In this exclusive interview by Forvis Mazars, Patrick Montagner, member of the ECB Supervisory Board, discusses the ECB’s supervisory priorities for 2025-2027 and the 2025 stress test. The conversation highlights how the ECB is adapting its supervisory focus and practices...
As we say goodbye to 2024 and look forward positively to 2025, at Forvis Mazars we know that financial institutions and funds will have to deliver in an evolving complex domestic and/or cross-border tax environment. Banks, insurers and asset managers...
In November 2024, the Network for Greening the Financial System (NGFS) released the latest version (termed Phase V) of its climate risk scenarios. These introduce significant advancements that enhance financial institutions’ accuracy when undertaking climate-related financial risk assessments. Key advancements...
As the impacts of climate risks become more pronounced, regulators and the insurance industry are under increasing pressure to refine risk assessment frameworks. This article examines regulatory developments, a critical review of climate scenarios and limitations of models within the...
In the wake of financial crises, the question 'Where was the board?' has become a rallying cry, reflecting the demand for greater accountability within banking institutions. Recent high-profile bank collapses underscore the necessity of robust internal governance frameworks that include...
As part of our annual series on “Top risks facing financial service (FS) firms”, we have identified and ranked the key risks for financial services business leaders in 2025. We discuss in the article below the top five areas that...
Forvis Mazars proudly participated in the Africa Financial Summit (AFIS) 2024, held from 9-10 December in Casablanca, Morocco, and sponsored the awards ceremony. Below are some reflections on the state of play and future of Africa’s financial sector. In recent...
In November 2024, the NGFS[1] (Network for Greening the Financial System) published phase V of its widely used climate scenarios updated with the most recent economic and climate data, policy commitments, and model versions. This phase V also introduces a...
Cloud computing has been with us for over 15 years, but we have barely scratched the surface of its potential.[1] Industry Cloud Platforms (ICPs) are cloud-based solutions targeting the specific needs of industry verticals that generic and traditional solutions do...
When the Covid-19 pandemic broke out in 2020, the banks had to make post-model adjustments[1] (or management overlays) to incorporate the impact of this unprecedented situation into the expected credit losses recognised by the banks. While the end of the...
After several years of significant macroeconomic and geopolitical events such as the Covid-19 crisis, the war in Ukraine, the return of inflation and rising interest rates, the year 2023 seemed to mark a form of stabilisation in the international environment...
The European Supervisory Authorities (ESAs) published the final texts of the DORA (Digital Operational Resilience Act) regulation in July. These definitive texts will come into effect in January 2025, enhancing digital operational resilience and IT risk management for all financial...
A day doesn’t seem to go by without there being another sustainability regulation announcement. This article is a whistle-stop tour around selected jurisdictions and provides an update on what has happened in the past few months, what is to come,...
In the ongoing digitalisation of the banking sector and the rapid growth of financial technology, banks increasingly rely on third-party service providers (TPSPs), including for some of their critical functions. This dependency introduces significant risks, as banks do not always...
Traditional methods of tackling financial crime are no longer effective in a world where bad actors use increasingly sophisticated techniques to exploit weaknesses in financial crime controls. With the establishment of a new European regulator, embedding the latest AI-enabled solutions...
In today's dynamic financial landscape, cryptocurrencies and their underlying technology have taken centre stage, attracting both enthusiasts and sceptics. The volatility and potential of digital assets prompt questions about their evolving positions in the traditional financial market. While the promise...
On 24 February 2024, Ukraine and the rest of the world marked the second anniversary of Russia’s invasion. Despite extensive media coverage of the war and its geopolitical and socio-economic ramifications on Europe and the rest of the world, there...
The role of artificial intelligence (AI) in financial services continues to exercise C-suite minds. Not least, how to balance AI's benefits to enhance the customer experience and improve back-office operations with the ethical challenges that AI presents. Sparking the debate...
The financial services sector is increasingly looking to technology to help tackle the rising levels of regulation they face. According to the latest Forvis Mazars C-Suite Barometer, the prominence of new technology as a global trend is on the rise...
As financial services organisations increasingly focus on digital transformation, having the right expertise and skillsets is critical. However, it’s not simply a question of human capital. It requires developing a talent strategy that recognises the profound impact technology will have...
Digital transformation now tops the C-Suite agenda of financial services organisations. According to the latest Forvis Mazars C-Suite Barometer, one-third of respondents identified the need to transform company IT as a strategic priority ahead of issues such as sustainability initiatives. While...
Optimism in the financial services sector is riding high. According to the latest Forvis-Mazars C-Suite Barometer, 94% of financial services respondents say they're growing, which is five points higher than the global average and up overall from 92% last year....
