IFRS Databases  Regulatory changes underway  1. 2. New Law on Liberalization of Bailiff Services Changes and Amendments to the Civil Procedure Code of Albania (reference to the execution of collateral 73 82% 6. Law on goods safeguard, values and 70 and enforcement of proceedings). persons protection 7. Electronic processing of debit instruments Bank Ombudsman Cost Savings Impact (% of 2007 target) Analytical Outputs 60 AML Rural Lending 8. Amendments of the anti-money laundering law  1. Recommendations on improving the public bailiff serviceCost Savings Debit Instruments 9. IFRS loan loss provisioning 2. Recommendations on the draft Law on Private Bailiff 3. Recommendations on amending the Civil Procedure Code 50  Regulatory changes to be initiated 10. Rural lending 4. 5. Regulatory Impact Assessment on the Civil Procedure Code amendment proposals Recommendations on regulatory changes to be made in order to implement IFRS and an action plan on 40 issuance of the regulatory amendments 6. Summary findings of the survey on the banks’ readiness to implement IFRS  Proposals to be completed in 2008 30 Positive Information 11.Law on bank letters of guarantee 12.Mortgage loan servicing and loss given  Operational Outputs 1. Project Working Group Meetings held: 13 default databases 2. Participating Professionals: 75 20 13.Roland Berger study 3. Public Institutions Represented: 6 10  Abandoned: 1 project 14.Credit rating agencies 4. Private Institutions represented: 27 0 Law on Safety  5. Projects Under Completion: 3 1. Reducing Cash Transactions 2. Reviewing the Capital Adequacy Regulation 0 134 170 182 220 236 240 3. Improving Consumer Financial Education Additional Lending Volume 21 22 21 22 SPI– Structure and Processes SPI Promotes EU Better Regulation Policy Design Steps Purpose • Operating principles: 1. Problem identification Scoping of problem To understand if a market/regulatory failure creates the case for regulatory – Local ownership intervention. 2. Definition of policy objectives To identify the effects of the market /regulatory failure to the regulatory – Programmatic focus objectives. – Mobilization of local expertise 3. Development of “do nothing option” To identify and state the status quo. To identify and state alternative policies (among them the “market – Involvement of foreign experts to fill local knowledge 4. Alternative policy options solution”). gaps Analysis of impact – Disciplined program management 5. Costs to users To identify and state the costs borne by consumers – Evidence-based analytical methods to search for 6. Benefits to users To identify and state the benefits yielded by consumers solutions 7. Costs to regulated firms and regulator To identify and state the costs borne by regulator and regulated firms 8. Benefits to regulated firms and regulator To identify and state the benefits yielded by regulator and regulated firms – Full transparency of our work Consultations – Strong practical impact orientation 9. Data Questionnaire To collect market structure data to feed into cost and benefit analysis • Operating guidelines – please see www.spi- 10. Policy Document To learn market participant opinions on various policy options albania.eu Conclusion 11. Final Recommendations Final report based on Cost Benefit Analysis and market feedback 23 24 Source: CEBS-CESR-CEIOPS Better Regulation Template Page 92 of 335 6
  • 141. European Banking Federation SPI Platform Toolkit World Banks "Convergence" Programme Better Regulation Steps in SPI Proposed next steps Projects • – Steps for initiating the partnership: Bilateral discussions between EBF’s Associate’s Management’s representative and top level representatives of the public authorities=====Scoping of Problem========║====Analysis== =║= Policy║=Conclusion= – Seminar for public authorities’ staff; Of Impact Consultation – Official proposal to Central Bank; – Joint invitation (Central Bank – Banking Association) addressed to other stakeholdersRegula P P P C C I Ptory r o r o o A W • Steps for establishing and running the partnershipcontex o li o s s A G - Executive Committee set upt b c p t t D - Preparation of public-private partnership project l y o a a P - Submission of request for funding to European Commission e o s n n o m b e d d li • First implementation steps of project after securing EU I j d B B c funding Better regulation - having a full picture of their economic, social and d e r e e y – Recruiting SPI Secretariat environmental impacts through the structured Impact n - Training SPI Secretariat e c e n r Assessment tool. - Annual activity program n ti g e e e ti v u fi fi c 25 26 fi e l t t o c s a a q m Benefits for public authorities out of their participation in the SPI partnership • Increase in the regulatory capacity • Strengthening its evidence-based methodologies • Structuring dialogue with banks Q & A session • Better work efficiency • Knowledge sharing with market participants and other authorities • Introducing/enhancing the public good perspective 27 28 Page 93 of 335 7
  • 142. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 94 of 335
