Featured Product

    Vicky Saporta of BoE Speaks on Future of Prudential Bank Regulation

    July 04, 2018

    In a speech at the Westminster Business Forum, Vicky Saporta of BoE discusses the importance of the reforms agreed in December 2017 that finalized Basel III. She goes on to describe what banking regulation will look like in the future.

    Ms. Saporta welcomed the finalization of Basel III as “a major milestone for regulators globally," as it puts in place the final elements of the reforms to banking regulation agreed since the crisis. She added that the central aim is to reduce the excessive variability of banks’ risk-weighted assets and, in doing so, make banks’ risk-based capital ratios more transparent and comparable. UK has developed a range of domestic reforms reflecting the importance of the banking system as a share of the UK economy. These range from the development and implementation of a new institutional framework for macro-prudential policy to deal with threats to financial stability, to the design of micro-prudential remuneration rules that better align risk-taking incentives with variable pay, to the Senior Managers and Certification Regime aimed at improving individual accountability at PRA-authorized institutions. It is also undertaking structural reform to protect retail payments and lending to households and businesses from shocks to other parts of banking groups specializing in serving wholesale customers.

    Looking ahead, Ms. Saporta said that industry should not expect a lot of further reform to bank regulation, particularly regulations regarding banks’ capital and liquidity. The focus of regulators, both in the UK and internationally, is pivoting toward three things: completing the implementation of the post-crisis reforms, making adjustments to the framework in response to new risks, and making adjustments to the framework in response to the unintended consequences. She also set out some principles that will guide us in ensuring that the adjustments made are appropriate. These principles provide that adjustments should be in line with the objectives of the regulation and/or of regulators, evidence-led, aim to address a problem that has been identified.

    Alongside some examples of where such adjustments have been made, she emphasized that horizon scanning and evaluation will be the key mechanisms in identifying other aspects of regulation that may require adjustment. In this context, she pointed to the ongoing evaluation exercise on central clearing incentives by FSB. She provided evidence that suggests that the current design of the leverage ratio is deterring banks that are most affected by the regulation from clearing over-the-counter derivatives on behalf of clients. In conclusion, she reiterated that BoE “will consider making adjustments to regulations in response to unintended consequences and new risks to ensure that the resilience we injected into the banking system post-crisis stands the test of time.” 

     

    Related Links

    Keywords: Europe, UK, Banking, Basel III Finalization, Basel III, Prudential Framework, BoE

    Featured Experts
    Related Articles
    News

    PRA Revises Branch Return and Updates Guidance for Regulatory Reports

    PRA published the policy statement PS17/19, which contains the final policy related to changes in the format and content of the Branch Return Form and reporting guidance.

    September 12, 2019 WebPage Regulatory News
    News

    FINMA Outlines Treatment of Stablecoins in Supplement to Guide on ICO

    FINMA published a supplement to its initial coin offerings (ICOs) guidelines, outlining the treatment for stablecoins under the Swiss supervisory law.

    September 11, 2019 WebPage Regulatory News
    News

    Ursula von der Leyen Presents Structure of Next European Commission

    President-elect Ursula von der Leyen has presented her team and the new structure of the next European Commission.

    September 10, 2019 WebPage Regulatory News
    News

    FED Proposes to Revise and Extend Reporting Form on Systemic Risk

    FED proposed to extend for three years, with revision, the Banking Organization Systemic Risk Report (FR Y-15; OMB No. 7100-0352).

    September 10, 2019 WebPage Regulatory News
    News

    EBA Issues Revised List of Validation Rules for Reporting

    EBA published the revised list of validation rules (version 2.9) in its implementing technical standards on supervisory reporting.

    September 10, 2019 WebPage Regulatory News
    News

    Bundesbank Publishes Supplementary Validation Rules for Reporting

    Bundesbank published the updated document containing supplementary validation rules in the context of the implementation of the reporting system at national level.

    September 10, 2019 WebPage Regulatory News
    News

    APRA Licenses Xinja Bank as Authorized Deposit-Taking Institution

    APRA granted Xinja Bank Limited a license to operate as an authorized deposit-taking institution without restrictions, under the Banking Act 1959.

    September 09, 2019 WebPage Regulatory News
    News

    FDIC Proposes Revisions to Regulations on Interest Rate Restrictions

    FDIC proposed revisions to its regulations covering interest rate restrictions that apply to less than well-capitalized insured depository institutions.

    September 09, 2019 WebPage Regulatory News
    News

    EBA Intends to Clarify End-Treatment of Grandfathered Instruments

    EBA announced its intention to clarify the prudential treatment applicable to own funds instruments at the end of the grandfathering period, which expires on December 31, 2021.

    September 09, 2019 WebPage Regulatory News
    News

    IMF Releases Reports on 2019 Article IV Consultation with Saudi Arabia

    IMF published its staff report and selected issues report in context of the 2019 Article IV consultation with Saudi Arabia.

    September 09, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3799