Being better informed: August 2015

As we predicted in last month’s introduction, July was another busy month as regulators publish expected papers before enjoying a summer holiday. The fears around a Grexit seem to have dissipated and European regulators are now focused as much on growth (such as Capital Markets Union) as they are with systemic risk issues. This is borne out by the European Commission consultation on a review of the fourth Capital Requirements Directive, which focuses on potentially reducing the existing rules for some banks that are less risky and identifying how to promote a growth in lending activities to small and medium-sized enterprises and individuals.

In the UK the PRA and FCA published a number of consultations setting out near final rules to the new Senior Manager and Certification Regime which will replace the existing approved person’s regime for banks and significant investment firms. In these latest consultations the PRA and FCA set out to meet one of the recommendations from last month’s Fair and Effective Markets Review to extend the Certification Regime to wholesale market activities.

We have recently seen the role of central banks becoming increasingly important entities in dealing with systemic risk as countries use macroprudential tools alongside the monetary tools they have at their disposal. We examine these issues and the tools that countries are using to deal with risk in the banking sector in more detail in this month’s feature article.

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