  • 143. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex V-1 Draft Invitation letter to the Central Bank and to the Ministry of Finance/Ministry of Economy to enter into SPI Partnership for financial sector modernization To: His Excellency Central Bank Governor His Excellency Minister of Finance/Economy Dear Sir, The bilateral meetings with the public authorities and the seminar organized for the middle management staff of the public authorities revealed a genuine interest in establishing a SPI Platform in our country. Encouraged by the favorable results of these consultations and by the banking community’s support, the Banking Association is hereby addressing the invitation to establish the SPI partnership, by appointing a top level management representative in the SPI Committee, the supervising body of the partnership. The attached note is presenting details on how SPI platform acts, each of the partner’s responsibilities, costs and benefits under the partnership. The mandate of the SPI Committee at this stage is to organize the partnership by inviting other institutions to join it and to take the necessary steps in order to secure European Union funding for the partnership activities. Once the financial needs are covered, SPI Committee’s duties will be to approve the activities to be performed by SPI Platform, to endorse the regulatory/self-regulatory proposals formulated by the Project Working Groups and to act for their endorsement. We express our trust that establishing the SPI partnership will enhance and complement the fruitful cooperation between our institutions for the sustainable development of the financial sector. Sincerely, Chairman of the Banking Association Page 95 of 335
  • 144. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 96 of 335
  • 145. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex V-2 Note for authorities’ decision to enter in SPI partnership The SPI (Special Projects Initiative) public – private partnership is a Platform for institutional cooperation between the market players and relevant authorities for addressing financial sector modernization opportunities of a country. The SPI partners are professional associations of the private financial institutions, regulating and supervising authorities of the financial market and of other closely related fields, academic institutions, international donors, etc. In [country] the potential partners could be, besides the Banking Association, the Central Bank and the Ministry of Finance/Economy the following institutions: [according to the preliminary discussions]. SPI Platform may be incorporated or not as a legal entity, the legal status will be discussed and proposed further by the SPI Executive Committee. SPI is handling financial modernization issues that refer to: - reducing asymmetric information - completing the market - increasing opportunities of entering into financial transactions - reducing transaction costs - enhancing competition on the market. This taxonomy is drawn from the European Central Bank taxonomy to measure progress on financial integration. Central Bank has a veto right on the SPI activity plan and while elaborated under the partnership, the regulations are to be approved and enacted by the Central Bank governing bodies or by the Ministry of Finance/Economy. Experiences in Romania and Albania showed that the SPI Platform can handle, after the initial running in period, a set of 10 financial modernization projects per year. SPI Romania 2007 12-project activity program  Positive credit information reporting  Electronic processing of debit instruments  Improving AML reporting  Revamping rural lending based on deposit certificates  Consumer financial education  Banking Ombudsman  Credit rating agencies  Stress testing  Provisioning under IFRS  Mortgage loan and Loss Given Default databases  MiFID implementation  Optimizing banks’ security Page 97 of 335 1
  • 146. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme SPI Albania 2009 10-project activity program  Enhancing banks’ liquidity risk management  Revising regulatory act on Execution of Procedures on Bank accounts  Revising Public Procurement Law  Unique and rationalized reporting system  Revising Foreign Currency Open Position  Preparing a feasibility study for a central depositary  Loan loss provisioning under IFRS  Establishment of a national settlement scheme for payments in foreign currency  Expansion of the credit bureau services - database for businesses  Expansion of the credit bureau services - scoring cards for individuals Some of above mentioned projects referred to prudential issues, as central banks appreciated that they can use information from banks or from consulting companies on the readiness to implement regulatory provisions, on the impact on banks and on setting the implementation period, on the clarity of the regulations. SPI’s strength and solidity are given by its partners’ commitment to collaboration, by its strong governance and by its work methodology. The supervising body of the SPI Platform is the SPI Committee gathering top level representatives of the partner institutions. SPI Committee has as main responsibilities  to decide on the activity program,  to monitor its execution, and  to endorse and promote the outputs of the program. The SPI Committee’s mission at this stage is to establish the partnership by inviting other institutions to join, to identify financing sources and to support the funding application process. The actual execution of the activity