FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms. FSB has published the workshop agenda and the related presentation documents, one of which is the presentation given by Claudia Buch on the preliminary findings of the too-big-to-fail evaluation. Claudia M. Buch is the Vice President of Deutsche Bundesbank and Chair of the FSB evaluation working group on the effects of too-big-to-fail reforms. Ms. Buch highlighted that the indicators of systemic risk and moral hazard have moved in the right direction post the reforms but there are still gaps that need to be addressed.
Ms. Buch highlighted that capital ratios of systemically important banks increased by more than those of other banks but their profitability has fallen relative to other banks, reflecting higher capital, lower risk, and higher funding costs. Moreover, the complexity of global banks remains high. Overall, the implementation of resolution reforms has progressed and stakeholders consider resolution to be more credible. However, there are still gaps to be addressed. Obstacles to resolution can be reduced further, as state support for failing banks has continued and resolution of central counterparties is work in progress. In addition, information transparency and monitoring can be enhanced. All stakeholders would benefit from closing information gaps. Risks from shift to non-bank financials also need to be monitored.
As part of its program to examine the effects of post-crisis financial reforms agreed by G20, FSB is carrying out an evaluation of too-big-to-fail reforms for banks. The evaluation is being chaired by Ms. Buch and is assessing whether the implemented reforms are reducing the systemic and moral hazard risks associated with systemically important banks. It is also examining the broader effects of the reforms to address too-big-to-fail for systemically important banks on the overall functioning of the financial system. In June 2020, FSB consulted on a report setting out the preliminary results of the evaluation. The deadline for providing feedback on the consultation report is September 30, 2020. This recent virtual workshop included presentations and discussions by a range of academic, regulatory, non-governmental organization and industry stakeholders on the analysis and findings of the evaluation. The workshop and the written responses to the consultation will inform the final evaluation report, which will be published in early 2021.
Keywords: International, Banking, To Big to Fail, Systemic Risk, Resolution Framework, D-SIBs, G-SIBs, FSB
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.
The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.
The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.
Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.
EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.
The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.