For the past eight years, Risk in Focus has sought to highlight key risk areas for internal auditors when preparing their independent risk assessment work, annual planning and audit scoping. The 2024 research report has revealed a looming poly-crisis as a series of high-impact risk events occurring simultaneously and exacerbating a multitude of interconnected risks. The report calls on boards to collaborate with internal auditors to navigate the poly-crisis by having an unwavering focus on organisational resilience and working together to respond rapidly to the myriad of immediate and fast-moving risks businesses now face. Continue reading…

The Financial Conduct Authority (FCA) has published the findings of its initial data exercise on bank account access and closures. The information supplied by banks, building societies and payment companies suggests that no firm closed an account between July 2022 and June 2023 primarily because of a customer’s political views. The Payment Accounts Regulations ban banks or building societies discriminating on this basis. The FCA will be doing further work with firms to verify the data and to better understand the reasons behind, for example, the closure of accounts due to reputational risk. Continue reading…

The European Commission has re-imposed a fine of around €376.36 million on Intel for a previously established abuse of dominant position in the market for computer chips called x86 central processing units (‘CPUs’). Intel engaged in a series of anticompetitive practices aimed at excluding competitors from the relevant market in breach of EU antitrust rules. In 2009, the Commission fined Intel €1.06 billion after finding that Intel abused its dominant position in the market for x86 CPUs. The Commission decision was based on findings that Intel had engaged in two specific forms of illegal practices by: (i) giving wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel (so-called ‘conditional rebates’); and (ii) paying computer manufacturers to halt or delay the launch of specific products containing competitors’ x86 CPUs and to limit the sales channels available to these products (so-called ‘naked restrictions’). Continue reading…

Francois Villeroy de Galhau

Let me start with good news about a favourite Eurofi topic: banking regulation and Basel 3. I say it as BIS Chair and former chair of GHOS: we had in Monday an important GHOS meeting in Basel, and we unanimously welcomed the decisive progress made this year in the implementation of Basel 3. By 2025, all jurisdictions – including Europe and – yes – the US – should have implemented it in a broad compliance with the standards. I know each banking industry, on both sides of the Atlantic, tends to consider that the other side has undue advantages. It’s simply not right, and our motto is now straightforward: let us now close this page, and implement the European compromise, no less and no more. No less as some banks would perhaps still dream of, and no more as some theoreticians of regulation would perhaps imagine. And we should now turn to the priority learned from the banking turmoil: “strengthening supervisory effectiveness” [*1] rather than focusing on further regulation. Let me now turn to my theme which is the policy mix to fight our main economic disease: inflation. Continue reading…

The European Central Bank (ECB) has published the results of its second economy-wide climate stress test. The results show that the best way to achieve a net-zero economy for firms, households and banks in the euro area is to accelerate the green transition to a rate that is faster than under current policies. “We need more decisive policies to ensure a speedier transition towards a net-zero economy in line with the goals of the Paris Agreement. Moving at the current pace will push up risks and costs for the economy and financial system. There is a clear need for speed on the road to Paris,” says ECB Vice-President Luis de Guindos. Continue reading…

by Michel Klompmaker

We recently spoke with Twan Houben about the possible impact of the enormously increased national debt in the United States. Twan Houben is concerned with crisis management, hence his special interest in the phenomenon of national debt on the other side of the Ocean. Then what’s going on? According to Marketwatch, the national debt there currently amounts to 33 trillion US dollars. To put that number into perspective, three years ago that was 23 trillion US dollars. It is not rocket science to calculate that with the increased interest rates in the last period, serious problems can arise if new loans have to be taken out to finance the national debt. But what are the consequences in Europe? Continue reading…

The European Commission has analysed the data related to the impact of the exports of 4 categories of agricultural products on the EU market. It has concluded that thanks to the work of the Coordination Platform and to the temporary measures introduced on 2 May 2023, the market distortions in the 5 Member States bordering Ukraine have disappeared. A constructive attitude of all participants in the platform helped to solve concrete problems and ensured that exports to third countries outside the EU are flowing and even increasing. Continue reading…

On 13 September, Neil Esho, Secretary General of the Basel Committee on Banking Supervision, at the Eurofi Financial Forum 2023, Santiago de Compostela. When asked how he went bankrupt, Mike Campbell, a Scottish war veteran who features in Hemingway’s novel, The Sun Also Rises, responded: “two ways: gradually and then suddenly”. This description of financial failure – clearly not new – is also an apt description that sums up many an episode of banking distress. This includes the failure of a number of US regional banks earlier this year, and the merger of two large Swiss G-SIBs. Continue reading…

Tough new rules designed to make the marketing of cryptoasset products clearer and more accurate, and that ban incentives like ‘refer a friend’ bonuses, will come into force on 8 October. The FCA has signalled that in response to industry readiness it will consider giving cryptoasset firms more time to implement certain changes, for instance a 24-hour cooling off period. Firms could be given until 8 January 2024 to introduce features that require greater technical development, with the core rules still coming into effect from 8 October 2023.  

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The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has recently published the second Trends, Risks and Vulnerabilities (TRV) Report of 2023. ESMA sees that financial markets are adapting to the new economic environment of durably higher inflation and interest rates, however risks remain high in ESMA’s remit. Markets are set to remain very sensitive to potential deteriorations in economic fundamentals or risks in the financial sector. Continue reading…