program is entrusted to Public-Private Working Groups established by project gathering experts from all the stakeholders, with a strong management team reflecting the main stakeholders of the issue to be solved. The SPI Committee and the project working groups rely heavily on the expertise and work of a small team – SPI Secretariat – that is permanently dedicated to the partnership. SPI Secretariat has to cover a mix of secretarial, analytical and communication responsibilities and project-related responsibilities. Running SPI projects require strong organization capabilities as it supposes to handle the relationship with about one hundred local and international experts. To make the most of the experts’ time and knowledge, with as little interference as possible in their official daily responsibilities, the SPI Secretariat prepares most of the analytical work. SPI operating principles are: a. local ownership – it is granted by the decision powers of and the support provided by the local stakeholders. Local stakeholders i) decide on the SPI program, ii) con- tribute to the activity through large mobilization of their experts and by covering a share of its operating expenses and iii) identify solutions and choose the ones that addresses best their concerns and accommodates their interests; Page 98 of 335 2
  • 147. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme b. programmatic focus - the issues to be tackled under SPI are proposed by its partners, through extensive consultation. They are prioritized according to their importance, to the strategic objectives or policy priorities decided by the industry or authorities and are approved by SPI Committee as annual financial modernization program. In Albania, for example, the annual program for 2009 was built up in the context of the policy priorities of the Albanian Banking system, discussed in Bank of Albania’s Banking Forum and other professional meetings; c. mobilization of local expertise - the annual program is executed by public-private working groups of local experts, led by a Project Management Group; d. involvement of foreign experts to fill local knowledge gaps - the Project Working Groups carry out analyses and prepare proposals for regulatory or self-regulatory changes with the significant support of the SPI Secretariat. When necessary, Project Working Groups invite international experts to provide complementary perspectives to their expertise; e. disciplined program management - in order to reach the objectives in an effective way, Project Working Groups run the projects according to specific and very detailed Terms of Reference prepared by the SPI Secretariat. The project steps are based on a standard documentation, based on the EU Better Regulation methodology, to be prepared and discussed in 4 Project Working Group meetings within about 3 months. Project Working Groups’ recommendations are signed off by the Project Management Group and eventually endorsed by the SPI Committee before being transmitted to relevant authorities for their consideration; f. evidence-based analytical methods to search for solutions – projects are executed according to EU Better Regulations methodology whose main principles are the consultations on policy options with stakeholders and use of Regulatory Impact Assessment as a tool for providing supporting evidence for regulatory proposals; g. full transparency of the work - the governance framework, activities, projects and documents are made available to the public through SPI website and/or on the websites of the SPI partners; h. strong practical impact orientation – the outcomes of the SPI are not studies or proposals, but enacted regulatory or self-regulatory changes. The costs of an SPI Platform comprise salary costs for the SPI Secretariat, equipment purchase and operating cost (office costs, event organizing costs, etc). The annual budget of an SPI Platform with the above referred minimum SPI Secretariat formula and with the punctual involvement of foreign consultants is estimated to about EUR 100,0001. For a 10 project annual program, this translates in about EUR 10,000/project. The costs are to be covered in major part out of EU funding. 1 To be revised according to each country’s context and conditions (salaries, SPI Secretariat formula, involvement of foreign technical assistance, etc.). Page 99 of 335 3
  • 148. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 100 of 335
  • 149. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex V-3 Draft Joint Invitation Letter to other SPI Potential Partners To: Top level representatives of public authorities and private institutions Dear Sir, Central Bank, Ministry of Finance/Economy and the Banking Association have decided to enter into the SPI partnership. As you know, SPI Platform handles financial sector modernization projects under the coordination of the SPI Committee, gathering high level representatives of the partner institution. The SPI partners commit themselves to put together financial, human and in-kind resources to identify commonly agreed solution to problems in their common interest. Please find attached a note on SPI partnership, activities, results and costs. We are writing to invite you to join the SPI partnership by appointing a representative as [Permanent Observer/Member] in