Financial Services Volunteer Corps
Summary Report of FDIC Secondee Activity 2009-2010
This June marked the three-year anniversary of the secondment program agreed upon between Financial
Services Volunteer Corps (FSVC) and the Federal Deposit Insurance Corporation (FDIC) to place one
or more FDIC employees full-time in FSVC’s Washington, DC office. Between September 2009 and
August 2010, FSVC hosted four secondees:
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Mr. Donald Saxinger, September-December 2009
Mr. Dennis Ankenbrand, January-March 2010
Mr. Claude Rollin, February-May 2010
Ms. Judith Dupre, April-August 2010
The secondees participated in 20 projects that took place in Albania, Algeria, Egypt, Jordan, Malawi,
and Morocco. Additionally, they did work for counterparts in Albania, Egypt, Libya, and Malawi from
Washington, DC, and Mr. Saxinger completed a project for the Central Bank of Iraq in Jordan. The
secondees worked directly with eight overseas regulatory counterparts and trained almost 440
individuals. In these efforts, they spent over 1,850 hours providing direct technical assistance.
While at FSVC, the secondees helped shape the direction of FSVC’s global regulatory programs and
worked with program staff to structure and implement specific projects. They shared their considerable
regulatory expertise with FSVC employees around the world. Below, we provide highlights from their
activities in support of FSVC’s mission to help build strong financial systems that enable developing
and emerging market countries to realize economic opportunities and help their citizens to achieve a
better quality of life. We also include descriptions of all specific projects in which the secondees were
involved.
Key Results
 Provided the Central Banks of Libya and Iraq with roadmaps for implementing their first ever
supervision of bank information technology systems;
 Provided the Banque d’Algerie with feedback on its proposed guidelines for the liquidity and
management components of its new risk-rating framework;
 Completed detailed reviews of two important procedural manuals that will enable the
Reserve Bank of Malawi for the first time to implement consistent processes for overseeing
bank mergers and resolutions; and
 Guided Central Bank of Egypt instructor-trainees in the adaptation of FDIC course materials
to the local context and the development of their teaching skills.
Commentary on Bank IT Examination Procedures
United States (for Libya), September 16-30, 2009
Mr. Saxinger wrote two short documents for the Central Bank of Libya (CBL) with specific, actionable
recommendations on how to carry out on-site examination of bank information technology controls.
One document covered “Recommendations on Improving the Framework for IT Examinations,” and the
other covered “Recommendations on Implementing an IT Examination Program.” The goal of the
project was to help the CBL develop consistent, documented bank examination procedures.
The documents produced by Mr. Saxinger helped the CBL’s Banking Supervision Department examine
the IT systems at banks, as well as provide more concrete guidance and benchmarks for its own
supervisors during bank examinations that include an IT component. Given that the documents clearly
laid out how a central bank with comparatively little specialization in IT matters can nonetheless
conduct effective IT examinations, they also provided a basis upon which to move forward with more
specific training and consultations for the examiners in this area. While researching the Libyan context
in preparation for this assignment, Mr. Saxinger also produced a series of recommendations for the
Libyan Government to lay a comprehensive legal and regulatory foundation for IT examinations by the
CBL in keeping with advances in technology.
U.S. Study Tour on Bank Liquidation and Conservatorship
United States (for Albania), September 28-October 2, 2009
Mr. Saxinger assisted in arranging a U.S. study tour for the Bank of Albania (BOA) to discuss with
public- and private-sector specialists various means to effectively address problem bank liquidation and
conservatorship. Over the course of one week, the BOA delegation met with the U.S. Federal Deposit
Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and former FDIC
officials now working on related issues in the private sector.
Study tour participants learned about the operational issues involved in managing a problem bank,
which better equipped the BOA to make informed decisions on: a) staffing and organizational structure
of future resolution teams; b) managing potential public concern in the event of a bank failure; c)
managing the institutional transfer of IT systems in the event of a bank failure; d) selecting an
appropriate option for managing an insolvent bank; f) appropriate supervisory actions to stave off a bank
failure; g) and selecting a bank conservator. The BOA will use this information to guide its future
strategy for bank resolutions and ultimately to contribute to a procedural manual.