In the aftermath of the Global Financial Crisis, regulators and legislators around the world tried to make sense of its causes and then implement rules to stop it happening again. In the UK, the resulting regulation introduced by the Financial...
In the dynamic world of finance, regulatory updates play a pivotal role in shaping industry practices and safeguarding the interests of stakeholders. From strengthening anti-money laundering measures to fostering transparency in crypto-asset markets, recent months have witnessed a flurry of...
Operational resilience is the ability of firms to prepare for, prevent, adapt and respond to, recover and learn from operational disruption. It is a complex and multi-faceted challenge for cross-border banks to prepare for and respond to. This is because...
An EU vs UK vs US perspective Sixteen years ago, the collapse of Lehman Brothers triggered the global financial crisis, which highlighted significant weaknesses in the global banking sector. The oversight of the sector was quite fragmented between jurisdictions, leading...
Differing approaches to Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) supervision across the EU have severely limited member countries’ ability to fight efficiently this growing threat. The creation of the Anti-Money Laundering and Countering the Financing of Terrorism Authority (AMLA)...
Following the 2007-08 global financial crisis, substantial deficiencies were identified in many banks’ risk data aggregation capabilities and risk reporting practices globally. This impacts banks’ ability to make timely risk decisions, creating risks not only for themselves but for the...
Financial institutions are faced with several challenges: strong economic pressure, regulatory changes, evolving customer expectations, punctuated by strong competition from fintechs and insurtechs; which rely natively on emerging technologies to offer best-in-class services. To meet these challenges and stand out...
Reinforcement Learning (RL) is a branch of Machine Learning (ML) that is still little known to the general public. In this approach, an agent repeats actions and, depending on the result of these actions, receives a reward or punishment in...
Africa's economic potential is hindered by the pervasive presence of illicit financial flows (IFFs), fraud, and corruption, which not only strip the continent of vital resources but also obstruct its path towards sustainable development. The staggering annual loss of $88.6...
In the ongoing battle against financial crimes spanning money laundering, terrorist financing, and the proliferation of weapons of mass destruction, collaborative efforts in asset confiscation and seizure stand as vital bulwarks. As we navigate the complexities of the financial landscape...
We have identified and ranked the key risks for financial services business leaders in 2024 based on market research, regulatory insights as well as our assessment of the current difficulties facing firms. We discuss in this article the key takeaways...
We have identified and ranked the key risks for financial services business leaders in 2024 based on market research, regulatory insights as well as our assessment of the current difficulties facing firms. We also highlight the changes in risk rankings...
In the contemporary landscape of insurance, the business model of open insurance, characterised by the strategic opening of insurers' resources to external collaborators, has been a focal point of discussion. Unlike the banking sector, where regulatory mandates such as the...
Mazars recently hosted a Financial Services INED Roundtable Dining Event in Dublin[1]. Over 50 financial services independent non-executive directors (INEDs) attended, from banking, asset management, funds and insurance entities operating across the EU and UK. The roundtable focussed on the...
Last October, the European Central Bank (ECB) initiated the preparation phase of the Digital Euro project, following two years of investigation and a proposal on the establishment of a digital euro published by the European Parliament (EP) in June 2023. In...
The European Central Bank (ECB) issued the SSM supervisory priorities for the 2024-2026 cycle on 19 December 2023. They sum up what institutions under the direct supervision of the ECB should expect in terms of areas of supervision, in 2024...
In January 2024, the European Central Bank (ECB) published its Climate and Nature Plan for 2024-2025. This plan aims to: clarify what actions the ECB intends to take to progress its climate and nature agenda; and define what banks need...
DORA is a legislative proposal that aims to improve the digital operational resilience and ensure the performance and stability of the financial system of the member countries of the European Union in the face of the risks associated with ICT...
In late 2023, and to coincide with COP 28, Mazars published its latest Sustainability practices survey on the progress banks and insurers have made in embedding sustainability into their businesses, our most comprehensive and information-rich report to date covering 404...
The Single Resolution Board (SRB) convened its annual conference on 13 February 2024 with a theme highlighting the focus for the year: ‘The road ahead: risk, readiness and resilience’. While significant strides have been made with the EU banking resolution...
In environmental, social and governance (ESG) reporting, materiality is crucial for enhancing transparency and accountability in sustainability and climate-related disclosures. Importantly, it helps identify and report on matters that are deemed significant, emphasizing their relevance to stakeholders. Materiality comes in...
To adapt to the swiftly evolving regulatory landscape and meet stakeholders' expectations, financial firms are increasingly formulating sustainability strategies to address environmental, social and governance (ESG) factors. Notably, emissions reduction and the pursuit of net-zero targets have become central elements...
