EBA Long Report - European Banking Authority - Europa

More documents

Recommendations

Info

Legal and reputational concerns Recently, some incidents involving European banks have come to light that have had an adverse impact on the banks involved. First, the banks involved have paid fines for wrongdoing. Second, this affects the reputation of the banking sector as well customers’ trust and market confidence in EU banks. In the last few months an investigation by the US and UK authorities concluded that several large banks were manipulating LIBOR. More or less concurrently, another investigation showed that some banks had deficient know-your-client procedures, thus making money laundering possible, or had knowingly breached international sanctions for certain states. Other banks, notably in the UK, have raised provisions against further regulatory sanctions related to mis-selling of Payment Protection Insurance (PPI) products. Recently, the EBA and ESMA have carried out joint work that has identified significant weaknesses and insufficiencies in the governance of the Euribor rate-setting mechanism 3 and European competent national authorities are also conducting legal investigations. On the risks related to consumer protection, the reader is invited to refer to the relevant section later in the report. Collectively, these incidents represent a failure in risk management and in compliance procedures that may point to a cultural problem that should be addressed by banks, and by supervisors, through more intense supervision. In our RAQ, most respondents believe that the legal and reputational concerns are going to intensify. Most respondents aim to address this through improving culture and risk management, but some are also raising reserves as the following figures 6 and 7 attest. 3 http://eba.europa.eu/News--Communications/Year/2012/ESMA-and-the-EBA-take-action-tostrengthen-Euribor.aspx Page 14 of 37
Figure 6: Trends in reputational risk 4 (source: RAQ) 16 14 12 10 8 6 4 2 You see an increase in the reputation/legal risk for the banking sector in general and also a negative trend in banks’ image with public opinion, media and the political spectrum 0 A B C D E Figure 7: Addressing reputational risk (source: RAQ) 16 14 12 10 8 6 i. You are aiming to adjust the culture and risk/conduct governance within the organisation. ii. You are building contingency reserves. 4 2 0 A B C D E 4 The horizontal axis of the two graphs on this page denotes the following: A:agree B: mostly agree; C: mostly disagree; D: disagree; E: no opinion or not applicable. Page 15 of 37
Page 1 and 2: Risk Assessment of the European Ban
Page 3 and 4: Executive summary Since the publica
Page 5 and 6: 1. Introduction Purpose of the repo
Page 7 and 8: Policies and political commitments
Page 9 and 10: progress in this direction. The SSM
Page 11 and 12: You envisage making material change
Page 13: Your bank can operate on a longerte
Page 17 and 18: Your bank will have to to rely more
Page 19 and 20: Asset deleverage is an element of y
Page 21 and 22: You see threats to your retail depo
Page 23 and 24: exercise led to an increase in bank
Page 25 and 26: Figure 15: Coverage ratio (specific
Page 27 and 28: a. Residential mortgages. b. Consum
Page 29 and 30: practices for loans in arrears, unc
Page 31 and 32: The leverage of CfDs consists in al
Page 33 and 34: Appendix: Samples Below we list the
Page 35 and 36: Annex Descriptive statistics from t
Page 37: Balance Sheet Structure KRI Descrip

EBA Long Report - European Banking Authority - Europa

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?