Assessment of BDA Bank Rating System Framework
Algeria, October 10-15, 2009
Mr. Saxinger consulted with the Banque d’Algerie’s (BDA) supervision department, the
Directorate de l’Inspection Generale (DGIG), on its development of procedures to support a
CAMELS-based bank risk-rating system. Alongside the U.S. Treasury Office of Technical
Assistance (OTA) Resident Advisor Robert Demler, the BDA requested assistance in reviewing
draft documents on the risk-rating framework and making suggestions for improvement. Mr.
Saxinger also conducted a general seminar for the DGIG on the application of the risk-rating
system to support and improve bank examinations.
Mr. Saxinger’s consultations with the BDA Working Group that developed the risk-rating system
resulted in a substantial reorganization of the CAMELS-based draft. This use of a sitting,
experienced bank examiner was directly applicable to a practical examination approach and
maximized the possibility for successful integration into BDA procedures. Mr. Saxinger’s advice
rendered the ratings approach more efficient and clarified and restructured the Off-Site and On-Site
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Department roles in the process. He also recommended that internal reporting lines be clarified in
order to have an operationally effective system.
Workshop on Examiner Guidelines for Commercial Bank IT Systems
Algeria, October 18-20, 2009
Mr. Saxinger reviewed draft guidelines for the BDA to conduct evaluations of risk in IT systems in
supervised institutions. He made suggestions for improvement in conjunction with consultations on the
overall risk-rating framework and conducted a seminar for the DGIG on the inclusion of IT risk
assessment in general bank examinations.
As a result of this assignment, the BDA substantially advanced in developing its first applied procedures
for analyzing IT issues under a coherent risk-based supervisory framework. Mr. Saxinger’s advice not
only clarified direct frameworks for IT analysis, but also placed IT supervision in the larger context of
the BDA’s efforts at supervisory reform. This project feeds into ongoing work to develop the BdA’s
first formalized examination framework for bank examiners.
Workshop on Examiner Guidelines for Commercial Bank Risk Management
Algeria, October 21-22, 2009
Mr. Saxinger reviewed draft guidelines for the BDA to conduct assessments of risk management
procedures in supervised institutions. He made suggestions for improvement in conjunction with
consultations on the overall risk-rating framework and conducted a seminar for the DGIG on the
importance of risk assessment as the central theme to bank examinations.
During the consultations with the BDA, Mr Saxinger identified operational weaknesses in the
CAMELS-based bank risk-rating system that the Director of the DGIG characterized as “very key in
helping us have a truly applicable program that applies best standards to the Algerian context.” The
procedures and manuals developed as a result of this project will formalize bank supervisory analysis in
Algeria for the first time and create a reasonably objective risk analysis standard. Once in use, the
procedures and manuals will provide valuable feedback to banks in carrying out their operations.
Commentary on Development of Deposit Insurance System
United States (for Malawi), October 6-November 5, 2009
Mr. Saxinger was one of four Volunteers, including Vijay Deshpande, also of the FDIC, who worked
remotely with the Reserve Bank of Malawi (RBM) to develop a questionnaire with an introductory
abstract explaining the overall policy context for the RBM to distribute to banks and non-banking
financial institutions (NBFIs). The questionnaire helped determine whether banks believe the Malawian
Government is ready to institute a deposit insurance system (DIS) and, if so, how the system should be
structured and paid for.
As a result of the project, the RBM received a comprehensive questionnaire to evaluate the need of
banks and NBFIs for a DIS. With a set of options for possible DISs, this survey of the market provided
valuable feedback on ongoing efforts to assess the potential for a DIS. Specifically, this effort laid the
foundation for a follow-up in-country visit in April 2010 to explore the issues raised in a deeper manner,
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prior to final recommendations to the RBM on whether and how to implement a DIS.
Participation in CBI Data Center Technical Advisory Committee Meeting
Jordan (for Iraq), November 15-18, 2009
Mr. Saxinger and two Volunteers from the Federal Reserve Bank of Kansas City participated in the first
meeting of the Technical Advisory Committee to establish a Data Center that will collect, analyze and
distribute information on the banking and wider financial sectors for the Central Bank of Iraq (CBI).
They gave presentations on how their institution process financial data and how that relates to possible
approaches for the CBI. Mr. Saxinger focused on the types of reports a Banking Supervision
Department generally needs and the data inputs necessary.
