A ride up Capit(a)l Hill

ICAAP

As a key determinant of bank solvency and therefore a critical component of financial system stability, a banking applicant’s capital assessments receive significant scrutiny from regulators as part of the application process.

Alongside the Regulatory Business Plan (RBP), The Internal Capital Adequacy Assessment Process (ICAAP) is therefore one of the most important pieces of work you will need to perform in the run up to receiving your authorisation, and thereafter on an on-going basis.

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Posted on 18/02/2019 | 0 Comments

The Bank of England and PRA’s Resolvability Assessment Framework: end-state resolvability in firms’ hands

Banner_ImageIn December, the Bank of England (the Bank) and Prudential Regulation Authority (PRA) consulted on the Resolvability Assessment Framework (RAF) for firms[1] in the UK.

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Posted on 23/01/2019 | 0 Comments

The 6th Anti-Money Laundering Directive - the battle continues…

AML

On 12 November 2018, approximately 6 months after the adoption of the 5th EU Anti-Money Laundering Directive (5AMLD), the European Parliament published further rules to strengthen the fight against money laundering through the 6th EU Money Laundering Directive (6AMLD).

 

Member States are required to transpose the 6AMLD into national law by 3 December 2020.  After which, relevant regulations must be implemented by firms within Member States by 3 June 2021.

 

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Posted on 16/01/2019 | 0 Comments

The new age of Basel Pillar 2 Economic Capital modelling – Article 1: Introduction

Economic

This article represents the first in a Deloitte UK Risk Advisory series on the new age of Basel Pillar 2 Economic Capital (‘EC’) modelling in banking with a particular focus on Credit Risk models. In article 1 we look at the changing use of this well-seasoned model type, starting with an overview of the resurgence of EC, challenges for both retail and corporate parameterisation, and the Concentration Risk question. We finish by considering the best way to prioritise development effort between model design & parameterisation, how EC can be used and some of our EC expert’s considerations for enhancing an EC framework. 

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Posted on 09/01/2019 | 0 Comments

Developing a persuasive Regulatory Business Plan (RBP)

Regulatory Business Plan

Banks have the same challenge as any new business: how to convince investors and lenders that your business has a viable model, can generate sufficient returns and can repay its liabilities. Candidate banks face this challenge and one more – they must convince the regulators of the viability and sustainability of their business plan.

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Posted on 04/01/2019 | 0 Comments

Equity release mortgages – the PRA softens the transition but not the end-point regime

Equity release mortgages

In our July blog on equity release mortgages we explored the PRA’s proposals in its Consultation Paper CP13/18 to tighten significantly its approach on equity release mortgages (ERMs). Specifically, the PRA proposed, unusually, to specify particular assumptions that it expects to underlie the calculation of the “effective value” used to assess whether firms are claiming undue Matching Adjustment (MA) benefit for ERMs backing annuities.

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Posted on 20/12/2018 | 0 Comments

Open Banking around the world: towards a cross-industry data sharing ecosystem

FCW1GD_lo

Europe might reasonably claim to be the 'cradle of Open Banking'[1] - after all, PSD2[2] and the UK's Open Banking Standard pioneered it. But, look around now, and open banking initiatives are popping up everywhere. It is not just a matter of replicating the European approach elsewhere. Jurisdictions are adopting their own approaches to Open Banking, reflecting their markets and policy objectives, and in some cases developing cross-industry approaches beyond financial services.

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Posted on 29/11/2018 | 0 Comments

IRB Downturn Specification: An opportunity to enhance PIT models and reduce MoC?

IRB

EBA RTS on the specification of the nature, severity and duration of an economic downturn, and the business case for credit cycle modelling

The EBA’s consultation postbag appears to have been heavier than usual, perhaps evidenced by the second public consultation on economic downturn EBA/CP/2018/07, the consultation on guidelines for downturn LGD CP/2018/08, the quantity and nature of feedback referenced in the feedback to the public consultation, and perhaps most importantly the significant change in methodology since the original consultation CP/2017/02. We summarise the changes in each draft below:

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Posted on 27/11/2018 | 0 Comments

FCA Dear CEO letter on affordability on 15 Oct 2018 – what you need to know

B1

Since taking on responsibility for the regulation of consumer credit in April 2014, the FCA has been addressing issues in this sector. It has always been one of its priorities to tackle risks in the high-cost credit market including payday lending, overdrafts, home-collected credit and catalogue credit.

In response to the increased number of complaints on unaffordable lending, the FCA published a Dear CEO letter on affordability in high-cost short-term credit on 15 October 2018. Assessing the extent to which creditworthiness assessments are compliant is a particularly topical subject in the wake of the latest changes to CONC (PS18/10) on 1 November 2018. As such, whilst this letter is addressed to high-cost short-term credit firms, other retail lending firms should also consider its content and sentiments.

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Posted on 14/11/2018 | 0 Comments

Achieving Authorisation: Top Tips for getting over the line

Bank

Okay, so you have decided you want to be a bank.

Now what? In this blog we look at our banking licence experiences, and look at the main lessons that we took away.

Becoming a fully authorised bank can be a long and drawn out process, with many challenges to overcome along the way, nevertheless we’ve selected our 5 key pointers for navigating the process…

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Posted on 24/10/2018 | 0 Comments