DOCSLIB.ORG

Essentials for the Post-Pandemic Bank Risk Operations Must Be Reconfigured to Reflect New Why Extreme Digitization Is a Must for Financial Services Realities

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Essentials for the Post-Pandemic Bank Risk Operations Must Be Reconfigured to Reflect New Why Extreme Digitization Is a Must for Financial Services Realities Expert Insights Essentials for the post- pandemic bank Why extreme digitization is a must for financial services Experts on this topic Sarah Diamond Sarah is the Global Managing Director, Banking and Financial Markets, for IBM. She is responsible for IBM’s Global Managing Director, relationship with major financial services firms, helping IBM Banking and Financial Markets them transform their businesses to respond to the linkedin.com/in/sarah-diamond- changing regulatory, business, and technology 044a99 landscapes. Sarah helped launch the Watson Financial [email protected] Services group and is Vice Chair, Promontory Financial Group, an IBM Company. Anthony Lipp Anthony is the Global Head of Strategy for Banking and Financial Markets at IBM. In his current role, he supports Global Head of Strategy, the development and execution of IBM’s business strategy IBM Banking and Financial Markets for serving banking and financial markets clients worldwide. linkedin.com/in/lippanthony He has diverse industry and consulting experience serving [email protected] top management on major strategy, organizational, and enterprise transformation initiatives in the financial services. He is a member of the IBM Industry Academy. Likhit Wagle Likhit is the General Manager of the Global Banking Industry at IBM. He has led and advised financial services General Manager, clients globally on business transformation programs that IBM Global Banking Industry have realized major improvements in client net promoter linkedin.com/in/likhit-wagle- scores, revenue growth, and bottom-line profitability. He 8a3a2416 is a member of the IBM Industry Academy. [email protected] Randy Walker Randy is the Global Managing Director of the IBM Financial Services Sector and is responsible for the IBM Financial Global Managing Director, Services business, helping banking, financial markets, and IBM Financial Services Sector insurance clients innovate and transform their businesses linkedin.com/in/randy-walker to respond to swiftly changing industry needs. [email protected] Paolo Sironi Paolo is the Global Research Leader in Banking and Finance at the IBM Institute for Business Value. He is responsible for Global Research Leader, providing business expertise and strategic thinking to Banking and Finance, executives with financial institutions, startups, and IBM Institute for Business Value regulators. An author on quantitative finance, digital linkedin.com/in/thepsironi transformation, and economics theory, he is a member of [email protected] the IBM Industry Academy. @thepsironi The authors thank Pablo Suarez and Seun Onodipe for their contributions in developing this report. Key takeaways The different normal: Forging Financial institutions need to master the future of financial services extreme digitization to succeed in the The COVID-19 pandemic has claimed thousands of lives, post-pandemic environment. stricken many more ill, and devastated entire economies. In response, many financial institutions have safeguarded The social and economic consequences of employees, enabled alternative working models, focused COVID-19 will make the post-crisis normal on business continuity and resilience, and learned new an enduring reality. These ramifications ways of serving customers. are accelerating the arrival of an uncertain Yet, the post-pandemic economic environment is future, inviting banks to lead “through the unexplored terrain. Case in point: depending on the scale of dark” by transforming business models and government assistance, credit defaults could be higher than during the 2008 global financial crisis. Lower interest strengthening operations through secured rates could prevail, potentially accelerating compressed cloud access, advanced automation, and the net interest margins and impacting a key revenue stream simplification of processes and products. for banks. The new normal for financial services could compel banks The different normal touches every to embrace continual reinvention of their business models corner—virtual and otherwise—of financial and solutions. How should banks manage costs, transform operations, and use technologies such as AI and cloud to institutions. impact innovation and the digital delivery of products and Organizations need to adopt both a holistic services? All are in play. It could be a matter