As a result of the project, the CBI received a Project Charter identifying organizations that will provide
advisory services, the roles of CBI departments and these organizations in supporting the establishment
of a Data Center, available funding, and overall program objectives. During the meeting, CBI Governor
Shabibi was able to get a firsthand analysis of the tremendous resources, as well as effective
departmental interaction that will be required to see the program through to completion. Additional
points emphasized included software applications suited to the current Iraqi financial environment, the
increasingly standard XBRL reporting framework, and criteria for evaluating IT vendors.
Participation in MENA Regional Deposit Insurance Conference
Jordan (for MENA Region), November 18-20, 2009
Mr. Saxinger and Mr. Rollin participated in a two-day conference hosted by FSVC and the Jordan
Deposit Insurance Corporation focused on the Basel Committee on Banking Supervision and
International Association of Deposit Insurers (IADI) Core Principles for Deposit Insurance Systems and
their application in the Middle East and North Africa (MENA) region. Their presentations focused on
setting risk-based premiums and defining safety-net participants.
As a result of this conference, the attendees learned about the advantages and disadvantages of differing
deposit insurance models used in other countries. Sessions were devoted specifically to the Effects of
the Global Financial Crisis on the MENA Region, Funding and Coverage Limits, Risk-Based Premiums,
Transitioning from Blanket to Limited Coverage, Insuring Sharia-Based Deposits, and Structural Issues
Related to Effective Design for Deposit Insurance, all in the context of the effects of the global financial
crisis on the MENA region and the way existence of a deposit insurance framework either enhances or
mitigates it.
Consultations on Bank IT Supervision
Jordan (for Iraq), November 22-24, 2009
Mr. Saxinger initiated FSVC’s program of work with the CBI Banking Supervision Department (BSD)
on supervision of banks’ IT systems. He consulted with senior BSD and IT staff on their overall
supervisory approach and how IT exams should fit into it. Mr. Saxinger also accompanied CBI staff
during a day spent with senior executives from HSBC’s headquarters in Amman to provide hands-on
examples for IT-related bank examinations.
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As a result of the project, the CBI obtained a workplan for creating a cadre of five specialized IT
examiners within two years. CBI Governor Shabibi approved a committee to be established to select
these five individuals. In the interim, the BSD representatives expressed their intent to apply the
“governance” model of IT supervision introduced by Mr. Saxinger that addresses the topic within the
overall framework of risk management in banks. It does not require specialized IT, but rather focuses
on basic security as well as technical and physical control concepts. Mr. Saxinger also distributed a
range of manuals the FDIC uses to carry out IT exams to all participants, several of which were
translated into Arabic by FSVC.
Consultations on Bank Operational Risk and IT Supervision
Albania, December 14-18, 2009
Mr. Saxinger assisted the BOA with establishing a robust operational and IT risk management
framework. He helped the BOA evaluate the effectiveness and accuracy of its current framework used
to identify, measure, monitor, control, and analyze bank operational and IT risk and other related
indirect risks. The first phase of the project consisted of consultations with BSD management, followed
by a one-day training seminar for BOA examiners.
This project increased BOA awareness of operational and IT risks that are often overlooked by banks
that choose to focus mostly on credit, market, and liquidity risk. It was particularly timely, as the BSD
was then restructuring and planning to set up a separate group to monitor these areas exclusively. Mr.
Saxinger also provided input on two regulations pertaining to e-banking transactions and operational and
IT risks that will be finalized in 2010. In addition, he provided reference materials and general guidance
on drafting an internal operational and IT risks supervision manual.
Workshop on Examiner Guidelines for Commercial Bank Liquidity Risk Assessment: Phases I &
II
Algeria, February 9-11, 2010 & February 28-March 4, 2010
Mr. Ankenbrand consulted with the BdA Working Group developing the CAMELS-based bank riskrating system on the treatment of liquidity risk during an exam and as part of an integrated bank rating.
He also delivered a general overview of liquidity analysis to a wider group, provided comments on draft
liquidity-related regulations, and met with the BDA Governor to discuss the outcome of the project.
As a result of the project, the BDA Working Group developed liquidity examination procedures. This
framework represents the first written guidelines for the DGIG on the subject. During the project, Mr.
