FSB published a report that presents results of the fifth regional monitoring exercise of the non-bank financial intermediation (NBFI) sector of the 16 participating jurisdictions in Americas. FSB's Regional Consultative Group (RCG) for the Americas conducted this exercise to assess the size, structure, and recent trends of the NBFI sector in the region, recognizing that this information is crucial to identify potential risks to financial stability at the local jurisdiction level and to identify risks arising from potential cross-border linkages. The report concludes that total regional NBFI assets, reached over USD 127 trillion at the end of 2018, experiencing only minimal growth of 0.15% during 2018, which contrasts with an annualized growth of 5.6% between 2012 and 2017. The narrow measure, which is NBFI activities that may pose bank-like financial stability risks, reached USD 22.9 trillion at the end of 2018, up from USD 22.1 trillion at the end of 2017.
The onshore Monitoring Universe of Non-bank Financial Intermediaries (MUNFI), comprised of Other Financial Intermediaries (OFIs), insurance companies and pension funds’ assets declined to USD 72.9 trillion at the end of 2018, down from USD 73.2 trillion at the end of 2017. The offshore MUNFI total assets were USD 7.9 trillion at the end of 2018, down from USD 8.2 trillion at the end of 2017. The exercise found that financial assets belonging to entities that have been registered as prudentially consolidated into a banking group rose to USD 2.8 trillion at the end of 2018, with all belonging to the OFIs sector—a 5.2% annual growth. Overall, the aggregate data shows a slowdown in total OFI assets, largely driven by the largest jurisdiction (United States). However, for most jurisdictions at the individual level, the sector presents positive growth rates. With regard to financial intermediaries’ interconnectedness data and data collected to assess the potential risks to financial stability, including risk concentration (risk metrics) associated with narrow measure entities or activities, the submission rate is still very low and quality may be insufficient for some of the reporting jurisdictions. Therefore, these present important areas for improvement in the future.
In particular, the continuation of the annual exercise, and its improvements on the closing of data gaps and the risk-measurement, are considered important areas for further development. While the Working Group continues to take steps to align the RCG Americas monitoring exercise with the FSB Global Exercise, the results show that important data gaps are still largely present. In addition, there is some heterogeneity in the understanding of the FSB methodology, due to which some corrections have been discussed bilaterally with jurisdictions. Going forward, the data collection process may benefit from increased cooperation and interaction among international authorities with the aim of closing data gaps and increasing consistency. Risk metrics data collection is left as an area for future work. To continue improving the monitoring and assessment of NBFI risks within the region, the Working Group recommends:
- To continue enhancing and encouraging participation by jurisdictions in the region and improving data collection coverage and quality for future exercises
- To improve on risk metric data collection and analysis in the next report
Keywords: International, Americas, Banking, Insurance, Pensions, Securities, NBFI, Non-Bank Financial Intermediation, Data Gaps, RCG Americas, FSB
Previous ArticleFHFA Proposes New Capital Framework for Fannie Mae and Freddie Mac
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.