the SPI Committee that supervises the activities of SPI Platform. As a partner institution, you will be invited to propose projects, to participate with your experts in solution designing and to support the enactment of regulatory proposals. The SPI Committee’s main responsibilities at this stage consist of raising awareness on the partnership and on supporting the process of securing the financial sustainability of the SPI Platform. Once the financial needs are covered, SPI Committee’s duties will be to approve the activities to be performed by SPI Platform, to endorse the regulatory/self-regulatory proposals formulated by the Project Working Groups and to act for their endorsement. We trust that your involvement in the SPI Committee as a [Permanent Observer/Member] would add value to the quality of SPI Secretariat’s work and would strengthen the connection of the SPI Platform with the financial market’s actors. Thank you. Best regards, Page 101 of 335
  • 150. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 102 of 335
  • 151. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex V-4 SPI Committee Operating Guidelines in the initiation stage of the public – private partnership SPI Committee Five Core Principles in the initiation stage of the public – private partnership  The SPI Committee represents a high level commitment to public-private collaboration to promote financial sector modernization.  The SPI Committee acts for building awareness on SPI partnership.  The SPI Committee commits to support fund raising for the SPI Platform.  The SPI Committee decides on SPI Secretariat composition and activities.  The SPI Committee selects unanimously the Financial Sector Modernization Program. Context Enhancing the financial sector contribution to growth requires a large-scale fine- tuning of micro-regulations that affect the efficiency of financial sector intermediation. These actions have to take place in close cooperation between financial authorities, members of the banking and financial industry, and users of financial services. To accelerate this process, main financial sector stakeholders have agreed to launch the “SPI Financial Sector Modernization Platform” (“SPI Platform”) and, in order to support it, to establish a high-level public-private Steering Committee (the “SPI Committee”) that will initiate, oversee and act upon analytical projects that hold the greatest potential for their contribution to financial sector modernization. SPI is placed in the broader context of a regional financial sector modernization program that will promote the launch of similar activities in neighboring countries to ensure maximum regional cooperation and coordination. ARTICLE 1: SPI COMMITTEE PURPOSE IN THE INITIATION STAGE OF THE SPI PARTNERSHIP Section 1. Mission Statement and Authority The SPI Committee represents a high level commitment to public-private collaboration to implement financial sector modernization projects. 1 Page 103 of 335
  • 152. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Its founding members are the Central Bank, Ministry of Finance/Ministry of Economy and the Banking Association. The SPI Committee is responsible for building awareness on the SPI partnership, for supporting the fund raising for SPI Platform’s activities, for setting up the SPI Secretariat function and team and to select the analytical projects to be undertaken as part of the First SPI Modernization Program. The SPI Committee may decide to establish relationships with authorities and civil society institutions, domestic and international institutions with a key role in securing funding for the SPI Platform activities. The links may involve SPI Committee membership, formation of specific SPI Committee consultative panels or other ad hoc arrangements as necessary. ARTICLE 2: SPI COMMITTEE MEMBERSHIP Section 1. Members The SPI Committee is composed of three founding members (hereinafter, the “SPI Committee Members”) as follows: 1. Governor of Central Bank (Hosting Chairperson); 2. Minister/State Secretary of the Ministry of Finance/Economy; 3. Chairman of the Banking Association. The SPI Committee Members operate in their personal capacity, their actions and decisions in the SPI Committee cannot be deemed having being taken pursuant to the general powers and authority that are vested with each of them by her or his institution. Each SPI Committee member may appoint an Alternate SPI Committee member. The SPI Committee may invite representatives of other institutions to attend its meetings as permanent observers in order to enhance relevance and effectiveness of SPI Committee-sponsored initiatives. Annex I contains the list of the SPI Committee members and permanent observers and of their alternates. Section 2. Term The SPI Committee shall be established at the launch of SPI Partnership that is, on [date]. ARTICLE 3: SPI COMMITTEE ACTIVITIES IN THE INITIATION STAGE General Remarks: SPI Committee Members or their Alternates shall attend regularly all the meetings to underline a high-level commitment to public-private dialogue. They must be able to actively participate in Committee meetings and projects. 2 Page 104 of 335