Ankenbrand made recommendations that encouraged the Working Group to propose amendments to
draft liquidity regulations. Specific recommendations included: inter-departmental coordination within
the BDA to ensure compatibility between the ultimate liquidity regulations and exam procedures;
providing a mechanism for feedback from commercial banks; considering adjustments to the key
liquidity ratio to reflect more accurately the financial state of a bank; and considering additional
liquidity ratios in the exam process. The liquidity risk seminar exposed a much wider group to new
concepts that should assist the BDA in its transition to risk-based supervision.
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Workshop on Examiner Guidelines for Commercial Bank Management Assessment
Algeria, March 7-11, 2010
Mr. Ankenbrand consulted with the BDA Working Group developing the risk-rating system on the
treatment of management evaluation during an exam and as part of an integrated bank rating. He also
delivered a general overview of management assessment to a wider group and met with the BDA
Governor to discuss the unique nature of this examination element.
As a result of the project, the BDA Working Group developed management examination procedures.
Given the more subjective nature of management assessment – and the conflict in this approach with the
BdA’s current “checklist” approach – this portion of the manual will require additional consideration
and revisions before completion. Mr. Ankenbrand’s management assessment seminar exposed a much
wider group to new concepts that should assist the BDA in integrating more subjective elements such as
this into its new risk-based approach to supervision.
Commentary on Bank Mergers and Acquisitions Procedures Manual
United States (for Malawi), February 16-March 17, 2010
Mr. Rollin reviewed the RBM’s draft guidelines for oversight of bank mergers and acquisitions. He
then made recommendations on language that should be added or edited to support effective supervision
by the RBM. This was undertaken in part out of the concern that recently raised capital requirements
could ultimately lead to greater consolidation in the banking sector.
As a result of this project, the RBM received a bank mergers and acquisitions manual edited to: clarify
the role of the RBM as Registrar; specify time limits for required action by the Registrar and bank
management; define necessary intermediate steps to conclude successful mergers and acquisitions; and
make reference to relevant sections of the Banking Bill and the Financial Services Act. Once approved,
the manual will provide the RBM with formal, consistent guidelines to oversee productive and efficient
mergers and acquisitions.
Commentary on Problem Bank Resolution Procedures Manual
United States (for Malawi), February 16-March 17, 2010
Mr. Rollin reviewed and made recommendations to the RBM regarding its draft guidelines for oversight
of problem bank resolution. This was spurred by the RBM’s request for a failing local bank to close
voluntarily, and the realization that there were no procedures previously developed to address such a
situation.
As a result of this project, the RBM received a problem bank resolution manual edited to: clarify the
role of the RBM as Registrar; specify the conditions that define a “problem” bank; define necessary
enforcement powers to conclude bank resolutions; and make reference to relevant sections of the
Banking Bill and the Financial Services Act. Once approved, the manual will provide the RBM with
formal, consistent guidelines to oversee resolutions from start to finish.
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Consultations on Revision of FDIC Introduction to Examination School Materials
Egypt, May 9-13, 2010
Ms. Dupre consulted senior management at the Egyptian Banking Institute (EBI) and the Central Bank
of Egypt (CBE) and designated instructor-trainees on their comments and suggested amendments
regarding adaptation of the FDIC Introduction to Examination School materials to local conditions. She
reviewed their initial proposed revisions prior to arriving in-country. While in Egypt, Ms. Dupre
consulted on the overall progress of the program and the next steps necessary for the instructor-trainees
to ultimately deliver the adapted course to Egyptian examiners.
As a result of the project, the EBI now has a roadmap for amending the curriculum of the FDIC
Introduction to Examination School. This included amendments to be introduced – such as necessary
omissions and additions and rewrites to accommodate local practices – as well as procedures regarding
the flow of work and information within the group. During the project, each instructor-trainee presented
to the group on the progress of revisions to their individual module assignments. Ms. Dupre discussed
the importance of establishing a process to adapt the School that could be replicated for future Schools,
and how the course adaptation must be integrated with on-the-job-training and ongoing managerial
evaluation.