of survival. perspective and a granular approach. They need to transform operations end-to-end A sobering assessment of future to achieve structural cost savings, succeed uncertainty: The recession and its with extreme digitization on the cloud, and ramifications achieve operational resiliency. The Great Lockdown put the profitability of most firms The “data-driven bank” will be based under unprecedented stress. It has triggered a global on the “data-enabled client.” economic downturn that endangers the very sustainability of entire industries, such as travel and hospitality. Innovative financial institutions will redesign customer proximity not only by using data Facing elevated uncertainty, firms may be cautious. Reduced consumption and weaker business investment to personalize their offers, but by infusing could drive the biggest immediate impact. Lower inventory interactions with artificial intelligence accumulations could arise from supply shock and (AI). This model generates new value, diminished demand. A dysfunctional global supply chain could weaken the economic outlook of developing markets understanding how digital relationships can and increase the risk of countries defaulting on their debts. truly create closeness and positive impact even during crises such as a pandemic lockdown. 1 The shape of the post-pandemic recovery will not be identical across industries and regional economies. The shape of the post-pandemic recovery will not be option of stretching lending capabilities and accelerating identical across industries and regional economies. And it their active roles in the recovery. Banks are instrumental could take a variety of forms, all influenced by the potential to the effective transmission of monetary policies and for future periodic lockdowns and growing political stimulus packages, helping businesses to progress toward uncertainties. For example, overall early expectations were recovery and restore consumer confidence. of a “V-shaped” recovery—with a shock to the economy and a displacement of output, but growth eventually rebounds, The initial perception has been that financial services and annual growth rates absorb that shock. could, on average, withstand the global shock better than in the 2008 global financial crisis, having already done However, where the shock persists, recovery predictions substantial homework in that aftermath. In particular, the have shifted to a “U-shaped” recession. While the initial European banking system engaged in sustained de-risking growth path resumes, some output loss is permanent. An and restructuring of credit portfolios from 2014 post-crisis “L-shaped” recession, where the crisis does significant peaks of nonperforming loan (NPL) ratios to end-of-2019 structural damage to supply or demand, could be imminent. levels. According to the European Banking Authority, Irish Certain regions or industries may even face a “W-shaped” banks reduced their credit portfolios from 21.6 percent to recovery, with multiple sharp declines and rises. 4.6 percent. Italy moved from 17.0 percent to 7.9 percent. On average, the euro zone halved aggregate NPL ratios Clearly, governments and central banks made headlines from 6.5 percent to 3.0 percent (see Figure 1).1 in their attempts to stabilize economic and social systems with unprecedented stimulus packages, granting banks the Figure 1 NPL ratios by country in June 2015 and June 2019 (%) indicate sustained de-risking2 50% 40% 30% 20% 10% 0% Greece Cyprus Portugal Italy Ireland Spain France Austria The Germany United European Netherlands kingdom Union NPL ratio June 2015 NPL ratio June 2019 Source: European Banking Authority 2 But is this the calm before the storm? The plummeting of interest rates In June 2019, Andrea Enria, Chair of the European Central Interest rate margins for US and UK banks are getting Bank’s Supervisory Board, had already warned, “We have squeezed, after the price for risk, by the re-emergence of to solve the issue of NPLs while the economy is still zero-to-negative interest rates and the flattening of yield resilient. If banks have to sail into the next storm with too curves, as has already happened in Europe and Japan many NPLs on their balance sheets, they will be less able to through the 2008 global financial crisis. weather it and come out safely on the other side.”3 The Federal Reserve System (“the Fed”) reduced interest What lies ahead is not reassuring. Financial services need rates by a total of 150 basis points (bps) in two emergency to plan for the worst. The current deterioration of economic meetings in March 2020, taking the federal funds rate to conditions could well transform a sudden recession into an 0-to-0.25 percent, along with USD 700 billion in asset 5 economic depression.4 purchases. These and other measures were meant to stimulate the US economy. The last time the Fed reduced rates this aggressively was in 2008, and the rates were suppressed until 2015 (see Figure 2).6 The implication: we could linger in a low-interest-rate environment for some time. Figure 2 To promote US economic growth, the Effective Federal Fund Rates were suppressed from 2008 through 20157 Basis points 600 500 400
