Whilst a quick search of Amazon and eBay reveals that although they are right out of crystal balls (along with surgical masks and hand sanitizer), we believe that as a result of regulatory and supervisory reforms over the last decade, the banking sector is relatively better placed to withstand the potential economic fallout of Covid19 than it was the financial crisis of 2007-12.

Starting with capital adequacy, the most fundamental measure of a bank’s ability to withstand stress,

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Welcome to the second edition of our regular briefing on news and views in the FIG (financial institution group) world.

These are the stories and insights that have captured our attention in recent months.

You can download a pdf version of the newsletter here.

Risk – Danske Bank Estonian Scandal

The forced closure of Danske Bank’s troubled Estonian operation displays the maximum impact of operational risk. Read article

Regulatory –

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The following article is from our latest FIG in Focus newsletter.

Impaired loans continue to fall at 2018 year-end whilst IFRS 9 expected loss provisioning has a mixed effect.

Bank impaired loans in almost all jurisdictions continued to fall in 2018, which considering the clouds on the macro-economic and political horizon may represent a cyclical low. Developed economies in particular, performed especially strongly with USA and Eurozone rates falling by 0.4% and 0.5% respectively.

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The following article is from our latest FIG in Focus newsletter.

In detailed guidelines designed to set out bail-in requirements for Eurozone banks, the Single Resolution Body (SRB) has recommended that large international banking groups adopt a so-called “Single point of entry” resolution strategy, similar to guidelines already in existence for UK banks since 2018.

A single point of entry resolution strategy typically relies upon the issue of resolution eligible liabilities at the group level,

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The following article is from our latest FIG in Focus newsletter.

In February 2019, Danske branch was ordered to close its Estonian operations by the end of the year as a result of the money-laundering crisis which has gripped the Danish bank.

The branch in question was acquired as a result of Danske’s merger with Finnish Sampobank in 2007. After the merger it continued to use a separate IT system from Danske’s main platform and many of its transactional documents were written only in Estonian and Russian.

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Practice, practice, practice

This article by one of our partners, Anne-Marie Barcia, was originally published on LinkedIn.

 

Can problem solving skills be taught?

Recently, an article in the Financial Times caught my attention: “What employers want from MBAs”. Having surveyed 72 employers in 8 countries, the findings are enlightening: The “Ability to solve complex problems” was cited as one of the top 5 most important skills – and one of the top 5 most difficult skills to recruit.

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CFA Institute Members can now earn continuing education (CE) credits when participating in our online and in-house training programmes.

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The drop in price for Novo Banco (formerly Banco Espirito Santo) bonds to distressed levels reflects both bail-in and regulatory risk.

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The new EU Banking Recovery and Resolution Directive (BRRD) which has to come into force January 1st 2016 is supposed to draw a line under taxpayer bailouts.

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Commentators in the US and Europe sound regular warning bells about liquidity risk if investors in bond funds try to redeem in troubled markets.

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