Seminar on Inter-Regulator Coordination for Financial Sector Systemic Risk Monitoring &
Evaluation
Morocco, May 10-14, 2010
Mr. Rollin and two other Volunteers conducted a week of multi-regulator workshops presenting revised
international thinking on macroprudential supervision in the wake of the global financial crisis,
particularly with regard to cross-sector risks. The Moroccan regulatory community’s participation was
spearheaded by Bank Al-Maghrib (BAM), which also heads the Commission de Coordination des
Organes de Supervision du Secteur Financier(CCOSSF). They requested assistance in defining possible
models, organizational needs, and appropriate tools for the creation of robust and comprehensive
financial sector risk monitoring and evaluation.
As a result of the project, the Moroccan regulatory community came to several points of consensus
regarding deepening and improving their financial stability framework to ensure effective cross-sector
macroprudential supervisory capability, particularly in times of crisis. These included the need to agree
new clarified and reinforced memorandums of understanding between the regulators for information
exchange under both normal and crisis circumstances; interest in pursuing new network analysis
approaches; and the need for BAM to seek a modification of its statutes to explicitly add responsibility
for financial stability. The regulators also reached a consensus to consider ways of reinforcing the
CCOSSF.
Observation of FDIC Introduction to Examination School
United States (for Egypt), June 14-25, 2010
Ms. Dupre, alongside Galo Cevallos, also of the FDIC, helped to facilitate the observation by three CBE
designated instructor-trainees of the Introduction to Examination School that they will ultimately be
teaching. In addition to attending the course, the participants met with Ms. Dupre and Mr. Cevallos to
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coordinate the lessons of he course with the ongoing adaptation of the curriculum of the Introduction to
Examination course to the Egyptian context.
As a result of the project, the participants learned techniques to teach the Introduction to Examination
School, as well as effective overall teaching techniques. All participants commented that watching the
approaches of different instructors, including with varied groups, was equally as informative as the
actual review of the material in preparing them for the next steps in adapting the course materials for
local use. On return to Egypt, they presented the lessons of their instruction to the cadre of instructortrainees.
Participation in FDIC Risk Management Exam
United States (for Albania), July 19-30, 2010
Ms. Dupre facilitated the participation of two BOA examiners in a live bank examination of a mediumsized branch of an international bank, alongside FDIC’s New York division staff members, for a period
of two weeks. Participants spent a majority of their two-week visit at the bank location, collaborating
closely with FDIC NY supervisory staff to conduct the bank examination. During the bank
examination, both participants were exposed to first-hand applications of supervisory techniques. In
addition to participating in the bank examination, both participants were also invited to attend
discussions, based at FDIC headquarters, which focused on topics that support effective bank
examination approaches.
As a result of this project, participants were able to gain a first-hand opportunity to apply risk-based
supervisory approaches during a live bank examination, and received training on methods used to
identify, measure, and control credit risk. In addition, observing bank supervision methodology during a
live bank examination provided participants a new perspective on future trends in supervisory
developments. In light of the BOA’s switch from a compliance-based supervision approach to a riskbased one, understanding possible future developments in bank supervision will enable BSD staff to
more effectively reform their own systems to better align with the rapidly changing and increasingly
complex financial markets.
Training for New Bank Supervisors on Financial Analysis
Malawi, August 2-6, 2010
Ms. Dupre and Bonnie Reneau, also of the FDIC, delivered a modified version of the Financial
Institution Analysis School, originally prepared by the FDIC, to a group of new RBM examiners. The
course covered the basic financial analysis techniques used by U.S. bank regulators to assess CAMELS.
It involved lectures and case studies in which students were asked to apply financial analysis tools based
on both on- and off-site information typically available to bank examiners.
As a result of the project, thirteen new examiners at the RBM have gained fundamental knowledge
about CAMELS in order to conduct their jobs implementing risk-based supervision of financial
institutions. The new employees learned additional critical skills, such as conducting analysis of
multiple financial factors, creating a coherent report of their conclusions, and presenting them orally to
their peers and supervisors. One of the participants emphasized that the training positioned her perfectly
for her next assignment conducting off-site analysis of a bank prior to the on-site examination.
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The secondees’ efforts have contributed significantly toward FSVC’s mission to strengthen financial
institutions in developing countries to support economic development. Based on the results of the third
year of the FSVC-FDIC secondment program, it has only added to the productive relationship and
outcomes previously established between the two parties – and immensely benefited counterparts around
the world. FSVC looks forward to welcoming new secondees for the 2010-2011 period.
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