On 29 June 2023, the European Union’s (EU) Markets in Crypto Assets Regulation (MiCA) entered into force. It is being implemented in stages depending on the provisions, between June and December 2024. The regulation, which provides clearer rules for crypto-asset...
The integration of environmental, social and governance (ESG) considerations into strategic planning is increasingly becoming a common practice among financial services firms. However, climate-related risks can also serve as drivers of financial risk for institutions. These risks can manifest through...
There is growing pressure for banks and insurers to incorporate C&E factors in their risk management frameworks (RMF). As a practice, it gives the ability to set clear thresholds for the climate impacts banks and insurers are willing and able...
There are increasing regulatory expectations globally for financial institutions to disclose and demonstrate how sustainability-related responsibilities are allocated within the organisation. In this respect, the increasing global trend towards mandatory sustainability disclosure frameworks continues to underscore the significant role that...
On 19 December 2023, the European Central Bank (ECB) published its updated Single Supervisory Mechanism (SSM) strategic supervisory priorities for the period 2024 to 2026. The priorities indicate what banks should expect in terms of supervisory activities in 2024. For...
The increased demand for sustainable finance shows that awareness of environmental, social and governance (ESG) issues is generally high among financial institutions. Indeed, for many of the larger players subject to the EU’s Non-Financial Reporting Directive (NFRD), there has been...
While the banking sector has shown resilience over recent years, the economic environment and geopolitical situation remain tense. So, what does this mean for risks to the banking sector? More specifically, what is the impact on capital requirements for banks...
The Basel Committee on Banking Supervision (BCBS) and Financial Stability Board (FSB) published reports in October 2023 on the causes and lessons learnt from the Spring 2023 banking turmoil. The BCBS report provides an assessment of the causes of the...
The implementation of the European Union's 'Taxonomy' regulation, which integrates two climate objectives, was carried out on 1 January 2022 through the 'Climate' Delegated Act released in April 2021. In line with this, the banking sector has been provided with...
In 2022, the European Union implemented the green taxonomy for the second year, requiring companies to disclose indicators related to climate objectives. The green taxonomy aims to guide capital investment towards environmentally sustainable activities, making companies assess their alignment with...
2023 marks the second year in which insurance and reinsurance companies have published their eligibility ratios for the European Green Taxonomy. For the insurance sector, the objective is to measure the proportion of investments, as well as the proportion of...
The IIF Annual Membership meeting is a setting for insights and perspectives from global financial regulators and senior financial sector executives on topical economic and regulatory issues. Being a forum with global coverage means that it is a valuable setting for...
DORA (the Digital Operational Resilience Act) is the key regulatory outlook for IT and Cyber risk between now and 2025. The European Supervisory Agencies have sought to strengthen the resilience of institutions by emphasising the need to evolve the approach...
Under IFRS 9, forward-looking information is a key component of Expected Credit Loss (ECL) calculations. However, forward-looking information requires a significant level of judgement, making comparisons difficult to navigate. Indeed, similar to the use of post-model adjustments, forward-looking scenarios have...
Despite banks emerging from the Covid-19 crisis in reasonably good health, the war in Ukraine combined with a global energy crisis and an uncertain economic landscape have once again put the spotlight on credit risk exposures. To better understand credit...
Since the Covid-19 pandemic, post-model adjustments1, or management overlays, have become an increasingly common and accepted mechanism used by banks to manage expected credit losses (ECLs). The number of post-Covid unprecedented events related to the war in Ukraine, energy crisis...
A recent major board reshuffle in one of Europe’s largest listed investment companies has focused attention on private investment valuations. It follows concerns raised by an ex-director over the robustness of the directors’ processes for approving investment valuations. The issues...
Revised list of uncooperative countries and territories for tax purposes published by the European Council The list of uncooperative countries and territories about tax is an important part of the external tax strategy of the EU. Globally, this strategy intends...
ACPR publishes report on automated AML/CFT transaction monitoring systems In 2022, the ACPR conducted a comprehensive thematic review, focussed on the automated systems utilised by the entities under its supervision. This entails entities implementing their obligations in terms of transaction...
The Eurofi financial forum is a setting for exchanges between European Union (EU) economic and financial regulators and senior financial sector executives from the industry. It occurs bi-annually alongside the Economic and Financial Affairs Council configuration (ECOFIN) meetings. This summary...
2022 AML-CFT Committee report available The MONEYVAL Committee, an entity of the Council of Europe which is tasked with addressing challenge of money laundering and terrorist financing (ML/FT), has recently published the AML-CFT report 2022. The findings of the report...
