New challenges of supervising financial conglomerates

The focus of this article is to analyse the development of large financial groups in the financial market called financial conglomerates, and to analyse the adequacy of their supervision, weather procedures and instruments of prudential supervision enable supervisory authorities to get the required information and to take eff ective decisions. In this article, the review of scientific literature allowed to distinguish three main typologies of financial conglomerate structures. Analysis shows that a large variety of fi nancial conglomerate structures causes the risks of contagion, risk of concentration, management complexity and confl icts of interests and requires more intense and a diff erent kind of their prudential supervision. The current European Union legislation provides for a comprehensive set of rules on prudential supervision, but the latest fi ndings have indicated that group risks arise across the whole fi nancial sector, underscoring the importance of the supplementary supervision of the links within financial groups and between financial institutions. Supplementary supervision on group risks will enhance financial stability and better protection of depositors, insurance policy holders and investors