  • 153. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme The specific role of SPI Committee is to: 1. Raise awareness on the SPI Partnership through joint or individual actions, through letters or statements, by taking care of posting on their institutions’ websites information on the partnership; 2. Support fund raising for the SPI Platform through various means, as deemed necessary over time, for applying with EU institutions and other international donors; 3. Decide on the design of the SPI Secretariat functions, participate in SPI Secretariat selection and support training activities of the SPI Secretariat members in their institutions; 4. Review the pipeline of micro-regulatory issues that require resolution and approve the proposals for individual analytical projects prepared by the SPI Secretariat consistently with the priorities for financial sector modernization. ARTICLE 4: SPI COMMITTEE MEETINGS Section 1. Frequency, venue and chairmanship The SPI Committee will meet at least two times in this stage: for approving the funding application and to approve SPI Secretariat team and the first activity program. The SPI Committee Member hosting the meeting will also act as a chairperson of the respective meeting. Section 2. Notice of meeting, agenda and quorum Notice of the meeting will be provided in advance, with an agenda and respective meeting materials e-mailed/mailed to the SPI Committee Members seven days prior to the meeting. The SPI Committee meeting agenda shall be prepared by the Banking Association Secretariat, in consultation with SPI Committee Members. A draft will be distributed to SPI Committee Members prior to the meeting. Any SPI Committee Member may request inclusion of items in the agenda. S/he will do so by contacting in written form the Banking Association Secretariat before the meeting. A quorum shall be required to conduct the business of the SPI Committee. A quorum is defined as a simple majority of the members. Section 3. Meeting Records Minutes of these SPI Committee meetings will be kept and maintained by the Banking Association Secretariat. Approved minutes will be distributed to the SPI Committee Members no later than a week after their approval. Meeting decisions will be made publicly available in ways to be determined. 3 Page 105 of 335
  • 154. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Section 4. Decision Making and Method of Vote SPI Committee decisions shall be taken by consensus among the SPI Committee Members present in the meeting. Section 5. Compensation No SPI Committee Member will receive salary or any other honorarium for their services under these bylaws. ARTICLE 5: OPERATING GUIDELINES AMENDMENTS These guidelines shall govern the SPI Committee in the initiation stage of the public – private partnership and new guidelines shall be adopted when the partnership will be operating. The SPI Committee may adopt special rules of order if required. These rules can be amended at any regular meeting of the SPI Committee by consensus, provided that the amendment has been submitted in writing at a previous meeting. [place, date] Central Bank Governor Chairman of Banking Association Minister/State Secretary of the Ministry of Finance/Economy 4 Page 106 of 335
  • 155. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme List of SPI Committee members and permanent observers and of their alternates SPI Stakeholder SPI Committee SPI Committee Members alternate members Central Bank Ministry of Finance/Economy Banking Association SPI Committee Permanent Observers [Financial Supervision Authority] [Ministry of Economy and Finance] 5 Page 107 of 335
  • 156. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 108 of 335
  • 157. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Annex V-5 Draft communication on SPI Partnership launching Special Projects Initiative – SPI is a public – private partnership for the financial sector modernization by promoting regulatory and self regulatory measures. SPI undertakes projects that reduce asymmetric information, reduce costs of transactions, increase opportunities for transactions, contribute to complete the market and improve competition, in a structured and effective manner. The Central Bank, the Ministry of Finance/Economy, the Banking Association and [the other SPI partner institutions] have decided to enter into the SPI partnership. The SPI Committee members, gathering top level representatives of the partner institutions had their first meeting on […], marking the launch of the SPI Partnership. The SPI Committee represents a high level commitment to public-private collaboration to promote financial sector modernization. Its mandate in this initiation stage is to act for building awareness on SPI partnership, to support fund raising for the SPI Platform, to decide on SPI Secretariat composition and activities, and to select unanimously the first Financial Sector Modernization Program. We are kindly inviting all public and private institutions, civil society and academia actors, international donors and international financial institution to join us in this initiative to accelerate financial sector modernization and to grant us their valuable support. Central Bank Ministry of Finance Banking Association Page 109 of 335
  • 158. European Banking FederationSPI Platform Toolkit World Banks "Convergence" Programme Page 110 of 335
  • 159. European Banking FederationSPI Platform Toolkit