Is Basel driving banks down a one-way street?

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In recent papers1, the Basel Committee (BCBS) has proposed a number of changes to the scope and use of internal modelled approaches.  Taken together, they represent a tectonic shift in banks’ ability to use internal models for regulatory capital purposes:

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Posted on 28/04/2016 | 0 Comments

Management information on culture | Connecting the dots

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Culture in financial services firms has moved towards the top of the agenda for regulators, investors and consumers in the wake of excessive risk-taking by some firms in the run-up to the financial crisis and a string of misconduct scandals.  Despite this, there can be a tendency on the part of some in the industry to see culture as “someone else’s problem”.  A Deloitte survey on culture in banking carried out in 2013 found that 65% of senior bankers believed there were significant cultural failings across the industry, while only 33% believed the same of their own bank. 

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Posted on 27/04/2016 | 0 Comments

Cooling the buy-to-let spending spree | PRA proposes higher standards and capital charges for buy-to-let mortgage lending

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The PRA published a Consultation Paper and draft Supervisory Statement on 29 March on more strict standards for buy-to-let lending. The proposals coincided with the FPC’s statement on macroprudential risks on the same day, which included concerns about the buy-to-let property market.

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Posted on 21/04/2016 | 0 Comments

FCA publishes Business Plan | What to expect from the FCA in 2016-17

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The FCA published its 2016-17 Business Plan on 5 April. The document is shorter and less detailed than in previous years, with only a brief Risk Outlook section, and makes limited announcements of new work. This may reflect the fact that the new CEO, Andrew Bailey, will not join the FCA until July, although as a member of the FCA Board, he will already have had an opportunity to influence the Plan. Like last year, the FCA has continued with its magic number of seven priority areas, rolling over five areas and prioritising two new areas – wholesale markets and the provision of advice.

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Posted on 11/04/2016 | 0 Comments

The new accountability regimes now live and auditable | The buck stops here

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The Senior Managers and Certification Regimes (“SMR”) and new Conduct Rule requirements are high on the agenda for many of our clients’ Audit Committees following their landing earlier this year. The changes, impacting banks, building societies, credit unions and designated investment firms, are designed to improve professional standards and culture. They have led to a flurry of activity across the sector in changing and implementing policies and processes to enable compliance.

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Posted on 7/04/2016 | 0 Comments

Banking Union and sovereign exposures | Europe’s risk averse risk sharing

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When the EU launched the Banking Union, the ultimate objective of the project was to be able to share risks between countries, rather than retain them at the national level. It is an aspiration that faces many complex political challenges, including the trade-off necessarily made by countries involved between risk sharing and risk reduction. The current EU debate on European deposit insurance, the so-called third pillar of the Banking Union, and the sovereign exposures of banks, reflects precisely such a compromise.

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Posted on 21/03/2016 | 0 Comments

Payments infrastructure | Breaking up the banks’ club?

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Last week, the Payment Systems Regulator (PSR) recommended that banks sell their shares in the main UK central payments infrastructure provider, VocaLink, to encourage competition.

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Posted on 2/03/2016 | 0 Comments

Regulatory references and the SMCR: Heading into extra time

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On 4 February 2016 the FCA issued Policy Statement (PS) PS16/3 entitled ‘Strengthening accountability in banking’.  Although predominantly focused on final rules extending the forthcoming Certification Regime (CR) to wholesale market activities, the PS also provided an update on the regulatory reference proposals previously outlined in the joint FCA/PRA Consultation Paper issued in October 2015.  The proposals focus on the risk posed to consumers and to market integrity if individuals with a history of questionable conduct, or so-called “bad apples”, are able to move from one regulated entity to another, without their new employer being aware of any historic conduct issues.

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Posted on 10/02/2016 | 0 Comments

Davos 2016: Will blockchain be the tipping point for financial services disruption?

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Some say that technology revolutionized knowledge. Once controlled by a privileged few, knowledge is now becoming available to everybody. What if the same were about to happen with trust?

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Posted on 22/01/2016 | 0 Comments

EBA raising the bar for market risk models

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The EBA published draft Regulatory Technical Standards (RTS) on the assessment and approval of internal models for market risk on 14 December 2015. The new document sets out far more detail on market risk model requirements than is currently contained in the Capital Requirements Regulation (CRR) or the PRA Rulebook and Supervisory Statements.

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Posted on 19/01/2016 | 0 Comments