• EU banks’ stability failings highlight limits of global governance
    25 June 2019
    Post-crisis banking reforms have still not been fully implemented, a global financial stability watchdog has warned G20 leaders as they prepare to meet in Osaka this weekend.

    It's not the first time the Financial Stability Board has warned of these gaps. But they persist, notably in the EU, which has been warned for several years that its efforts to shore up lenders are “not materially compliant” with global norms.

    Global regulators hope that shame will encourage laggards to catch up, as European lenders urge to make a further special case in implementing the latest round of bank-capital rules.

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  • Citi's adoption of 700 legal entity identifiers lauded by Financial Stability Board
    24 June 2019
    Citigroup was singled out by a global watchdog for adopting 700 legal entity identifiers for its units at a time when few other banking giants are opening a window into their overall risk exposure.

    Only 6.2 percent of banks worldwide provide their ultimate parents when registering for the 20-digit barcodes intended to help firms identify the potential impact of risks rippling across their entire organization, the Financial Stability Board said in a recent report.

    Citi, the third largest US bank by assets, “has a process to keep this data up-to-date for the benefit of their clients, counterparties and other stakeholders,” the report said. “This group also feeds LEI hierarchy information on other entities."

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  • Asset managers should be candidates for stress tests, top Bank of Italy official says
    21 June 2019
    Regulators world-wide should consider subjecting asset managers to stress tests, a top Bank of Italy official said, adding to the chorus of bank authorities flagging nonbank risks.

    Potential threats posed by asset managers “are too new, too complex and too little understood for any complacency,” the Italian central bank’s deputy governor, Luigi Signorini, said in a speech* this week. “The work on stress-testing tools for nonbanks is still in its infancy.”

    The asset-management sector has resisted previous calls for stress tests.

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  • EU banks' hopes of break from global capital rules dashed by commission
    20 June 2019
    New rules agreed in December 2017 by global standard-setters in Basel are the latest round in a wave of post-crisis regulation intended to ensure banks can weather a crisis without being bailed out by taxpayers.

    The new framework requires EU banks to hold an additional 24.5 billion euros ($27.5 billion) in capital, the bloc’s banking authority said in October 2018.

    Many banks also argue it would put European small-business lending at a disadvantage.

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  • UK financial firms' future EU access will reflect recent deals, Barnier adviser says
    20 June 2019
    The remarks from European Commission official Stefaan de Rynck suggest the EU will continue to take a tough line over any attempt by the UK to undercut the bloc’s financial standards, in spite of British government pleas to offer guarantees of continuing access.

    A draft withdrawal agreement suggests the EU plans to recognize UK rules, in effect granting limited access under the process known as equivalence. But EU officials have noted that, in practice, that could be withdrawn at short notice, in the event of market turbulence or if London won’t play ball.

    UK officials have asked for “enhanced equivalence,” more robust than that which the EU today applies to the likes of Hong Kong or Guernsey. Officials at the UK finance ministry believe that existing arrangements for non-EU territories have grown haphazardly, and are not up to the task of dealing with the level of financial flows that pour to the continent from the City of London.

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