Regulatory updates

EBA launches a central database for AML/CFT

A central database to strengthen the anti-money laundering and counter-terrorist financing (AML/CFT) framework was launched by the European Banking Authority (EBA) on 31 January 2022. Called EuReCA, the new database will be essential to coordinate efforts by national competent authorities...

Sustainability and climate risk: what can banks expect?

The growing importance of sustainability issues and the role of credit institutions in financing transformation places climate and environmental risks at the core of regulatory and supervisory scrutiny today. For some years now, the Network for Greening the Financial System...

European Commission adopts review of Solvency II

On 22 September, the European Commission adopted a review of Solvency II following the consultation launched by EIOPA in 2020, whose final guidance was published in December 2020. As the Commission notes, the 2020 review of the directive met several...

The FSOC weighs in on climate risk

The Financial Stability Oversight Council (FSOC) was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act as a result of the 2007-2008 US financial crisis. A first of its kind, the 15-member council is tasked primarily with identifying...

Regulated firms: A matter of life and death

As the PRA transitions from a “rule-taker” to a “rule-maker”, small and medium-sized banks operating in the UK can expect to benefit from a more “streamlined” regulatory regime that could be easier to interpret, implement and maintain; but at the...

NPL secondary market may solve the increase in credit risk

The identification and management of non-performing loans or NPLs as early as possible by banks are among supervisors’ current high-level priorities. Indeed, when prudential, monetary, and fiscal crisis mitigation mechanisms are tapered, the weakening of borrowers’ creditworthiness could materialise, along...

First ACPR climate stress test pilot exercise results

Climate change introduces considerable economic challenges. On the one hand, financial institutions must contribute to the transition to a low-carbon and balanced economy to effectively combat global warming. On the other hand, the financial sector is exposed to climate-related and...

2021: The year of Brexit for banks

Brexit, or the UK's departure from the European Union, became a reality on 1 January 2021. In terms of the regulatory impact for the financial sector, and the banking sector in particular, the UK being a third country, UK banks...

Managing an increase in bank credit risk

While 2020 went relatively smoothly for the banking sector, uncertainties remain on the potential effects of Covid-19 on the real economy. Any negative impact could lead to heavy losses for the sector, especially when support measures are gradually phased out....

The impact of credit risk on 2021 stress tests

On 13 November 2020, the EBA published the final methodological note for the 2021 EU-wide stress-testing exercise. The aim of the stress tests is to assess the resilience of financial institutions to adverse economic and financial developments, in particular in...

Resolvability is now the SRB’s key focus

With the economic repercussions of the Covid-19 crisis yet to be fully assessed, a robust resolution framework is essential to ensure the stability of the banking system. While the banks were given leave to postpone the reporting of some less...

Injecting noise into the discussion

Michael Lennard, Chief of International Tax Cooperation and Trade in the Financing for Sustainable Development Office (FfDO) of the United Nations, examines the role of tax toolkits for developing countries from a personal perspective. The Platform for Collaboration on Tax...

Mazars’ banking regulatory radar: 2020-2025

In this edition of our Banking Regulatory Radar, we cover the key regulatory developments in the banking sector for 2020-2025. The latest version of the Mazars' Regulatory Radar has been updated with all the Level 2 legislation published in 2020,...

Building a more inclusive tax model

Michael Lennard, Chief of International Tax Cooperation and Trade in the Financing for Sustainable Development Office (FSDO) of the United Nations, discusses, from a personal perspective, a range of key issues on the UN’s approach to transfer pricing. In 2019...

UK supervision of international banks post Brexit

Around one-fifth of global banking activity is undertaken in the UK. Almost half of the UK's banking assets are held by international banks. The PRA currently supervises approximately 250 international banks, both branches and subsidiaries, which are part of around...

IBOR transition and FRTB cross dependencies highlighted

The revised market risk framework – also known as the Fundamental Review of the Trading Book (‘FRTB’) – not only impacts an institution’s regulatory capital charge calculation for market risk, but also affects operational, governance and business strategies. FRTB brings...

IBOR Transition: modelling of SOFR risk factors

One of the major challenges of IBOR transition is the availability of historical data on alternative risk-free rates (RFRs) required to implement interest rate model changes or re-calibration. With the Secured Overnight Financing Rate (SOFR) only published since April 2018,...

Is SOFR a strong enough USD LIBOR alternative?

With COVID-19, being declared a pandemic on March 11, 2020, financial institutions have had to shift most of their resources to mitigate the risks that have arisen. This has adversely affected important activities, one of which is market participants’ efforts...

