EBI - European Banking Institute’s Post

A heartfelt thanks to the Bangko Sentral ng Pilipinas for hosting The SEACEN Centre-Federal Reserve Course on Crisis Management, Recovery and Resolution Planning, at the Philippine International Convention Centre (PICC), 6-9 May 2024. Thanks also to Lyn I. Javier, Assistant Governor, Policy and Specialized Supervision, BSP, and Mangal Goswami, Executive Director, the SEACEN Centre for their kind opening remarks. A very special thanks to Katie Kiresich from the Board of Governors of the Federal Reserve System, Curt Hribal from the FRB of Chicago, Aiza Shafiqa binti Ainan Marzuki from Bank Negara Malaysia and Elton Lam from the Resolution Office of the HKMA as well as Srichander Ramaswamy, director, financial stability, supervision and payments, the SEACEN Centre for their kind intervention. Thanks also to the 29 participants for their kind questions and engagement during the course. And most importantly, thanks to Haslina Muda for her amazing planning and organization. Some of my key takeaways from the course are: 1. Based on the experiences of the 2023 bank failures of Silicon Valley Banks, Signature Bank of New York and First Republic Banks, etc, it is evident that banks not designated as G-SIBs can be systemically significant or critical upon failure. Consequently, we must rethink the recovery and resolution framework and how best to better plan for non-SIBs that might be systemically significant or critical in the event of failure.  2. These failures also raised questions about business models that rely heavily on uninsured deposits and the need for authorities to consider different outcomes for uninsured depositors at smaller or less complex banks. 3. With respect to Credit Suisse, the conservation on the treatment of the AT1 Bonds is going to continue for a long time.   4. Bail-in as a resolution option is likely to be deeply challenging in emerging markets where banks are largely funded by deposits and equity, and bond and capital markets are not as well developed as in advanced economies. 5. Authorities are grappling with the fact that the speed of bank runs will likely increase in the future based on the rapid innovation and digitalization, including the presence of faster payments and use of social media. The question is, what can be done?  6. A critical concern relating to crisis management, recovery and resolution planning is the general lack of maturity and experience. To address these concerns table tap exercises and crisis simulation exercises are vital to building institutional knowledge.

l 'm delighted to share with you my last chapter published in the Handbook of Banking and Finance in the MENA Region. I would like to thank the editors professor Khaled Hussainey and Dr Tamanna Dalwai for their helpful comments. Abstract: The purpose of this chapter is to examine the role of bank liquidity in ensuring financial stability. Based on the Basel III liquidity framework guidelines, the authors calculated the NSFR for 124 banks operating in the Middle East and North Africa (MENA) region during the period 2014–2021. #MENA #islamic #banking #finance #NSFR

"During two visits in 2023-24, the IMF mission implemented a set of recommendations made by a previous technical assistance mission in May 2022 which were aimed at improving the solvency stress model of the Superintendency of Banks, Panama (SBP). The mission also provided training on the design of a cash flow-based liquidity stress tool and another system-level liquidity stress testing methodology. During a follow-up mission, work was carried out on market risk and corporate risk, and the methodology for the liquidity stress test that was used during the 2023 Financial Sector Assessment Program (FSAP) with Panama was anchored at the SBP." #banking #bankingsystem #bankingandfinance #financialsystem #riskmanagement #corporaterisk #risk #superintendencyofbanks #sbp #panama #imf

How the #EBA and #ESM cooperate to strengthen #crisis prevention and navigate an incomplete banking union? The #EBA will continue to fine-tune the #SingleRulebook with more than 140 additional mandates planned for a full, timely, and faithful implementation of the #BaselIIIframework in the EU. Regulation of the banking sector serves the critical purpose of minimising the impact of bank failures, especially during systemic crises. Since achieving a zero-failure system is elusive, the focus remains on minimising stress and ensuring resilience. Therefore, it is important to uphold and strengthen the EBA’s preventive role. Through regular ad hoc risk assessments, transparency exercises, and #EUwideStressTest2025, the EBA enhances market discipline and contributes to crisis prevention. The reformed #ESM Treaty, which is pending full ratification, provides a legal basis for a set of new tasks and a new instrument, the backstop for the #SingleResolutionFund. This instrument would support the orderly resolution of large banks, should the Single Resolution Fund be depleted. Such a second line of defence greatly reduces uncertainty on the outcome of the resolution of failing banks and minimises further the impact of such failures on financial stability and fiscal discipline. #EBA #ESM #crisis #SingleRulebook #BaselIIIframework #EUwideStressTest2025 #SingleResolutionFund

