Banking Risk & Regulation Podcast

The move from the London interbank offered rate compelled by regulators due to manipulation scandals towards alternative risk free interest benchmarks has been protracted and painful for those involved. 

Undoubtedly, much progress has been made with many sectors of the financial industry such as derivatives seemingly well prepared. But moving away from the financial sector towards corporates, preparations and transition arrangements have been slower and patchy, which has raised concern among central banks such as the US Federal Reserve Board and the Bank of England. 

This podcast explores the issues corporates have been having with transitioning to alternative interest rate benchmarks, how they’re coping with repapering contracts, the various legacy issues and the construction of the replacement risk free rates and their impact on pricing corporate loans.

Tackling these topics are Subadra Rajappa, head of US rates strategy at Société Générale and Sarah Boyce, Associate Director, Policy and Technical at the Association of Corporate Treasurers.

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Singapore is famous globally for its enthusiasm for technology and for pushing the envelope in this area. The Monetary Authority of Singapore very much follows in that tradition and is a pioneer in the use of supervisory technology (SupTech). 

It has a raft of projects designed to turn itself into the most advanced technology driven central bank in the world as it steadily digitises many of its functions. These range from fundamentally rethinking how data is harvested from financial firms and analysed for important insights through to detecting and disrupting money laundering activities. 

In this episode, Vincent Loy, Assistant Managing Director (Technology) at the Monetary Authority of Singapore discusses these various projects and their aims. 

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When governments across the world ordered population lockdowns to stop the spread of the Covid-19 pandemic, banks had to quickly switch away from working in offices towards remote working - which has never been done before on such a big scale. This impacted almost the entire business from payments through to vast trading floors and all their support functions. 

This episode explores the operational risk implications of this sudden and widespread shift in working patterns. 

In particular, the discussion covers the challenges of remote working in terms of banks maintaining their compliance functions, dealing with cyber risks, the challenges of dealing with paperwork and interacting with supervisors under these conditions. And finally, some thoughts are shared on how bank business and operating models may evolve post-Covid-19.

Discussing this topic is Kerry Peacock, Head of Operations EMEA and International Head of Operations for MUFG and Heather Adams, a Managing Director in Accenture’s Risk Practice.

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Following the 2007-9 global financial crisis - the Basel framework underwent significant revisions. It’s partly thanks to these changes that banks entered the Covid-19 pandemic induced crisis in a robust condition. 

Nonetheless, it remains unclear how deep and prolonged the current downturn will be and how many bad loans banks will notch up in the process. 

Therefore, could there be further revisions to the Basel framework? Particularly if the current crisis turns out to be particularly bad and badly damages the financial sector? Also, the world is far more divided than it was on the eve of the last financial crisis. How might this impact supervisory cooperation, deliberations within the Basel Committee and adherence to the Basel framework. And lastly, what impact might sustainable finance and climate change have on prudential frameworks? 

Addressing these topics is Bill Coen, former secretary general of the Basel Committee on Banking Supervision and chair of the IFRS Advisory Council. He also sits on the board of directors of the Toronto Centre, a global non-profit organisation that provides leadership training in financial supervision. Also, sharing his views is Paul Sharma, a Managing Director at Alvarez & Marsal and was a Deputy Head of the Prudential Regulation Authority and a former member of the Basel Committee

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Regulators, central banks and governments have taken unprecedented measures to support the economy during population lockdowns around the world to stamp out the spread of the Covid-19 pandemic. 

Prudential regulators have also acted quickly to ensure banks help support the economy. This has involved measures ranging from payment holidays on some loans, to delayed reporting through to pushing back some regulatory implementation deadlines and even temporary relaxations of some capital requirements. 

But are these measures temporary or do they signal a new trend where individual jurisdictions diverge from the bits of the Basel framework they don’t like? 

In this series, Michael McKee, a partner at global law firm DLA Piper and David Strachan, the head of EMEA Centre for Regulatory Strategy at global consultancy Deloitte, have shared some insights as to how these trends might play out. 

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The economic fall-out from the Covid-19 pandemic is the first major test for the IFRS-9 accounting standard, which only came into force in 2018. 

Global Risk Regulator chaired a discussion about how banks are interpreting the IFRS-9 standard, what approaches they’re taking to forward provisioning for bad loans and how they’re accounting for regulatory guidance around how they should provision for non-performing loans. 

The two experts who took part in the discussion were Jane Fuller who is a co-director at the Centre for the Study of Financial Innovation and a fellow at the CFA Institute UK and Damien Burke who is a partner at the credit risk consultancy, 4Most. 

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