Covid-19 US policy changes: what banks need to know

Impacts from the COVID-19 pandemic have reverberated across every part of the global economy. Small businesses are struggling to pay their employees, banks are grappling with collapsing local economies, and many borrowers across the nation cannot meet their monthly mortgage...

Are more stringent gender diversity measures required?

Gender equality, while not systematically embedded in national laws, is clearly set in European law. The Capital Requirements Regulation (CRR) requires financial institutions to adopt a policy promoting diversity within their management bodies and, for the most significant ones, to...

Progress on transitioning to SONIA

The Risk-Free Rates Working Group (RFRWG) published an update on the impact of COVID-19 on the timeline for firm’s plans to transition away from GBP LIBOR on the 29th April. While the central assumption of LIBOR’s publication being ceased after...

ARRC acts for a smooth IBOR transition

The Alternative Reference Rates Committee (ARRC) continues to support market participants in their efforts to transition from USD London Interbank Offered Rate (LIBOR) towards the Securities Overnight Reference Rate (SOFR). Following the Financial Conduct Authority’s (FCA) March 2020 statement that...

COVID-19: Phase 1 of SFTR delayed

The European Securities and Markets Authority (ESMA) has issued a public statement to announce the delay of the industry’s compliance with phase one of the Securities Financing Transactions Regulation (SFTR). This is in response to ESMA’s awareness of the financial...

IBOR transition: Fallback language developments

The expected 2021 disappearance of LIBOR requires robust fallback language for cash products and derivatives alike. Industry associations have taken initiatives to reform the historic fallback language of securities, with ISDA proactively leading the way on derivatives and national working...

Is Asia on its way to IBOR transition?

With Libor’s cessation date at the end of 2021 looming, global regulators are hastening their IBOR fallback strategies. Yet while market momentum has increased for multiple published RFR indices, among them the GBP SONIA, the EUR €STR, and the USD...

Is SOFR the ultimate replacement for USD LIBOR?

Financial market participants – at least the largest ones – are actively preparing for the expected discontinuation of the London Inter-Bank Offered Rate (LIBOR) after 2021. Transitioning towards a LIBOR-free world is a challenge that requires the involvement and coordination...

IBOR Reform – key takeaways

With significant IBOR reform on the horizon, Mazars brought together industry experts, practitioners and regulators to discuss the challenges and opportunities they face. Speakers included the Bank of England Market Division’s Alastair Hughes, EFRAG’s Didier Andries and Mazars’ IBOR lead,...

IBOR reform moves forward, but challenges remain

A raft of recent consultations on Ibor reform indicates that we may finally be making some progress. We have seen the International Swaps and Derivatives Association (ISDA) issue another round of consultations for Inter-Bank Offered Rates (IBORs) trying to solve...

Data Protection: constraint or opportunity?

Today’s world is witnessing an explosion of data, including personal data: your civil status, what you do and don’t like, your holidays, your favourite leisure activities. The exploitation of all this data is multiplying through the use of innovative IT...

Brexit Watch #3: countdown is on

Following a majority vote against Theresa May’s Brexit deal on 15 January 2019, and with only 3 weeks until the proposed deadline of 29 March, financial services authorities in the UK and EU have been urgently preparing for an increasingly...

LIBOR reform: Setting the cat among the pigeons

Could the transition period towards the new alternative Risk-Free Rates (RFRs) be more complex than initially envisaged? The speech given by Edwin Schooling Latter, Director of Markets and Wholesale Policy at the Financial Conduct Authority (FCA), on the 28 January...

A decade on from Lehman Brothers

Which is the more significant - the tenth anniversary of the collapse of Lehman Brothers, or the tenth anniversary of the opening of the App Store? For the global financial community world, 15 September 2008 is a key date, weighted...

Cryptoassets: Accounting for an emerging asset class

The sweeping growth and prolific collection of technologies that make up cryptoassets today have made it incredibly challenging for regulators worldwide to standardize and issue authoritative guidance. Professional accounting standard-setting bodies, like the Financial Accounting Standards Board (FASB) and the...

Crypto-Funds: Regulation? Yes please!

While 2018 has witnessed some turmoil in the crypto-currency markets, interest in this new asset class - and also in investment funds which allow easy access to crypto-currencies - remains high. On 26 June 2018 CBOE Global Markets filed an...

BEAT Could Eat Into Income Tax Savings

Tax legislation generally includes promises to simplify the process of computing taxes. But in the process of transforming legislation into law, those good intentions often are overshadowed by new complexities. The Tax Cuts and Jobs Act of 2017 is no...

