and operational risk. on - site inspection teams from the commission bancaire are currently scrutinising these models. their investigations show that, overall, large banking groups have taken the measure of this project early on, so as to be ready for the deadline of the 1st january 2008, even if some improvements need to be made in certain areas. furthermore, most banks will have to meet the next challenge of fine - tuning their risk management and calculating their economic capital in the coming months, pursuant to pillar 2. in sum, these regulatory, economic and financial factors are prompting banks to change the way they manage their risks, meaning that supervisors must be more flexible and more watchful. to clarify these considerations, i would like briefly to address two issues : 1. the results posted by french banks in 2006 are good, but they are not without vulnerabilities. 2. french banks are currently in the final straight as regards the implementation of the new regulation. as the banking supervisor, our role is to support them during this transitional period and to ensure together that the reforms are carried out properly. french banks ’ 2006 results are good, but not without vulnerabilities like the majority of leading european banks, french credit institutions reported good results for 2006, in line with the previous three years. for the three main banking groups under ifrs, the net banking income grew nearly 19 per cent, more than in 2005. in all, the aggregate net income of the french banking system, under french gaaps, amounts to nearly €40 billion. this reflects a substantial contribution from foreign subsidiaries and from non - banking business, especially insurance. moreover, most large french banks made major acquisitions outside their home market in 2006, particularly in regions with strong growth potential. retail banking is still the main source of profit for french banks, accounting for nearly 60 per cent of the largest groups'net banking income. that said, the domestic retail market began to decelerate in the last quarter of 2006 and the first quarter of 2007. the net interest margins of several major groups contracted, contributing to downward pressure on 2006 results. to an increasing extent, this margin squeeze is not being offset by the rise in outstanding loans, while fees and commission income has been growing less strongly than in recent years. the outlook for intermediation income in 2007 may be less positive given the persistently intense competition in the credit market and the possibility that the yield curve will remain either flat or shallow. furthermore, we must learn a

relevant, accurate, timely and sufficient data – including positive – collected on a systematic basis from all reliable, appropriate and available sources, and should retain this information for a sufficient amount of time. achievement of this principle will call for the collective contribution of all parties here today. the governing council and the secretariat will need to work together to support various credit providers who sign up to share data. good quality data will guarantee that the risk management tools and models developed from the data trends are robust and reliable. this way, the credit granting process will become more refined and more efficient. lenders will soon move away from mere use of ‘ gut feeling ’ or other rudimentary forms of information gathering that are unreliable and costly to assemble. by paying attention to maintaining high quality data in the credit reference bureaus, the players will also minimise contentions by borrowing customers as every effort must be made to address customer complaints on data accuracy. all lenders need to appreciate that the bis central bankers ’ speeches first port of call in resolving customer complaints must always be within the lending institution itself. where disputes cannot be settled internally, institutions must bring them to the attention of an industry mediation process. in this connection, i am pleased to note that the akcp secretariat has put in a lot of work towards developing a cis dispute resolution handbook. the akcp secretariat will soon be ready to conduct a public launch of its alternative dispute resolution mechanism and create awareness on the out - of - court settlement process. this will mark an important step towards adding credibility to the cis process. central bank is ready to provide required support needed to make this launch a success. ladies and gentlemen : i now wish to turn to the important role of akcp in contributing to policy and legal reform. the 4th of the general principles for credit reporting states that : the overall legal and regulatory framework for credit reporting should be clear, predictable, non - discriminatory, proportionate and supportive of data subject and consumer rights. the legal and regulatory framework should include effective judicial or extrajudicial dispute resolution mechanisms. while we recognise that the role of formulating a robust legal and regulatory framework remains with the regulators, the central government and parliament, we would like to forge a partnership with industry players in achieving this important function. we therefore encourage you to form relevant committees that will consult with, and make proposals to, the regulators in matters of cis. due to the multiplicity of regulators involved, i urge the secretariat of akcp to liaise with the