Emily McCormick’s Post

Basel does not allow banks to recognize any capital benefit arising from the reassignment of a financial instrument between trading book and banking book. ----------------------------------------------------------------------- Without exception, a capital benefit as a result of switching will not be allowed in any case or circumstance. This means that the bank must determine its total capital requirement (across the banking book and trading book) before and immediately after the switch. If this capital requirement is reduced as a result of this switch, the difference as measured at the time of the switch will be imposed on the bank as a disclosed Pillar 1 capital surcharge. This surcharge will be allowed to run off as the positions mature or expire, in a manner agreed with the supervisor. To maintain operational simplicity, it is not envisaged that this additional capital requirement would be recalculated on an ongoing basis, although the positions would continue to also be subject to the ongoing capital requirements of the book into which they have been switched. Source: https://lnkd.in/gwGmHS8Z

S&P Global Ratings' Quarterly Banking Update is loaded with insights and snazzy charts. The two parts that really spoke to me were: 🔶 Slides 9-10 show continuing #NIM compression. Banks should be looking to #CRT as a way to grow higher rate lending capacity without having to recognize unrealized losses in their existing book. 🔶 Slide 22 shows the increase in lending to nonbank financials (e.g., fund finance, warehouse, private credit, indirect consumer). Banks that have not converted these asset classes to securitization structures should look into it as an easy way to optimize capital. https://lnkd.in/eMna4r-D

🔍 Key Findings from the Financial Stability Board's Latest Report: The financial landscape has been significantly shaped by the sharp interest rate increases from 2022 to 2023. The recent report from the Financial Stability Board sheds light on the challenges and responses within the sector: - Valuation Losses & Funding Strains: Entities like Credit Suisse and several U.S. banks have experienced notable withdrawals, highlighting the need for robust liquidity management. - Technology's Double-Edged Sword: Social media's influence can accelerate financial movements, underscoring the importance of strategic communication and policy action to counteract potential bank runs. - Policy Recommendations: The report calls for immediate measures to address liquidity outflows, a closer look at the impact of uninsured deposits, and the enhancement of resolution plans for better information flow. - Deposit Dynamics: With digital platforms increasing deposit volatility, competitive pricing strategies are crucial for attracting and retaining deposits. - Navigating Rising Rates: The sensitivity of bank margins to interest rate changes is a concern, with entities employing various strategies to hedge risks and manage liquidity. 🚀 Implications for the Industry: The report advocates for continuous monitoring and adaptation to ensure market functionality, emphasizing the need for enhanced data to tackle rapid deposit changes and the strategic management of portfolio liquidity. Stay informed and prepared as we navigate these evolving financial waters together. #FinancialStability #InterestRates #BankingSector #RiskManagement #PolicyRecommendations #MarketInsights #EY #Allin For a detailed read, check out the full report here: https://lnkd.in/eBqTCE9h

In response to the CBN's new capital directives, we have refined our prior thought leadership document. We present the updated edition, ‘Navigating the Horizon: Charting the Course for Banks amid Plans for Recapitalisation – Version 2.0’. This revision encapsulates the latest developments and furnishes a thorough analysis designed to guide the Banking sector through the impending changes. Our report examines the CBN’s recapitalisation plan and provides a critical assessment of the current position of banks across various authorization type — international, national, and regional. We assessed the adequacy of the banks’ existing capital in relation to the new requirements and estimate the additional capital that each bank will need to raise to comply with these updated regulatory requirements. Additionally, we explore potential funding sources and strategic opportunities for banks to utilize the newly raised capital to generate attractive, risk-adjusted returns for their investors. Please find the attached updated publication for your perusal. We are eager to hear your thoughts and address any inquiries you might have.