With the approaching end of the investigation phase of the ECB’s digital euro project in October 2023, and the expectance of a decision on starting a realisation phase by the end of this year, the pros and cons of a...
New report on AML/CFT risks in payment institutions In accordance with the European Union regulations, the European Banking Authority (EBA) has been mandated to assess the management of the most significant risks in the fight against money laundering and terrorist...
New measures to combat money laundering and terrorist financing The European Parliament has adopted a set of stringent measures to strengthen the fight against money laundering and terror financing, alongside circumventing sanctions within EU. These regulations are presented by EU...
ESG-related regulatory requirements, and scrutiny, show no signs of abating. Asset managers have a pivotal role in financing the transition towards low-carbon economic systems. Hence, governments have introduced several ESG-related regulatory requirements that apply to asset managers. Some examples of...
Both the UK and the EU are consulting on the next wave of iterations to the Basel reforms. Whilst the focus of these consultations has been relatively broad, the rules around the computation of Pillar one Credit Risk RWAs have...
The European Commission published on 18 April 2023 a new legislative package aiming to adapt and strengthen the framework for crisis management and deposit insurance (CMDI), with an acute focus on small and medium-sized banks. This proposal, which follows the...
On 16 December 2022, the AMF published additional information[1] on its website about the AMF exam, more commonly known as the "AMF certification" exam, since it certifies only the entities that organise the exam, rather than the people who pass...
The tax system applicable in the overseas public authorities includes a set of investment incentive schemes designed to promote their economic and social development. One factor to their successful implementation in practice is to provide as much visibility and sustainability...
The European Securities and Markets Authority (ESMA) published on 17 November, together with EBA and IOEPA, a Q&A on the RTS of the SFDR Delegated Regulation (Commission Delegated Regulation (EU) 2022/1288), just six weeks before coming into force. The Q&A...
In recent weeks, we have witnessed the successive bankruptcies of three banks in the United States, as well as the hasty takeover of Credit Suisse by UBS. This chain of events inevitably calls into question whether this trajectory echoes the...
Since the onset of 2023, regulatory news has been adorned with the latest European legislation, under the acronym DORA, adopted on 10 November 2022 by the European Parliament. Standing for the Digital Operational Resilience Act, it will apply to the...
The momentum towards a low-carbon economic system is only set to grow. Financial services firms are pivotal actors in the transition; consequently, increasing demands are being put on them to demonstrate their sustainable finance activities and credentials. This blog explains...
Implementing credible environmental, social and governance (ESG) actions requires successful enablers. So how can firms identify these enablers and, crucially, remove barriers to implementation? If we take our latest C-Suite Sustainability Barometer, we can see that out of the over...
“I see digital as the future of finance”. These are the words of the Executive Vice President of the European Commission (EC), Valdis Dombrovskis, voiced in the summer of 2020. He has undoubtedly been proven right as governments and central...
The global climate crisis has triggered the financial sphere to address the way in which it conducts business. Climate risk consideration is currently growing in the banking industry but should also be considered by banks in the Credit Valuation Adjustment...
The Federal Reserve Board (Fed) has shared instructions on its pilot climate scenario analysis exercise (CSA). Six of the largest U.S. banks, i.e., Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo are participating in the...
In our last article on sustainability-linked financing, we highlighted the accounting issues related to these contracts that are currently being debated between stakeholders. The most critical issue is the classification of loans or bonds that reference the borrower or issuer’s...
After two years marked by the Covid-19 crisis, the first half of 2022 offered the prospect of a return to a certain economic normality. However, the outbreak of war in Ukraine combined with a deteriorating economic environment have reshuffled the...
A lot of attention at COP27 was focused on the likelihood of keeping global warming to 1.5 °C, in line with the goals of the 2015 Paris Climate Agreement. The consensus was that we are in real danger of falling...
The European Central Bank (ECB) has expressed a significant supervisory concern surrounding more than half of supervised banks in terms of the progress made on fulfilling the expectations specified in the Guide on climate-related and environmental risks. The ECB recently...
The European Banking Authority (EBA) is tasked, in cooperation with the European Systematic Risk Board (ESRB), to initiate and coordinate biennial EU-wide stress testing exercises to assess the resilience of institutions to adverse market developments. The objective is to provide...
As environmental, social and governance concerns are becoming more and more prevalent, sustainable finance is now under the spotlight. The financial sector has a key role to play in achieving the ESG transition. One of the levies developed by the...
The European Union (EU) has taken the first step in directing capital investments toward so-called sustainable activities with the introduction of the Green Taxonomy on 1 January 2022. For the real estate sector, the objective is to measure the share...