Load more

Recommended publications
  • Risk and Regulation Monthly November 2020 Contents
    CENTRE for REGULATORY STRATEGY EMEA Risk and Regulation Monthly November 2020 Contents CONTENTS HIGHLIGHTS COVID-19 BANKING CAPITAL MARKETS INVESTMENT MANAGEMENT CENTRAL BANK OF IRELAND OTHER CONTACTS Highlights In Ireland, the Central Bank published the outcome of its thematic review of fund management companies. It was found that a significant number of firms have not fully implemented the framework for governance, management and oversight in fund management companies. The European Commission published a consultation on AIFMD. This ask respondents whether fund delegation rules should be accompanied with quantitative criteria or a list of core functions that cannot be delegated. For a full list of COVID-19 related regulatory, monetary and fiscal policy initiatives, please see our report available here. COVID-19 Speech by Pablo Hernández de Cos, Governor of the Bank of Spain, on EU Spain's experience with risks and ECB vulnerabilities in the corporate sector as a result of the COVID-19 crisis Speech by Philip R. Lane, Member of the Executive Board at the ECB, on the Speech by Luigi Federico Signorini, ECB’s monetary policy in the pandemic Deputy Governor at the Bank of Italy on mobilising private finance for a Interview of Christine Lagarde, green recovery and hence “building President of the ECB on the role of the back better” ECB in non-normal times Macroprudential bulletin covering the Speech by Randal K Quarles, Vice usability of capital buffers Chairman for Supervision of the Board of Governors of the Federal Reserve ECB -
    [Show full text]
  • 10. Consolidation of the European Banking Industry: Obstacles and Policies
    10. CONSOLIDATION OF THE EUROPEAN BANKING INDUSTRY: OBSTACLES AND POLICIES Martin Boer and Andrés Portilla, Institute of International Finance (IIF)1 10.1. ABSTRACT Consolidation of the European banking industry can lead to stronger and more resil- ient banks, and can also boost profitability due to greater economies of scale. However, while the business case for consolidation is clear, there are a number of significant ob- stacles preventing mergers and acquisitions. The obstacles arise from various economic, political, regulatory and cultural factors, or are related to the business environment in which European banks currently operate. Global and regional geopolitical uncertainty and rapid and profound changes in the global banking industry’s outlook due to innova- tion and technological change add to these challenges. This chapter reviews the current European banking landscape, considers the various obstacles to consolidation and dis- cusses policy recommendations aimed at strengthening the European banking system to achieve a healthier, more stable and more profitable future. Keywords: Bank consolidation; EU Banking Union; EDIS; Banking regulation; Cross-border banking. 1 Martin Boer is Director (Regulatory Affairs) and Andrés Portilla is Managing Director (Reg- ulatory Affairs) at the Institute of International Finance (IIF) in Washington, D.C. The views ex- pressed in this article are those exclusively of the authors and do not necessarily represent the views of the IIF. With thanks for the invaluable research assistance to Kristina Haberson of the Vienna University of Economics and Business. 263 THE EURO IN 2020 10.2. INTRODUCTION Today’s global banking industry is radically different than it was before the global financial crisis.
    [Show full text]
  • ECB Annual Report on Supervisory Activities 2020