In the third edition of the Resolvability Assessment Report, published on 9th July 24, the Single Resolution Board (SRB) concludes that: - All banks which had to comply with their final (MREL) targets as of 1 January 2024 managed to meet their requirements (both external and internal). - For banks with longer transition periods the remaining external MREL shortfall equals EUR 6 bln, compared to MREL instruments global amount of 2,555 bn EUR. 📈 Compared to end of 2022, the SRB has observed significant progress from banks in three prioritised capabilities: ✅ Estimation of liquidity needs both under slow and fast-moving outflow scenarios in the resolution ✅ Extended identification of assets that can serve as collaterals for obtaining funding during and after resolution. Going beyond Central Bank eligible collaterals. ✅ Enhanced capabilities to generate the datasets for resolution planning, valuation, applying bail-in and preparation for a sale-of-business and the restructuring post bail-in. As a result, the SRB is shifting its focus to the operational readiness of banks for crisis management. 💡 The important message coming from the Resolvability Assessment Report is that as of next year, the SRM will open a new chapter of its resolvability assessment based on a revised methodology (Heatmap) and the systematic testing of banks’ capabilities. This new approach to assessing resolvability will be more risk-based. It is aimed to capture emerging risks and reflect lessons learnt from past crises in the resolvability assessment framework. Testing will rely on standard templates for all banks to enhance transparency, but also multi-annual testing programme specifically defined for each bank. The criteria for resolvability assessment and the guidance on testing will undergo public consultation.

it's all about contracts.

“Strengthening cooperation between the EBA and ESM will fortify the European safety net, and ultimately help cement trust and accelerate progress towards a fully-fledged banking union” European Banking Authority (EBA) Chairperson José Manuel Campa and ESM Managing Director Pierre Gramegna come together in our new #ESMblog to discuss how to reinforce their respective institutions’ functions to ensure crisis prevention and preparedness and thus bridge the gap of an incomplete banking union. ✔️ The EBA as regulator and transparency data hub: through regular ad hoc risk assessments, transparency exercises, and EU-wide stress tests, the EBA enhances market discipline and contributes to crisis prevention. ✔️ The ESM as insurance, and fire-fighter: the permanent crisis resolution mechanism for the euro area, the ESM closely monitors economic and financial conditions across its member states. By identifying tail risks and vulnerabilities, it remains ready to intervene when needed. Collaboration between institutions can help sharpen the ability to detect risks, respond promptly to crises, and prevent crises from unfolding. The EBA and the ESM are committed to deepening their collaboration, strengthening their analytical capabilities, maximising the effectiveness of their tools, and investing in human capital. Read the blog: https://ow.ly/MJ1a50SCYqN

ASSET QUALITY AND BANKS PERFORMANCE: A PANEL DATA ANALYSIS OF COMMERCIAL BANKS I am glad to present a new paper published in the journal Risk Governance and Control: Financial Markets & Institutions authored by Dr. Hanan Barakat with co-authors. This study investigates the relationship between #asset quality management and #bank #profitability, focusing on key indicators such as return on equity (#ROE) and return on assets (#ROA). Additionally, the paper examines specific metrics related to #assetquality. You are invited to read and download this paper below or following the link: https://lnkd.in/ei94mZzs Hala El Sedafy, Bassel Elbages, Karim Elfaham, Mahmoud Otaify, Rola Kabbani, Mansour Abdelrhim, DR. Zeinab Kassem, Dr. Abdelrahman Selmy, Dr. Ahmed Amin Hashim, Bahaaeldin Samir Allam, Mohamed Masry, Hebatalla E. Elbialy, hossam Sharawi, Dr. Ahmed Mohamed Habib #qualitymanagement #assetqualitymanagement #bankprofitability #banking #commercialbanks #finances #risks #corporategovernance #riskgovernance #riskcontrol #accounting #audit

Very important for the NZ banking industry!!