CRD4 consultation responses now up

April 21, 2010

The CRD4 consultation responses are now  on the web.

BCBS164/165 Consultation – Responses are up

April 19, 2010

I just checked on the BCBS website – they now have published the responses to the BCBS164/BCBS165 consultation. 244 responses, 106.3MB on disk to be precise (…and no, they dont provide a zip file, you have to download every single one of them…).

Cursory review showed that everyone was there – trade associations, banks, industry, academics. Even a gentleman from Microsoft replied

Not sure when (…and if…) I will be able to sift through, but I will keep you posted.

Update: more responses coming in – my count is now at 250 documents, 109.1 MB on disk. CRD4 consultation documents still not up yet

Bank Resolution

April 17, 2010
I have just finished an analysis on the current status of bank resolution. Key findings:
• The most senior political leaders have requested that the cross-border resolution regime for failing banks is to be reviewed as to not repeat the experience in the recent crisis, and key regulatory and legislative bodies have recently published and consulted on specific proposals.
• There is an agreement amongst regulators, industry, and sovereigns that there is a strong need for an international harmonisation of a better co- operation in the resolution process, and that new tools are needed.
• There is also a broad agreement about some of the tools needed, eg bridge banks, asset and liability transfers, and bad banks. Others – eg living wills, ex-ante burden sharing agreements, and hard intervention triggers – are more controversial.
• Whilst the regulators seem to favor an integrated resolution regime where international groups are dealt-with as a whole, sovereigns and industry seem to push back in this idea, and to favor a more local approach where every jurisdiction deals with its own legal entities, as is the case today.
• Assuming the political will to address the cross-border issue remains it is therefore likely that there will be a strong push for groups to reorgan- ise along juridictional lines, with all local entities being self-sufficient in terms of solvency, liquidity, and also risk management and governance.
• The strategic implications are that in this scenario cross-border groups will have to reconsider (i) whether their engagement in certain jurisdic- tions are core or marginal, and (ii) how to address the self-suffiency issue, eg through decreased lending or through competition for deposits.
• Local banks, which will not be strongly impacted by those proposals directly (unless the proponents of a level playing field get their way) will nevertheless be impacted by the changing behaviour of their cross border competitors in their markets.

Basel III – Today’s the (T-2) day!

April 14, 2010

On 16 April 2010 is the deadline for submission for comments for the new Basel III regulations BCBS 164, and also the liquidity regulations BCBS 165, and also for CRD4. Cant wait to see what the people have to say…

As you probably now, a number of interesting features in this package:

  • Redefinition of capital
    • Core is king
    • No more Lower Tier 2 and Tier 3
    • No more deferred tax assets
    • No more minority interest (in core)
  • Risk coverage of the capital framework
    • Securitisations and Re-securitisations
    • Counterparty credit
    • Central counterparties
    • Riskweights for financial institutions
  • Introduction of a leverage ratio
    • Off-balance sheet items
    • Netting
  • Liquidity requirements
    • Short term liquidity ratio
    • Structural liquidity ratio
    • Common set of measures

Keep you posted!!!