    ECB Annual Report on supervisory activities 2020 Embargo This document is free for publication from 09:00 CET on 23 March 2021 No data from the document may be released before the above embargo has expired. Any publication that breaks the embargo will cease to receive texts in advance of the release time. March 2021 Contents Foreword by Christine Lagarde, President of the ECB 3 Introductory interview with Andrea Enria, Chair of the Supervisory Board 4 1 Banking supervision in 2020 9 1.1 Supervised banks in 2020: performance and main risks 9 Box 1 Measures taken by ECB Banking Supervision to address the COVID-19 pandemic 20 1.2 Supervisory priorities and projects in 2020 23 Box 2 Supervisory technology 35 1.3 Direct supervision of significant institutions 36 1.4 Indirect supervision of LSIs 44 1.5 Macroprudential tasks of the ECB 47 1.6 Looking ahead: risks and supervisory priorities for 2021 48 Box 3 Public consultation on ECB Guide on climate-related and environmental risks 52 2 Authorisations, enforcement and sanctions 54 2.1 Authorisations 54 Box 4 The ECB’s supervisory approach to consolidation 61 2.2 Whistleblowing, enforcement and sanctioning 62 3 Contributing to crisis management 66 3.1 Interaction with the Single Resolution Board 66 3.2 Work on recovery planning 66 3.3 Crisis management and European integration 68 3.4 Crisis management involving less significant institutions 69 4 Cooperating across borders 71 4.1 Enlarging the SSM through close cooperation 71 4.2 European and international cooperation 72 ECB Annual Report on supervisory
    [Show full text]
  • Vol. 9, Part 1, Pp
    Volume 9 – Part 2 – 2020 ISSN 2050-9014 LAW AND ISSUES ON FINANCIAL MARKET REGULATION, ECONOMICS BUSINESS DEVELOPMENT AND YEARLY GOVERNMENT’S POLICIES ON REVIEW GLOBALIZATION Editors F. CAPRIGLIONE – R. M. LASTRA – R. MCCORMICK C. PAULUS – L. REICHLIN – M. SAKURAMOTO in association with LAW AND ECONOMICS YEARLY REVIEW www.laweconomicsyearlyreview.org.uk Mission The “Law and Economics Yearly Review” is an academic journal to promote a legal and eco- nomic debate. It is published twice annually (Part I and Part II), by the Fondazione Gerardo Capriglione Onlus (an organization aimed to promote and develop the research activity on fi- nancial regulation) in association with Queen Mary University of London. The journal faces questions about development issues and other several matters related to the international con- text, originated by globalization. Delays in political actions, limits of certain Government’s poli- cies, business development constraints and the “sovereign debt crisis” are some aims of our studies. The global financial and economic crisis is analysed in its controversial perspectives; the same approach qualifies the research of possible remedies to override this period of progressive capitalism’s turbulences and to promote a sustainable retrieval. Address Fondazione Gerardo Capriglione Onlus c/o Centre for Commercial Law Studies Queen Mary, University of London 67-69 Lincoln’s Inn Fields London, WC2A 3JB United Kingdom Main Contact Fondazione G. Capriglione Onlus - [email protected] Editor‐ in‐ Chief F. Capriglione Editorial Board G. Alpa - M. Andenas - A. Antonucci - R. Olivares-Caminal - G. Conte - M. De Marco - M. Hirano - A. Kokkinis - I. MacNeil - M. Martinez - M. Pellegrini - C. Schmid - M.
    [Show full text]
  • Political, Fiscal and Banking Union in the Eurozone?
    POLITICAL, FISCAL and BANKING UNION IN THE EUROZONE? Edited by Franklin Allen, Elena Carletti & Joanna Gray i POLITICAL, FISCAL AND BANKING UNION IN THE EUROZONE? iii POLITICAL, FISCAL AND BANKING UNION IN THE EUROZONE? EDITED BY Franklin Allen Elena Carletti Joanna Gray AUTHORS Edmond Alphandéry Tony Barber Andrea Enria Luis Garicano Daniel Gros Mitu Gulati Richard J. Herring Robert P. Inman Jan Pieter Krahnen Mattias Kumm Peter L. Lindseth Patrick O’Callaghan Richard Parker Hélène Rey Philip Wood European University Institute Florence, Italy and Wharton Financial Institutions Center University of Pennsylvania, Philadelphia, USA iv Published by FIC Press Wharton Financial Institutions Center 2405 Steinberg Hall - Dietrich Hall 3620 Locust Walk Philadelphia, PA 19104-6367 USA First Published 2013 ISBN 978-0-9836469-6-9 (paperback) ISBN 978-0-9836469-7-6 (e-book version) Cover artwork, design and layout by Christopher Trollen v Contents The Contributors vii Acknowledgments xix PREFACE xxi by Franklin Allen, Elena Carletti & Joanna Gray 1 In Spain, the Diabolic Loop is Alive and Well 1 Luis Garicano 2 The Danger of Building a Banking Union on a One-Legged Stool 9 Richard J. Herring 3 Banking Union in the Eurozone? A panel contribution 29 Jan Pieter Krahnen 4 European Banking Union: A Lawyer’s Personal Perspective 41 Philip Wood 5 Establishing the Banking Union and repairing the Single Market 47 Andrea Enria 6 Banking Union instead of Fiscal Union? 65 Daniel Gros 7 Managing Country Debts in the European Monetary Union: Stronger Rules or Stronger Union? 79 Robert P. Inman vi Contents 8 No to a Transfer Union, yes to an Economic Justice Union 103 Mattias Kumm 9 Fiscal Union in the Eurozone? 107 Hélène Rey 10 The Evolution of Euro Area Sovereign Debt Contracts: A Preliminary Inquiry 117 Mitu Gulati 11 Political, Fiscal and Banking Union in the Eurozone 139 Edmond Alphandéry 12 The Eurozone Crisis, Institutional Change, and “Political Union” 147 Peter L.
