Financial Conglomerates

Abstract This chapter discusses the supervision of financial conglomerates. In 1999, the Joint Forum on Financial Conglomerates released a paper which sets out the basis of the supervision of conglomerates, and the basic principles set out in this paper remain the basis for conglomerate supervision. The paper classified the existing approaches to conglomerate regulation into the ‘building block prudential method’, the ‘risk based aggregation method’, and the ‘risk-based deduction method’. The EU Financial Groups Directive, although largely based on the work of the Joint Forum, has also set out three prescribed approaches to conglomerates which are similar but not identical to the Joint Forum categories. Those four methods are discussed.