An EU-wide individual accountability regime for banks?

Accountability regime

Overview

  • The European Commission is seeking views on the “benefits and drawbacks” of an individual “accountability regime” under the Capital Requirements Directive (CRD).
  • The proposals are at a formative stage, and it is uncertain whether they will ultimately be taken forward. Nonetheless, we recommend that Board members and senior managers pay close attention to how they unfold through the consultation process.
  • Although the Commission has positioned these proposals as more of an extension of the existing fitness and propriety requirements, there are some potential parallels with the UK’s Senior Managers and Certification Regime (SM&CR).

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Posted on 13/12/2019 | 0 Comments

Four key questions around the EU’s implementation of Basel III

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The Basel Committee on Banking Supervision (BCBS) agreed the final elements of the Basel III framework in December 2017 (often referred to by industry as ‘Basel IV’), but the timing and nature of its implementation in the EU is subject to a complex legislative negotiation that has yet to begin.

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Posted on 11/12/2019 | 0 Comments

UK regulators take a big step forward with their approach to Operational Resilience

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On 5 December, the UK’s financial regulators, the Bank of England (BoE), Prudential Regulation Authority (PRA), and Financial Conduct Authority (FCA), published a series of consultation papers (CPs) on their proposed approach to operational resilience in the financial sector.

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Posted on 10/12/2019 | 0 Comments

The EU Solvency II review: 10 “stakes in the ground” from EIOPA’s consultation

The EU Solvency II review 10 stakes in the ground” from EIOPA’s consultation

EIOPA’s extensive recent consultation1 on the 2020 review of Solvency II gives a first indication of the changes to Solvency II that EIOPA will recommend to the European Commission.

This blog highlights ten over-arching topics from the consultation that we consider indicate where significant change is and is not likely, and which in turn could have an important bearing on the UK’s post-Brexit prudential capital regime. Each topic is detailed in the appendix to this blog.

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Posted on 21/11/2019 | 0 Comments

Uncovering the benefits of client lifecycle value for investment banks during challenging times

Uncovering the benefits of client lifetime value for investment banks during challenging times

Last month, our article1 outlined our views on re-discovering customer lifetime value (“CLV”) within the capital markets sector. This month, we explore why adopting a CLV lens to customer lifecycle management can bring enhanced benefits for both corporate and investment banks (“CIB”) and their clients.

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Posted on 19/11/2019 | 0 Comments

Smarter Better Faster: The next generation of risk modelling with Machine Learning

Smarter Better Faster The next generation of risk modelling with Machine Learning
Alan Turing’s seminal 1950 paper "Computing Machinery and Intelligence", posed the question "Can machines think?" Introducing the idea of the first “learning machine with the potential of becoming artificially intelligent”. Since then machine learning (ML) has found its way into numerous processes; seeking to simplify our lives by making processes smarter, better and faster. Financial risk management is an industry that is rife with opportunities for ML to disrupt in the coming years, one of the most obvious areas being credit scoring.

In this blog we explore some of the main findings of the recently published Bank of England survey on ML, this is followed by our views on the challenges and potential solutions of implementing ML within a credit risk scoring framework.

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Posted on 13/11/2019 | 0 Comments

PRA Dear CEO letter highlights continued concerns over the quality of regulatory reporting

PRA Dear CEO letter highlights continued concerns over the quality of regulatory reporting
On 31st October, the PRA published a Dear CEO letter to remind banks, building societies and designated investment firms that they are required to submit complete, timely and accurate regulatory returns.  The fact that the PRA has seen the need to issue a reminder about such a core regulatory obligation reflects its concern about errors in regulatory reporting (both public and identified by the PRA in the course of its supervision) and what it sees as the need for appropriate investment in both data quality and processes to ensure the accuracy and completeness of reporting.

In this blog we consider how firms have been addressing regulatory reporting challenges to date, identify key areas of focus for Senior Managers, Boards and Audit Committees and provide our view on how firms might respond to the letter and how we can assist.

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Posted on 11/11/2019 | 0 Comments

Green Wishes without Greenwash – The FCA’s Green Finance and Climate Change Statement

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The FCA’s Feedback Statement focuses on greenwashing, disclosure and integration of material climate change risks and opportunities into business, risk and investment decisions.

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Posted on 31/10/2019 | 0 Comments

Illiquid retail funds: FCA strengthens investor protection but drops some measures trailed in its consultation

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With the spotlight falling increasingly on fund liquidity risks, not least from central banks concerned about emerging systemic risks, the Financial Conduct Authority (FCA) has published its final rules on liquidity risk management for non-UCITS retail schemes (NURS). The FCA started reviewing these rules after several property funds were suspended in the wake of the 2016 EU referendum. The FCA has stated that it has also taken into account lessons from the Woodford Equity Income Fund suspension in June 2019. Importantly, however, the new rules will not apply to UCITS funds such as the Woodford fund. We therefore expect further rule changes for such mainstream retail funds in the near term.

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Posted on 25/10/2019 | 0 Comments

The importance of valuation standards in ILS

Magnifyglass_loTwo years of significant loss events, many of which have experienced significant loss deterioration, have exposed some limitations and areas of improvement of the ILS fund management industry. This should be expected of an industry whose core product hadn’t been tested through to the end of its lifecycle for several years, due to a series of benign cat years. The key lies in how the industry responds to these challenges, and determining how issues can be mitigated in the future to support the (still nascent) insurance securitisation process.

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Posted on 22/10/2019 | 0 Comments