    [Show full text]
  • Promoting Safe and Sound Banks in the SSM Programme
    Promoting safe and sound banks in the SSM ECB colloquium in honour of Danièle Nouy Wednesday, 5 December 2018 European Central Bank, Kaiserstrasse 29 (Eurotower) Frankfurt am Main ECB-PUBLIC Wednesday, 5 December 2018 09:30 Opening speech Mario Draghi, President of the European Central Bank 09:45 Conversation with the Chair Moderator: Patrick Jenkins, financial editor of the Financial Times 10:00 Panel discussion “A single supervisor for the euro area – 5 years after” Chair: Sylvie Goulard, Deputy Governor, Banque de France Speakers: William Coen, Secretary General, Basel Committee on Banking Supervision Andrea Enria, Chairman, European Banking Authority Nicolas Véron, Senior Fellow, Bruegel/Peterson Institute 11:00 Coffee break 11:15 Panel discussion “SSM: taking a snapshot of the future ” Chair: Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB Speakers: Jonathan Faull, Chair of European Public Affairs (Brunswick Group) Jonathan Fiechter, External Senior Advisor to the International Monetary Fund and the World Bank Sven Giegold, Member of the European Parliament Elke König, Chair, Single Resolution Board 12:30 Get-together buffet 13:30 End of colloquium 2 ECB-PUBLIC General information Dates Wednesday, 5 December 2018 Venue European Central Bank Kaiserstrasse 29 60311 Frankfurt am Main Tel.: +49 (0) 69 1344 0 Fax: +49 (0) 69 1344 6000 E-mail: [email protected] Language English Transfers Participants are requested to arrange their own transfers from and to the airport, unless indicated otherwise. Contacts Colloquium Organisation Team E-mail: [email protected] For all content related questions please contact: Guillaume Leclercq, Counsellor to the Chair of the Supervisory Board Tel: +49 69 1344 6856; e-mail: [email protected] Website www.bankingsupervision.europa.eu Please note that this programme may be subject to change without notice.
    [Show full text]
  • Speakers' Biographies
    SPEAKERS’ BIOGRAPHIES Dr David Andrieux Senior Business Consultant, Sopra Banking Software David Andrieux is an expert in strategy and innovation in financial services. He helps financial institutions transform their business models for the digital age, with a particular expertise in digital banking, daily banking, and payments. Dr Andrieux has a book and 30 scientific papers to his name, plus seven international academic prizes in physics, whilst a Postdoctoral Fellow at Belgian research centre FNRS and at Yale University in the US. He has also authored a range of CxO resources, such as a recent white paper on the future of digital banking. Maria Åsenius Head of Cabinet of Commissioner Cecilia Malmström, DG TRADE, European Commission Graduated from Stockholm School of Economics with a degree in business and economics in 1986, Maria Åsenius started a career in journalism as an editorial writer at Göteborgs-Tidningen (July 1986 to December 1988) and at Dagens Nyheter (January 1988 to November 1988). She then worked as a freelance journalist in Brasilia and Paris, as well as correspondent for the Swedish business magazine Veckans affärer. In March 1993 she began to work in the Government Offices in Stockholm, first as Deputy Press Secretary to the Minister for Finance and then as a Political Adviser to the Minister for Culture and Immigration. Between May 1995 and January 2002 Ms Åsenius was Desk Officer for the ELDR Group in the European Parliament before becoming Political Adviser to the President of the European Parliament, Pat Cox, a position held until July 2004. She was a member of Olli Rehn’s cabinet (August 2004 to June 2007) and Deputy Head of Cabinet to Commissioner Olli Rehn at the European Commission in Brussels.