An IBOR revolution is on its way

The whole financial system relies on reference interest rates, more precisely on InterBank Offered Rates (IBORs) whose integrity and reliability have raised some concerns since the 2008 financial crisis and the LIBOR manipulation scandal. These IBORs are used to determine...

Podcast: Basel III Implementation – May 2018

In this podcast, Greg Simpson discusses the Prudential Regulatory changes proposed by Basel 3. Together with Phuong Gomard and Bowen Lu, regulatory specialists in Mazars’ Banking Consulting practice, they highlight the impact on the standardised approach to credit risk and...

GDPR and PSD2: what are the issues for FinTechs?

The FinTech model is reaching a new level of maturity. The first stage saw them disrupt the traditional banking business models using technology to impact the customer experience and relationship. The second wave offers FinTechs the opportunity to expand their...

Let’s make the regulatory capital rule simple

On September 27, 2017, the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (the "Banking Agencies") issued a proposed joint rule to simplify several requirements in the Banking Agencies’ regulatory capital...

The clock is ticking

In August 2017, S&P Global Market Intelligence published an analysis of where banks will set up their European hubs. Germany, namely Frankfurt and Berlin, came first with 13 financial institutions. Dublin came a close second attracting 12 banks, insurers or...

Podcast: Banking Regulatory Outlook

Along with Mazars banking regulatory advisory specialists Pauline Pelissier and Audrey Cauchet, Greg Simpson provides an overview of the banking regulatory outlook in the UK and Europe over the next 12 to 18 months. They also discuss IFRS9 in the...

Revision of the CRR / CRD IV package

On Wednesday 23 November, the European Commission presented its long-awaited revision of the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD IV), including the regulatory changes that mark the finalisation of the Basel III agreements. This revision follows five years of...

Brexit – playing for a draw?

On 20th October, I was delighted to chair an event in collaboration with OMFIF on the implications of Brexit for the financial services industry. We had an excellent panel of experts representing banks and asset managers as well as the...

Sustainable banks must manage their risks

At a time when the European Banking Authority’s stress tests have provided valuable insights into the solvency levels of European banks, these banks are continuing their efforts to formalise the conceptual and operational framework of risk management. While changes in...

Brexit and China: a mountain to climb?

Over a beer with David Cameron in October last year, Chinese leader Xi Jinping expressed a very clear opinion on which way he wanted Britain’s vote on Brexit. He wanted a “prosperous Europe and a united EU” with the UK...

BREXIT! – Not GREXIT?

Greece’s financial systems have been tightly monitored by the institutions – once called the Troika – of ECB, IMF and EU Commission in recent years. The systemically relevant Greek banks are under close control of the Joint Supervisory Team (JST),...

Brexit: opportunities for smaller overseas banks

The impact of Brexit on foreign banks, and especially the larger ones, has already been the subject of extensive media coverage and speculation. Discussions on the advantages and disadvantages of Brexit for larger overseas banks have been wide-ranging. Will the...

Ifs and Buts

The Brexit debate last week was overshadowed by Theresa May becoming the UK’s new Prime Minister and some of her more radical appointments to her Cabinet. On top came the horrific terror attack in Nice and the failed coup d’état...

Italian banking – a Brexit-fueled calamity

Brexit continues to dominate the political and financial world across Europe and beyond as people wrestle with its impact. But there’s another massive storm on the horizon for the EU that has been brewing for some time and Brexit may...

Feeling the effects of Brexit

It’s two weeks since the Brexit Referendum and it’s fair to say that its consequences are already being felt. At a broad economic level, sterling has hit a 31 year low and economists have revised down the economic outlook for...

Capital Markets Union: The Impact on Banks

Business funding diversification, helping to increase options for savers and making the economy more resilient are some of the main objectives set out in the European Commission’s Action Plan on Building a Capital Markets Union (CMU) published on 30 September...

ICAAP / ILAAP: what will change in 2016?

Banks prepare for the reinforcement of prudential supervision via the Single Supervisory Mechanism (SSM). After successive waves of new regulatory requirements in recent years, the outlook for the calculation of risks and Pillar 1 capital requirements is becoming clearer. At...

PSD2, FinTechs and Brexit: The Wider Implications

UK Banks are already gearing up for the introduction of the revised Payment Services Directive (PSD2) that comes into force in January 2018. By providing clear guidelines and regulations, the Directive essentially removes the barriers to new players and opens...

Simplicity is a complex issue

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A good bank requires good supervision

To be a ‘good bank’, a bank must be efficient, innovative and trustworthy. Given its central role at the heart of the economy and financial system and the risks associated with fulfilling its role, banks have to operate within an...