Banks
BoE reveals final element of ring-fencing framework
Systemic risk buffer will apply to ring-fenced assets, with the aim of preventing banks amplifying stress; BoE also hopes it will give smaller banks a competitive boost
BoE’s Bailey sets sights on balance sheet clarity
Clear disclosure of creditor hierarchies will be ‘critical’ moving forward, says Andrew Bailey; clarity in bank balance sheets is a ‘good thing’
Policy interactions may drive global banking contraction, BoE economists find
The combination of unconventional monetary policy and regulation may cause ‘substantial’ spillovers as banks cut cross-border lending, economists including Kristin Forbes find
BIS stats show further retreat in global banking flows
Falling claims on China drive bulk of overall reduction in cross-border claims, but pace of decline slows compared with previous quarter
FCA officials grilled on second comms backlash
MPs accuse FCA of failing to recognise perceived importance of dropped bank culture review, leading to strong public backlash; chief executive says approach to communication will be reassessed
Basel Committee completes trading book review
Much-anticipated redesign of market risk framework seeks to capture risks the Basel accord failed to guard against in 2008; impact study implies median 27% increase in capital charges
BoE moves to close bonus clawback loophole
Under new proposals, banks will no longer be able to circumvent malus and clawback rules by buying out new employees’ bonuses
New bank business models could undermine stability, panellists warn
Panel including Mark Carney and Agustín Carstens raises concerns over the way regulation and low rates are forcing banks to adapt in unpredictable ways
Mauritius looks to set up asset management company
Central bank launches public consultation on creation of bad bank, which would help ‘clean up clogged balance sheets’ of country’s banks
Lagarde calls for ‘fundamental change’ in Nigerian policy
IMF managing director tells leaders to shore up the banking system, strengthen the external position and exercise ‘restraint’, during visit to Nigeria
Norges Bank paper seeks to improve modelling of money
Researchers aim to capture the role of money as both a medium of exchange and a liquid asset, with the resulting equilibrium underscoring the need for a liquidity coverage ratio
Bank of England paper explores time-varying capital requirements
Authors use firm-bank level database from UK to examine impact of higher capital requirements on asset growth of borrowing firms; also consider interaction with monetary policy
‘Step-in risk’ could become part of Basel framework
Basel Committee consults on the risks created by a bank intervening to support third parties, but reserves judgement on how to incorporate such risks into the Basel framework
National Bank of Austria tells banks not to slow reform pace
Financial stability report notes trend of improving capitalisation has slowed; urges banks to continue the reform process and avoid short-term growth at the expense of stability
Bonus cap may impact other pay regulation, research from Bank of England warns
Researchers see potential for bonus caps to clash with other remuneration regulation; level of pay ‘at risk’ declines
UK payment systems regulator assesses compliance in first annual report
First PSR annual report shows progress is being made towards access and governance goals, but there are still areas for improvement
Bank of Israel challenges interim competition report
Governor Karnit Flug warns of ‘marked risk’ to economic stability from some proposed measures; central bank argues they may hinder competition, not promote it
New Zealand economists stress-test dairy sector
An article published by the Reserve Bank of New Zealand finds banking system losses would still be ‘manageable’ under the worst-case scenario for milk prices and farm values
UK banks must raise extra £27bn to meet resolution needs under BoE proposals
Large banks will have to issue additional subordinated debt to meet MREL requirement under proposals designed to ensure banks will continue to operate under resolution
Rising Swedish bank wages do not reflect rising talent, Riksbank paper finds
Researchers exploit large database of worker skills to assess why Swedish bank wages have risen so sharply in recent years, finding it is not because bankers have become relatively more talented
Central Bank of Armenia says currency turbulence has raised credit risks
Financial stability report says economy has been affected by sharp depreciation of the dram, worsening credit risk as many loans are denominated in US dollars
Banks may need major overhaul to handle new disclosures, FSB task force says
Many banks will need to make ‘substantial changes’ to systems and processes to cope with new and more complex standards on accounting for expected credit losses, report finds
Leverage ratio as high as 5% could yield net benefits, BIS economists say
Authors say there is ‘considerable room for manoeuvre’ when it comes to setting a leverage ratio above the current Basel III minimum of 3%
Technology empowering bank customers, says Israeli supervisor
Further integration of tech into banks has increased competition in the market and amount of power customers have over financial institutions, Ber argues