    [Show full text]
  • The European Central Bank's Pandemic Bazooka
    THE EUROPEAN CENTRAL BANK’S PANDEMIC BAZOOKA: MANDATE FULFILMENT IN EXTRAORDINARY TIMES René Smits Manuscript accepted for publication as Chapter 22 in: Dolores Utrilla and Anjum Shabbir (eds), EU Law in Times of Pandemic. The EU’s Legal Response to the COVID-19 Crisis, EU Law Live Press, 2021. 1. Introduction1 The year 2020 has become the first in a hundred years when a pandemic broke out that both affected the world and effected a severe downturn in economic activity across the globe. Earlier outbreaks of deadly ultra-contagious diseases have been kept within a region of origin – the havoc and misery created by Ebola was certainly no less than what we have seen since the eruption of a world-wide pandemic of the COVID-19 virus (‘coronavirus’). Less than 20 years after Ebola brought distress to people in West Africa,2 humanity faced a pandemic on global scale. After the outbreak of the disease in Wuhan (China), it spread globally, affecting first thousands, then millions of people whose lives were turned upside-down as they were asked, or compelled, to respect ‘social distancing’ to prevent contagion, stay at home, work at a distance, and self-isolate or go into quarantine. The social and economic effects of the pandemic have been huge. Allow this sociologist cum lawyer to begin with the social disruption before focusing on the legal issues of the European Central Bank (ECB)’s response. Suddenly, values were resurfacing that, in the ‘normal’ economic life of many, had not figured prominently: family life; the environment and Planet Earth3; recognition of the vital roles of cleaners, teachers, health workers and other indispensable people for a society to conduct its business – their social status and earnings dismal compared to those of entrepreneurs, innovators and managers; the possibilities of working remotely from one’s ‘home office’ for those whose jobs allow them to do so.
    [Show full text]
  • Speakers 2014
    Date: 30 October 2014, 9 – 18 h, Venue: Auditorium Friedrichstrasse, Berlin Joint Conference, 30 October 2014, Auditorium Friedrichstrasse, Berlin Conference Language is English, Admission is free but restricted on confirmed registration T H E C OMPREHEN S I V E A ss E ss M E N T , SPEAKER S A N D P A N E L P ARTICIPANT S T H E E C B ´ S N E W S UPERVI S ORY ROLE AND LIMIT S OF A COMMON S UPERVI S ION IN THE EU Organizer: Anmeldung / Registration: Keynote Speakers Prof. Mathias Dewatripont was appointed Financial Risk and Stability Network via email: [email protected] Executive Director at the National Bank of Thomas Hoenig was confirmed by the Senate Belgium in May 2011, and Vice-Governor in or by fax: 032 22 9808 724 as Vice Chairman of the Federal Deposit June 2014, where he is responsible for pru- Scientific Co-Organizers: Registration deadline: 22 October Insurance Corporation in November 2012. He dential policy and financial stability. In this joined the FDIC in April 2012, as a member of Bruegel capacity, he is a member of the Supervisory the FDIC Board of Directors for a six-year Board of the European Central Bank and of the Basel Com- Attendance is free of charge. Admission only German Institute for Economic Research term. He is a member of the executive board mittee on Banking Supervision. Since 1990, he has been European School of Management and Technology after confirmed registration. Die Veranstaltung ist of the International Association of Deposit Insurers.