In summer 2022, the Bank for International Settlements (BIS) published its second consultation paper on the prudential treatment of cryptoasset exposures. The guidelines outlined in the proposed document follow an initial discussion paper released in 2019 and a first consultative...
The Federal Reserve Board (FED) will commence its first bottom-up climate scenario analysis exercise at the beginning of 2023, as announced on 29 September. The exercise will be exploratory in nature and will not result in extra capital requirements. The...
The objective of the European Union’s Taxonomy regulation, in force since 1 January 2022, is twofold for the insurance and reinsurance sector. First, to measure the share of investments devoted to financing economic activities eligible for the taxonomy, known as...
In force since 1 January 2022, the European Union's Taxonomy regulation aims to support the market for green finance. More specifically, greater transparency in the market will help prevent greenwashing by providing information to investors about the environmental performance of...
A new regulation introducing a pilot scheme based on blockchain technology is set to come into force on 23 March 2023. The new European regulation1 is an experiment to develop secondary markets for financial securities based on distributed ledger technology...
The first supervisory climate risk stress test (2022 CST) conducted by the European Central Bank (ECB) has concluded with official results and findings made public on 8 July 2022. The exercise has complemented the broader ECB’s agenda to assess the...
Following Russia's annexation of Crimea in March 2014, the United States (US) and the European Union (EU), together with other countries, imposed mainly economic sanctions on Russia. Since Russia's recognition of the self-proclaimed autonomous republics of Donetsk and Lugansk, followed...
Climate change is now firmly in the focus of prudential regulators and supervisors across the globe. Against this background, the European Banking Authority (EBA) is mandated to assess whether a dedicated prudential treatment of exposures related to assets or activities...
The last few weeks have been marked by an ongoing review of the supervisory priorities initially listed by the Single Supervisory Mechanism (SSM) for 2022-24, and developments in the climate agenda outlined by the European Central Bank (ECB). ECB’s supervisory...
For several months now, we have been in an economic and financial environment that we have not seen for some years. In May, inflation in the Eurozone reached 8.1%, with six countries exceeding 10%, while the United States recorded an...
The years between 1848 and 1918 are considered the relevant building period for the Gründerzeit-Zinshaus buildings in Vienna. In this period Viennese housing construction underwent a decisive development which shaped the city’s characteristic flair to this day: the Zinshaus buildings...
France’s innovative and incentivising Action Plan for Business Growth and Transformation (PACTE) law lays the legal foundations for corporate social responsibility. With more than 400 companies established as “sociétés à mission” – mission-led businesses – by the end of 2021,...
Central Bank Digital Currencies (CBDCs) continue to receive increasing attention not only from the ECB but all over the world. So far, 10 countries [1] have already deployed CBDC programmes with another 15 countries [2] currently conducting pilot programmes. In...
The chair of the European Central Bank's Supervisory Board, Andrea Enria, has voiced several times in the past months the supervisor’s concern with the increasing growth of the leveraged finance sector, which deals with loans to highly indebted borrowers. By...
The war in Ukraine, as well as the unprecedented sanctions imposed by the European Union, the United States and their partners against Russia have had major consequences for financial services institutions. For foreign companies operating in Russia or Ukraine, the...
While the European Commission’s most recent opinion on the review of the Solvency II Directive is broadly in line with the final European Insurance and Occupational Pensions Authority (EIPOA) opinion issued in December 2020, some measures have now been amended....
Regardless of geography or business sector, many groups and companies have taken out cybersecurity insurance policies in recent years. These policies cover companies against new threats to information systems, including ransomware and data theft incidents that have been making the...
The European Green Deal aims to achieve climate neutrality by 2050 and create a modern, competitive and resource-efficient economy. To meet its objectives, the European Commission has begun to restructure the non-financial reporting requirements for companies. Although some of the...
Since the European crisis management framework was established in 2014, there have not been many failing banks in Europe. However, the recent global health pandemic, combined with the ongoing conflict in Europe between Russia and Ukraine, could easily change this....
Crypto-asset markets have been on banks’ radar for some time. While interest and involvement have varied, regulatory developments have been a driving force. In September 2020, the European Union (EU) published a proposal for the regulation of Markets in Crypto-assets...
As a setting for exchange between European Union (EU) economic and financial regulators and senior financial sector executives from the industry, one of the world’s largest financial services conferences, Eurofi, took place in Paris in February. Established in 2000, the...
In March 2022, the European Central Bank (ECB) published its second snapshot of climate-related and environmental risk disclosure levels among significant institutions under its direct supervision. In line with the results of the first snapshot published in November 2020 -...
