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On March 9, Emma Dunkley wrote in the Financial Times about the new app-based banks aiming to steal a march on the incumbents. In her words:
“They are not expected to take a significant share of the market from the biggest banks.”
The implementation of the mandatory exchange of initial and variation margin for non-cleared OTC derivative trades in the EU commenced on 4 February for financial counterparties with the largest derivatives portfolios. The introduction of these rules – which was part of the G20’s mandate to reduce the systemic risk posed by the OTC derivatives trading – is expected to lead to an increase in the cost of trading for non-cleared trades.
7 March 2017 will mark a year since the commencement of the Senior Managers Regime (SMR) for banks, building societies, credit unions and PRA-designated investment firms. This date is also significant since it will be the go-live date for the following requirements which form part of the SMR:
The demand for IT risk management is rapidly increasing in response to the rise in threats and the unprecedented wave of innovation spreading across the financial services industry. Now is the time for senior financial services risk professionals to begin preparing for the array of changes that are altering the world in which we live.
In recent years, the regulatory and governance framework in financial services organisations has become increasingly complex. A key area of focus has been in the area of remuneration structures, policies and processes, where there has been a significant amount of regulatory development.
Last month, RBS announced it is to increase its provisions by over GBP 3 billion in relation to investigations and litigation centred on the US residential mortgage-backed securities it underwrote.i At the same time, the US DoJ has levied further fines exceeding USD 12bn on two European banks to settle claims of abuse within the RMBS market.ii On this backdrop, and prior to the 2016 reporting season, we thought it a suitable time to reflect on the level of provisions within European banking institutions and to explore whether the tide of regulatory penalties is starting to turn.
With the adoption of the IFRS 9 accounting standard into EU law, it is full steam ahead for banks to deploy credit models that estimate Expected Credit Loss (ECL) accounting values. The standard requires firms to account for lifetime ECL on loans that have experienced a “significant increase in credit risk” (SICR), but allows firms to reach their own conclusions as to just how much credit risk ought to be viewed as “significant”.
Biased Expectations: Will biases in IFRS 9 models be material enough to impact accounting values, as well as other applications such as pricing?
As European IFRS reporters enter 2017, the first generation of Expected Credit Loss (ECL) models have generally been developed, and granular transitional impacts quantified.
‘We want to ensure that the process of complaining is straightforward, transparent and fair to consumers, while allowing firms to handle complaints as efficiently as possible and for consumers to have effective access to the ombudsman service if they remain dissatisfied.’ Financial Conduct Authority (FCA)