    [Show full text]
  • CV of Andrea Enria
    Curriculum Vitae Andrea Enria PERSONAL INFORMATION Andrea Enria Gender Male | Nationality Italian CURRENT POSITION Chairperson March 2011 – date European Banking Authority (EBA) - London, United Kingdom Responsible for preparing the work of the EBA BoS; ensuring the achievement of the EBA objectives and fulfilling other tasks and decisions of the BoS. Acting as the head representative of the EBA and responsible for making statements before European Parliament and competent committees and providing answers to the questions put by their members whenever requested. Presiding over the meetings of the EBA Board of Supervisors (BoS) and the Management Board (MB). WORK EXPERIENCE 2008-2011 Head of the Supervisory Regulations and Policies Department Banca d’Italia - Rome, Italy Responsible for Banca d’Italia’s issuance of prudential rules, advisory function on primary legislation in financial matters to the government and the Parliamentary Commissions, regulatory dialogue with industry groups, macroprudential analysis, methodologies for on-site and off-site examinations, accounting and reporting issues, international cooperation, representing Banca d’Italia in several international and European fora (CEBS, Cross-Border Crisis Management Group of the Financial Stability Board, G20 Deputies Group on Regulation and Supervision), coordinating an internal task force on planning for the whole supervisory area. 2004-2008 Secretary General of the CEBS and Company Secretary of CEBS Secretariat Limited Committee of European Banking Supervisors (CEBS) -
    [Show full text]
  • EBA Framework Cooperation Agreement
    Framework Cooperation Arrangement Framework Cooperation Arrangement between the European Banking Authority ('EBA') and the Board of Governors ofthe Federal Reserve System, the Federal Deposit Insurance Corporation, the Office ofthe Comptroller ofthe Currency, the U.S. Securities and Exchange Commission, and the New York State Department of Financial Services (collectively, 'U.S. Authorities,' and, together with the EBA, 'the Parties') (1) The global financial markets involve financial institutions and groups that operate across borders, with many institutions operating both within two or more Member States of the European Union (the 'EU') and in the United States of America (the 'U.S.'). (2) Under the domestic legal frameworks of the Parties' respective jurisdictions, supervisory and resolution authorities possess various crisis management tools and powers that can be employed to address circumstances in which a financial institution or group encounters serious financial difficulties. (3) In order to ensure the effectiveness of crisis management actions in relation to internationally active financial institutions or groups, work is underway-including under the auspices of the 020 through the· work of the Financial Stability Board ('FSB')-to ensure that supervisory and resolution authorities have the capacity to share information and cooperate in the cross-border application ofcrisis management tools and powers. (4) Recent developments within the EU make it timely and appropriate to set out a high-level framework for cooperation that is consistent with internationally agreed principles. (5) With a view to promoting the uniform development of cross-border crisis management information sharing and cooperation arrangements, Directive 2014/59/EU on Bank Framework Cooperation Arrangement Recovery and Resolution ('BRRD') 1 empowers the EBA to conclude framework cooperation arrangements with non-EU supervisory and resolution authorities of jurisdictions where internationally active financial institutions or groups carry out part of their activities.
    [Show full text]
  • Public Hearing with Andrea Enria, Chair of the ECB Supervisory Board ECON on 27 October 2020
    BRIEFING Public hearing with Andrea Enria, Chair of the ECB Supervisory Board ECON on 27 October 2020 This note is prepared in view of a regular public hearing with the Chair of the Supervisory Board of the European Central Bank (ECB), Andrea Enria, which will take place on 27 October 2020. The briefing addresses (i) recent supervisory measures in response to the COVID-19 crisis, including an overview of the ECB’s COVID-19 vulnerability analysis and a discussion on the effectiveness of certain capital relief measures; (ii) the SSM’s response to the European Parliament’s 2019 Banking Union Report; (iii) short-term risks for the banking sector (low profitability, NPLs and Brexit); (iv) longer-term challenges, including consolidation in the banking sector and completing the Banking Union; and (v) supervisory issues, namely anti-money laundering and addressing cyber and IT risks. 1. COVID-19 and recent supervisory measures Supervisory measures In response to the COVID-19 crisis, the ECB Banking Supervisor has adopted a number of measures, aimed at ensuring that banks can continue to support the economy and fulfil their role to fund households and corporates: Providing capital relief: In March 2020, the ECB announced that it would allow banks to operate temporarily below the level of capital defined by the Pillar 2 Guidance (P2G), the capital conservation buffer (CCB) and the liquidity coverage ratio (LCR). Banks were also be allowed to partially use capital instruments that do not qualify as Common Equity Tier 1 (CET1) capital, to meet the Pillar 2 Requirements (P2R). In a press statement, the ECB clarified the expected pace for banks to restore capital and liquidity positions, allowing banks to operate below the P2G and the combined buffer requirement until at least end-2022, and below the LCR until at least end-2021, without automatically triggering supervisory actions.
    [Show full text]