The invasion of Ukraine by Russia on 24 February 2022 is considered the most significant geopolitical event since the Second World War. While there is no question of military intervention by the European Union (EU) at the moment, the EU...
A central database to strengthen the anti-money laundering and counter-terrorist financing (AML/CFT) framework was launched by the European Banking Authority (EBA) on 31 January 2022. Called EuReCA, the new database will be essential to coordinate efforts by national competent authorities...
Like all industries, the real estate sector has to implement a range of legal, technical and organisational measures to protect the personal data of its employees, customers, prospects and suppliers. Processing must comply with several regulations related to data protection,...
As part of the European Green Deal, the European Union intends to encourage green investments and prioritise the revision of the Non-Financial Reporting Directive (NFRD). The European or Green Taxonomy, which sets out a precise classification of sustainable activities with...
The market is seeing a growing trend for real estate management companies seeking to speed up the process of closing their accounts. This is largely due to the positioning of real estate funds in life insurance contracts requiring increasingly shorter...
As part of its rotating Presidency of the EU Council for a six-month mandate, France chaired its first EU Council of Finance Ministers (ECOFIN) meeting on 18 January with a view to getting certain current legislative work finalised. The ECOFIN...
As regulated entities execute their post-Brexit strategies and relocate their European Union (EU) operations from the UK to other EU states, a key issue to be addressed for those relocating to Ireland remain to be the impending legislative changes surrounding...
The great financial crisis triggered a massive wave of bankruptcies in the worldwide banking sector, affected not only large international banks such as Lehman Brothers but also local ones such as Northern Rock in the UK. Basel prudential standards are...
Supervisory priorities 2022-2024 In December 2021, the European Central Bank (ECB) and the national supervisory authorities of the Eurozone countries published their supervisory priorities for 2022-2024. The three-year coverage enables the ECB banking supervision to achieve good progress in addressing...
The growing importance of sustainability issues and the role of credit institutions in financing transformation places climate and environmental risks at the core of regulatory and supervisory scrutiny today. For some years now, the Network for Greening the Financial System...
Financial institutions and non-bank financial technology companies (FinTechs) alike make extensive use of various machine learning models (MLOps) in core and non-core areas of their business. Banks, for example, rely on such models for a range of risk assessments, including...
The Covid-19 pandemic has amplified technology’s impact on the banking sector, helping to prove that technology now stands at the core of business sustainability for banks. In their constant search for convenience, digitally-savvy customers have pushed banks’ focus towards providing...
The creation of a new Anti-Money Laundering Authority will transform the supervision of money laundering and financing terrorism (AML/CFT) in the EU. Proposed reforms also extend the AML/CFT rules to all crypto-asset service providers, as well as include specific rules...
On 22 September, the European Commission adopted a review of Solvency II following the consultation launched by EIOPA in 2020, whose final guidance was published in December 2020. As the Commission notes, the 2020 review of the directive met several...
The Financial Stability Oversight Council (FSOC) was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act as a result of the 2007-2008 US financial crisis. A first of its kind, the 15-member council is tasked primarily with identifying...
The widespread use of working from home (WFH) during the pandemic, regardless of sector or geographical location has required organisations and their information systems (IS) management to be very agile in deploying or increasing their capacity for remote collaboration. Some...
As the PRA transitions from a “rule-taker” to a “rule-maker”, small and medium-sized banks operating in the UK can expect to benefit from a more “streamlined” regulatory regime that could be easier to interpret, implement and maintain; but at the...
The identification and management of non-performing loans or NPLs as early as possible by banks are among supervisors’ current high-level priorities. Indeed, when prudential, monetary, and fiscal crisis mitigation mechanisms are tapered, the weakening of borrowers’ creditworthiness could materialise, along...
The unveiling of the new banking package “CRR3 - CRD6” on 27 October 2021 presents a further landmark on the road to implementing the final Basel III agreements. The regulatory scheme will also focus on the revision of the market...
The low level of banking consolidation in Europe compared to other countries is raising concerns among the supervisory community in Europe. It is a trend further reinforced after the financial crisis of 2007/2008 that produced a noticeable slowdown in consolidation...
Climate change introduces considerable economic challenges. On the one hand, financial institutions must contribute to the transition to a low-carbon and balanced economy to effectively combat global warming. On the other hand, the financial sector is exposed to climate-related and...
On 30 July, the European Central Bank unveiled the 2021 supervisory stress test results, which demonstrated that the region’s banking system is resilient in an unfavourable environment. The Common Equity Tier 1 (CET1) ratio has fallen 5.2% to 9.9% under...