In response to the CBN's new capital directives, we have refined our prior thought leadership document. We present the updated edition, ‘Navigating the Horizon: Charting the Course for Banks amid Plans for Recapitalisation – Version 2.0’.   This revision encapsulates the latest developments and furnishes a thorough analysis designed to guide the Banking sector through the impending changes.   Our report examines the CBN’s recapitalisation plan and provides a critical assessment of the current position of banks across various authorization type — international, national, and regional. We assessed the adequacy of the banks’ existing capital in relation to the new requirements and estimate the additional capital that each bank will need to raise to comply with these updated regulatory requirements.   Additionally, we explore potential funding sources and strategic opportunities for banks to utilize the newly raised capital to generate attractive, risk-adjusted returns for their investors.   Please find the attached updated publication for your perusal. We are eager to hear your thoughts and address any inquiries you might have. 

In response to the CBN's new capital directives, we have refined our prior thought leadership document. We present the updated edition, ‘Navigating the Horizon: Charting the Course for Banks amid Plans for Recapitalisation – Version 2.0’.   This revision encapsulates the latest developments and furnishes a thorough analysis designed to guide the Banking sector through the impending changes.   Our report examines the CBN’s recapitalisation plan and provides a critical assessment of the current position of banks across various authorization type — international, national, and regional. We assessed the adequacy of the banks’ existing capital in relation to the new requirements and estimate the additional capital that each bank will need to raise to comply with these updated regulatory requirements.   Additionally, we explore potential funding sources and strategic opportunities for banks to utilize the newly raised capital to generate attractive, risk-adjusted returns for their investors.   Please find the attached updated publication for your perusal. We are eager to hear your thoughts and address any inquiries you might have. 

How Will OSFI Guidelines Shape the Future of Canadian Banking? Question: What long-term impact will OSFI’s regulatory framework have on Canadian banks? Answer: OSFI’s regulatory framework will continue to have a long-term impact on the Canadian banking sector by promoting resilience, fostering innovation, and ensuring sustainable growth. As financial markets evolve, OSFI’s forward-thinking guidelines will help banks adapt to emerging risks while maintaining the highest standards of governance and capital adequacy. This approach positions Canadian banks for long-term success in a dynamic global market. What future developments from OSFI are you most excited about? 👉 Like if you’re optimistic about the future of Canadian banking! 👉 Share to inspire conversations on financial stability! 👉 Comment with your thoughts on how OSFI is shaping the future of finance! #MDMarketInsights #businessanalysis #capitalmarkets #financeindustry #financialservices #investmentanalysis #TradeFloor #dataanalytics #riskmanagement #tradingstrategies #marketresearch #investmentmanagement #assetmanagement #fintech #regulatorycompliance #portfoliomanagement #derivatives #marketanalysis #financialtechnology #quantitativeanalysis #investmentstrategy #businessintelligence #financialinnovation #economicanalysis #hedgefunds #privateequity #TradingSystems #datascience #riskanalysis #financialdata

Join us for an Exciting Webinar! We are excited to announce a joint webinar with KPMG US and Fitch Ratings, featuring our very own Isaac Wheeler. Don't miss out on this opportunity to gain insights on how U.S. banks can manage interest rate risk effectively. 📅 Date: June 4, 2024 ⏰ Time: 10 AM ET 🔗 Register now: https://hubs.la/Q02yp6SX0 Stay ahead of the curve and enhance your financial strategies with expert advice. We look forward to your participation! #Webinar #InterestRateRisk #Banking #FinancialStrategies #DerivativePath

ICYMI: the recording of the first webinar of our series on the revised Core Principles for effective banking supervision is now available: https://ow.ly/xcSR50StNPl The post-Global Financial Crisis (GFC) period has seen banks continue to build their resilience to financial risks, underpinned by stronger regulatory and supervisory frameworks, including the Basel III standards. The Core Principles for effective banking supervision have been strengthened to reflect key elements of many of the post-GFC reforms introduced by the Basel Committee on Banking Supervision. This panel focused on the experience with macroprudential regulation, supervision, and tools across jurisdictions. Speakers: Nathalie Aufauvre, Secretary General, L'Autorité de contrôle prudentiel et de résolution (ACPR), Banque de France William (Bill) Coen, Former Secretary General, Basel Committee on Banking Supervision; Board Member and Chair, Finance, Audit and Risk Committee, Toronto Centre Moderator: Babak Abbaszadeh, President and CEO, Toronto Centre #FinancialInclusion