European banks work on first CLOs since crisis | Regulatory inconsistency threatens bank funding, exec says | China targets shadow banking for more transparency
January 29, 2013
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European banks work on first CLOs since crisis
Responding to investor demand for high-yielding assets, European bankers are working to offer collateralized loan obligations, which comprise corporate loans mainly for leveraged buyouts. Financial Times (tiered subscription model) (1/27)
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Regulatory inconsistency threatens bank funding, exec says
Prudential CEO Tidjane Thiam is concerned that banks will face challenges raising funds from insurers because of conflicting Basel III rules for banks and Solvency II rules for insurers. "The inconsistencies between Solvency II and Basel III are a major issue," Thiam said at the World Economic Forum in Davos, Switzerland. "Who's going to provide capital to the banks?" Bloomberg (1/23)
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China targets shadow banking for more transparency
Data on financing flows in China's shadow banking sector that the central bank began tracking in 2011 will now be published, a bank official says. The effort appears aimed at improving transparency in regional and national social financing and tightening regulation in this non-bank activity. Off-balance-sheet activity skyrocketed 600% last year in China, according to industry data. Western credit rating agencies view the increase as systemic risk to financial stability. Reuters (1/28), Financial Times (tiered subscription model) (1/27)
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Regulatory and Accounting Issues
Basel Committee prepares to reveal capital-modeling results
The Basel Committee on Banking Supervision's study of risk-weighted assets will reveal large differences in how banks compute capital requirements, sources say. The results could lead to stricter rules to unify such assets. (subscription required) (1/25)
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Net stable funding ratio might be dropped from Basel III
The net stable funding ratio is in limbo after the Basel Committee on Banking Supervision compromised on the liquidity-coverage ratio, allowing more assets to be deemed easy to sell. Financial Times (tiered subscription model)/dealReporter (1/22)
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Shadow banking might be next regulatory target
Mark Carney, head of the Financial Stability Board and incoming governor of the Bank of England, emphasized at the World Economic Forum that regulation of shadow banking is still on the agenda. He acknowledged that while it might have become a "forgotten bit of reform," it will still be addressed. "Shadow banking, over-the-counter derivatives; these are the areas that absolutely amplified the last crisis and will do so again unless we complete our agenda," Carney said. An FSB proposal is expected ahead of a Group of 20 meeting this fall in Russia. Reuters (1/26)
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EU might delay deadline for debt-ratio disclosure
The EU is considering giving banks another year to disclose whether they meet a leverage ratio, which is part of Basel III rules, sources say. Nations might aim to postpone the deadline to Jan. 1, 2016. Bloomberg (1/28)
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Derivatives margin standards remain up in the air
With large issues unresolved on collateral requirements for derivatives, a joint group of the International Organization of Securities Commissions and the Basel Committee on Banking Supervision might be going back to the drawing board. A fresh proposal reportedly would include a phase-in period to ease a possible collateral crunch as a response to concerns that an immediate collateral increase would strangle the fragile economic recovery. (subscription required) (1/25)
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FSB says banks have trouble determining excessive risk
Global regulations that call for reduced bonuses as a penalty for excessive risk taking are proving hard to implement, according to the Financial Stability Board. In addition to trouble defining "poor behavior" that should be penalized, opinions differ on whether such penalties are legal. Bloomberg (1/24)
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Regulators could govern techniques for asset-risk calculation
Stefan Ingves, chairman of the Basel Committee on Banking Supervision, says there are large differences in banks' valuation of their assets' riskiness. Regulators could impose "limitations in the modeling choices for banks" to unify and simplify rules, Ingves says. Bloomberg (1/24)
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ESMA: No retroactive implementation of swaps rules
The European Securities and Markets Authority says no existing swaps trades will be affected by margin requirements planned by the regulator. ESMA decided that "front-margined" swaps would cause too much damage to firms that would need to guess on compliance. (subscription required) (1/23)
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Stepping up to the Liquidity Challenge: The Changing Role of CPM
A White Paper outlining the findings of the 2012 IACPM/KPMG benchmarking survey on funding liquidity management and credit portfolio management has been published. Learn more.
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Save the Date for IACPM?s Spring Conference -- May 22-23 in London
IACPM Annual Spring Conference will be held May 22 to 23, 2013, at the InterContinental London Park Lane in London, UK. The preconference day, May 21, will feature our Educational Seminar, the only one of its kind specifically geared toward Credit Portfolio Management professionals. More information will be available soon on our website,
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In youth we learn; in age we understand."
-- Marie von Ebner-Eschenbach,
Austrian writer
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