The continued popularity of funds with an environmental, social and governance (ESG) focus has put global ESG assets on track to exceed $53tn by 2025, up from nearly $38tn at the end of 20201. As growth continues, expectations for effective...
A growing interest in environmental, social and governance (ESG) issues is driving record inflows into the ESG-led investment sector. During 2020, sustainable funds available to European investors attracted net inflows of €233bn1, which saw assets under management hit the $1.1tn...
The recent breakthrough of data science and deep learning make a model independent approach for hedging possible. This hedging approach known as deep hedging is a robust data-driven method able to consider market frictions as well as trading constraints without...
A major step forward has been taken in implementing the European "investment firms" package in France*. The transposition of the package into local legislation, alongside EU Regulation 2019/2033 on prudential requirements for investment firms (IFR), came into full effect on...
Recently, initiatives to tackle climate-related and environmental risks in the financial services industry have begun across the world. These initiatives followed the adoption of the United Nations Paris Agreement on climate change, the 2030 agenda for Sustainable Development and the...
Local and international trends have transformed the way banks operate, affecting their capital positions and profitability. In particular, ongoing digitalisation programmes and technological innovation continue to add pressure on traditional banking models, including the supply chain. While management’s focus on...
With the current ultra-low interest rate environment and market volatility having a negative impact on banks’ returns and, ultimately, their capital positions, operating models must quickly adapt and become more cost-efficient to maintain profitability. This drive for cost-efficiency has become...
Brexit, or the UK's departure from the European Union, became a reality on 1 January 2021. In terms of the regulatory impact for the financial sector, and the banking sector in particular, the UK being a third country, UK banks...
On 1 March 2021, the European Banking Authority (EBA) launched a public consultation on draft implementing technical standards (ITS) for Pillar 3 disclosures of environmental, social and governance (ESG) risks, under its capital requirements regulation (CRR) mandate. The consultation will...
The digitalisation of banking processes and the introduction of AI-led technology impact the central and strategic role of information systems within the banking system. The growing use of information and communication technology (ICT) exposes all financial institutions to an increasing...
The Targeted Review of Internal Models (TRIM) was one of the largest projects by the European Central Bank (ECB) aimed at identifying potential sources of unwarranted or non-risk based variability in Significant Institutions (SIs) risk-weighted assets (RWA) from the use...
Click here to read 'Key takeaways & industry challenges following the ECB TRIM project – a focus on credit risk (Part 2)' As articulated by the ECB in its recent TRIM reporting, the 236 findings cover different key aspects of...
Against the background of a new year still severely affected by the persistence of the pandemic throughout the world and economies facing an unprecedented global macro-economic shock, the Basel Committee has felt it necessary to address the audit of the...
Over the past decade, the financial services industry has been disrupted by the arrival of new players whose rise to prominence has pushed traditional banks - previously faced with little competition - to transform themselves. In this context, technology and...
While 2020 went relatively smoothly for the banking sector, uncertainties remain on the potential effects of Covid-19 on the real economy. Any negative impact could lead to heavy losses for the sector, especially when support measures are gradually phased out....
On 13 November 2020, the EBA published the final methodological note for the 2021 EU-wide stress-testing exercise. The aim of the stress tests is to assess the resilience of financial institutions to adverse economic and financial developments, in particular in...
The publication on 29 January of baseline and adverse scenarios, output templates, instructions and market assumptions required to carry out stress tests signals the go-ahead by the European Banking Association (EBA) for the 2021 regulatory exercise. Because of the Covid-19...
With the economic repercussions of the Covid-19 crisis yet to be fully assessed, a robust resolution framework is essential to ensure the stability of the banking system. While the banks were given leave to postpone the reporting of some less...
While there is a consensus about the smart building concept, there are still challenges to overcome if tomorrow’s buildings are enhanced to benefit the environment, cities and people. Starting with their design and throughout their useful lives, buildings have a...
While digital transformation has been disrupting all business sectors for many years, 2020 will be remembered for its particular impact on real estate administrators. A third of French respondents believe that artificial intelligence can be more efficient than a real...
European sustainable finance regulations evolved considerably in 2020, and the European Banking Authority (EBA) is continuing this trend into 2021. It recently published a discussion paper assessing the potential inclusion of Environmental, Social and Governance (ESG) risks in the supervisory...
With more than half of the world’s fastest-growing economies located in Africa1, the continent’s economic outlook is a positive one. Average annual GDP growth since 2000 is over 5%, placing Africa as the second-fastest growing economy behind Latin America. Real...
