New Central Bank organisational chart – changes to financial supervision structure
The Central Bank of Iceland has made changes to its organisational chart effective today, Thursday 12 January 2023. The changes entail a reduction in the number of supervisory departments from four to two, but they do not entail any reductions in staffing.
Under the new organisational chart, the Banking Department, Pensions and Insurance Department, and Markets and Business Conduct Department have been abolished and a new department – Microprudential Supervision of Banks, Pension Funds, and Insurance Firms (abbreviated to Prudential Supervision) – established in their stead. The new department will take over the tasks of the former Pensions and Insurance Department and Banking Department, as well as some of the tasks of the Markets and Business Conduct Department, with changes in focus . Most of the tasks previously carried out by Markets and Business Conduct will be transferred to the Compliance and Inspections Department, which is now called Conduct Supervision. According to the new organisational chart, the Bank has five core departments: Economics and Monetary Policy, Markets, Financial Stability, Prudential Supervision, and Conduct Supervision. As before, there are four support departments – Operations, Information Technology and Statistics, Finance, and Human Resources – plus the centralised General Secretariat.
Since the Central Bank and the Financial Supervisory Authority merged at the beginning of 2020, opportunities have developed for further integration of supervisory activities. The requirements made of supervised entities have changed and evolved within recent years the last decade. Greater emphasis is now placed on individual risk factors – such as governance, operational risk, and so forth – and on individual functions – e.g., business conduct and anti-money laundering and terrorist financing measures. As a result, supervised entities must acquaint themselves with and comply with new, detailed requirements made of their operations. At the same time, increased requirements are made of supervisory bodies, which must have a thorough knowledge of both individual risk factors and the requirements made of them, in order that education and supervision can be carried out in a manner ensuring compliance with the regulatory framework for the financial market.
The Microprudential Supervision Department merges financial supervision and supervision of risk factors in supervised entities’ activities. This gives the Central Bank has a more comprehensive overview of supervised financial institutions entities’ activities and ensures more targeted supervision of financial conglomerates. It will strengthen cooperation among experts from various risk assessment specialities and reduce the key worker risk that results from distributing comparable knowledge across two departments. With the organisational changes, a single department, Conduct Supervision, will be tasked with imposition of penalties, with the aim of increasing specialisation and enhancing consistency. The changes entail increased integration and reduced key person risk and are a natural continuation of the merger between the Bank and the Financial Supervisory Authority. The guiding principle behind the merger is to enhance trust, transparency, and efficacy of economic management; ensure effective utilisation of information; and offer the possibility of better-quality analysis and oversight.
Further information on the organisational structure of the Central Bank of Iceland can be found here.
No. 2/2023
12 January 2023