It is said that the Viennese writer and journalist Karl Kraus once asked a budding academic what he was planning to study, upon which the young man said, “Business ethics.” To which Kraus replied, “One or the other, you can’t have both.” This brief exchange rather neatly reflects a view held across much of our society – that business and ethics are irreconcilable rivals at opposite ends of the spectrum. It is widely thought that the banking sector, more than anywhere else, bears testament to this idea of business being an ethics-free zone. And who could blame them for thinking that way? After all, financial crises and scandals – like the one in which banks colluded for years to rig benchmark rates – don’t exactly put the picture straight. In some instances, these scandals were rooted in unethical behaviour. Court rulings, fines and an exodus of customers are a stiff price to pay for this conduct, not least for the banks themselves.
Continue reading…

The European Banking Authority (EBA) published its tenth report on risks and vulnerabilities in the EU banking sector. The report is accompanied by the 2017 EU-wide transparency exercise, which provides key data in a comparable and accessible format for 132 banks across the EU. The data shows further resilience in the EU banking sector amid a benign macroeconomic and financial environment, with an additional strengthening of the capital position, an improvement of asset quality and a slight increase of profitability. However, further progress on NPLs is needed whilst the long-term sustainability of prevailing business models remains a challenge. The importance of robust data management and IT and operational resilience is also a priority.
Continue reading…

In his speech Klaas Knot, President of De Nederlandsche Bank (DNB), talks about the importance of investing in the European economy: investing is the keydriver of future economic growth. He also points out the challenges like climate change. He will do so by addressing three main questions: first, is euro area investment currently too low? Secondly, focus on business investment, and examine what its drivers are. Lastly, he will give his view on how public investment can be tailored to contribute to sustainable economic growth. Continue reading…

The Financial Conduct Authority (FCA) has imposed on Paul Walter, a former Bank of America Merrill Lynch International Limited (BAML) bond trader, a financial penalty of £60,090 for engaging in market abuse. Following an investigation, the FCA found that Mr Walter, an experienced trader, engaged in market abuse by creating a false and misleading impression as to supply and demand in the market for Dutch State Loans (DSL) on 12 occasions in July and August 2014.  
Continue reading…

The federal banking agencies finalized a rule for certain banking organizations by extending the existing capital requirements for mortgage servicing assets and certain other items. The rule is being finalized to prevent different rules from taking effect while the agencies consider a broader simplification of the capital rules.
Continue reading…

The Consumer Financial Protection Bureau (CFPB), Board of Governors of the Federal Reserve System, and Office of the Comptroller of the Currency (OCC) today announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2018 will increase from $25,500 to $26,000.
Continue reading…

The European Securities and Markets Authority (ESMA) has issued two Statements on Initial Coin Offerings (ICOs), one on risks of ICOs for investors and one on the rules applicable to firms involved in ICOs. ESMA has observed a rapid growth in ICOs globally and in Europe and is concerned that investors may be unaware of the high risks that they are taking when investing in ICOs. Additionally, ESMA is concerned that firms involved in ICOs may conduct their activities without complying with relevant applicable EU legislation.
Continue reading…

Contracts for differences (CFDs), including financial spread bets, with cryptocurrencies as the underlying investment are increasingly being marketed to consumers. These products are extremely high-risk, speculative products. This is a warning of the Financial Conduct Authority (FCA) to inform consumers about the risks of buying them.
Continue reading…

The Financial Stability Institute (FSI) was jointly created in 1998 by the BIS and the Basel Committee on Banking Supervision. The FSI’s main objectives are to: (i) promote sound supervisory standards and practices globally and support full implementation of these standards in all countries; (ii) keep supervisors updated with the latest information on market products, practices and techniques; (iii) provide a venue for policy discussion and sharing of supervisory practices and experiences; and (iv) promote cross-sectoral and cross-border supervisory contacts and cooperation. These objectives are achieved through the production of FSI Insights on policy implementation and other publications, meetings and conferences with senior officials and FSI Connect, the BIS’s web-based learning tool for financial sector supervisors.
Continue reading…

Julia Hoggett, the new Director of Market Oversight at the FCA, shares in her speech several of her observations, regarding both MAR; the relatively newly minted Market Abuse Regulation (MAR) and more broadly the overall ‘market abuse regime’. Her aim is to help frame not just the FCA’s approach, but how FCA hope the industry is thinking about both MAR and the regime as a whole.
Continue reading…