Global banking regulator limits large bank's exposure to counter systemic risk
The Basel Committee on Banking Supervision has revised its standard for measuring and controlling 'large' exposures, which aim to limit the losses felt by a bank if an individual counterparty, or group of counterparties, suddenly fails.
The revision, which takes effect January 2019, helps ensure the bank survives and reduces system-wide contagion risk.
The standard, published Tuesday, sets a general limit of 25 per cent of a bank's Tier 1 capital, which applies to a bank's exposure to a single counterparty or group of interdependent firms that could simultaneously fail. A tighter limit of 15 per cent will apply to exposures between banks designated as global systemically important banks (GSIBs).
Citing lessons learned from the financial crisis, the Basel Committee says "banks did not always consistently measure, aggregate and control exposures to single counterparties or to groups of connected counterparties across their books and operations."
Finance officials express confidence about global economy
Top finance officials feel the global economy has made a turn towards stronger growth, following a policy-setting panel of the 188-nation International Monetary Fund over the weekend.
The finance ministers, who sit on the panel, alongside IMF Managing Director Christine Lagarde, said that the new phase will enable nations to make headway with unemployment - a major problem following the worst recession since the Great Depression of the 1930s.
Lagarde referred to 2008 through 2010 as an "economic disaster," adding "we are moving into a strengthening phase," during a news conference. The IMF predicted
global growth would strengthen to 3.6 per cent in 2014 and 3.9 per cent in 2015 in its latest economic forecast.
The recovery in the United States is helping offset the slow-down in major emerging markets such as China, despite some emerging economies plowing ahead far surpassing developed nations.
Officials also acknowledged a number of threats to their predictions including concern over the Fed mishandling efforts to dissipate bond buying used to lower long-term interest rates, and the risk to market confidence over the political stand-off with Russia's annexation of Crimea.
UK regulatory body outraged over advisor disclosure failings
The UK’s Financial Conduct Authority (FCA) has blasted the financial service industry for what it calls widespread failings in the way advisory firms are disclosing information about costs.
Although an official ban on commissions paid to financial advisers came into force at the end of 2012, after a far-reaching survey the FCA has found that “too many” wealth management firms weren’t being clear enough about fees, reported The Guardian.
Of 113 firms surveyed, 73% failed to provide the required information on the cost of advice. Two unnamed companies will also potentially be referred to the financial crime division and face major punishment.
This comes after Santander was fined £12.4m by the FCA last month for serious failings in the way that it sold thousands of customers’ investment products.
One of the major backlashes of the change from conflicted remuneration to fee for service in the UK has been the exit, either partially or fully, of many banks from the market. This has created what has been dubbed at an “advice gap” for mainstream consumers, the report said.
International Wrap: News in Brief
International Wrap: News in Brief