This article is part of the series covering the impact of sustainable finance on the insurance sector. Read further:Part 1: Assessing the impact of sustainable finance on insurance entitiesPart 2: How the insurance sector is meeting ESG challenges Clarity of...
This article is part of the series covering the impact of sustainable finance on the insurance sector. Read further:Part 1: Assessing the impact of sustainable finance on insurance entitiesPart 3: Developing a toolkit for responsible investment decisions When taking environmental,...
This article is part of the series covering the impact of sustainable finance on the insurance sector. Read further:Part 2: How the insurance sector is meeting ESG challengesPart 3: Developing a toolkit for responsible investment decisions Amid a global pandemic...
The working environment has always been an important factor for companies' performance and their ability to attract talent. With the rise of remote work, this aspect has become critical: companies now have to ‘seduce’ staff to return to the office....
The global real estate crowdfunding market was estimated at USD13.2bn in 2018 and is expected to reach USD868.9bn by 20271. In addition, the market is expected to grow at a compound annual growth rate (CAGR) of 58.3% from 2019 to...
In this edition of our Banking Regulatory Radar, we cover the key regulatory developments in the banking sector for 2020-2025. The latest version of the Mazars' Regulatory Radar has been updated with all the Level 2 legislation published in 2020,...
Facebook’s ambition to create a transferable global digital coin between users on the social media giant’s messaging platforms WhatsApp and Messenger has been controversial from the outset. Perhaps not surprisingly, the backlash from regulators around the world was substantial from...
The pandemic has had a significant impact on our entire ecosystem. We have seen global CO2 emissions fall by a record 7% in 20201 benefitting the environment. Yet, at the same time, we have seen adverse consequences for the mental...
March 2020 marked the first time - since its inception in 2014 - that the Bank of England (BoE) cancelled its annual stress tests for the UK’s biggest lenders. Instead, they undertook a desktop analysis of the UK banking sector...
Around one-fifth of global banking activity is undertaken in the UK. Almost half of the UK's banking assets are held by international banks. The PRA currently supervises approximately 250 international banks, both branches and subsidiaries, which are part of around...
One of the anticipated challenges in the transition from IBOR rates to risk-free rates (RFRs) is the management of its impact on quantitative models. The ones currently used for pricing IBOR-linked financial instruments account for term rates which are “forward-looking”....
Under article 430c of the updated Capital Requirements Regulation (CRR 2), the European Parliament and the Council of the European Union mandate that the European Banking Authority (EBA) perform a feasibility study on reducing the reporting burden for the European...
There is little doubt that Covid-19 has had a significant impact on insurers, but there were already factors in play that were adding pressure on the insurance industry. What covid-19 has done is to create new challenges, as well as...
An important milestone in the IBOR transition is the change in rates used by LCH and CME for discounting and Price Alignment Interest (PAI) calculations for USD OTC cleared swaps. Indeed, on October 16, 2020, they moved from using the...
As the world gears up for the transition to net-zero, the European Union is setting ambitious targets with respect to its own environmental footprint. For instance, by 2030 the EU is looking to reduce European greenhouse gas emissions by at...
In the early 1990s, stress tests became a popular internal tool for international banks to examine risks and gain a better understanding of threats to the institutions' balance sheet. From there, the Basel Accord was amended in the mid- '90s...
The revised market risk framework – also known as the Fundamental Review of the Trading Book (‘FRTB’) – not only impacts an institution’s regulatory capital charge calculation for market risk, but also affects operational, governance and business strategies. FRTB brings...
One of the major challenges of IBOR transition is the availability of historical data on alternative risk-free rates (RFRs) required to implement interest rate model changes or re-calibration. With the Secured Overnight Financing Rate (SOFR) only published since April 2018,...
Over recent years, technology and software have become strategic assets for competitiveness and resilience in the banking sector. Institutions have no choice but to invest to develop and deliver innovative services whilst managing ever greater IT and cybersecurity risks. The...
The Federal Reserve Board released stress test results for DFAST 2020 including additional sensitivity analysis, considering the COVID19 outbreak, to assess the resiliency of large banks under three hypothetical recessions, or downside scenarios, that could result from the coronavirus event....
American entrepreneur, Malcolm Forbes, once described diversity as “the art of thinking independently together”. Today, diversity is beginning to emerge as a quintessential workforce norm and institutions have started to acknowledge the differences in their staff compositions that are deeply...
With COVID-19, being declared a pandemic on March 11, 2020, financial institutions have had to shift most of their resources to mitigate the risks that have arisen. This has adversely affected important activities, one of which is market participants’ efforts...
Impacts from the COVID-19 pandemic have reverberated across every part of the global economy. Small businesses are struggling to pay their employees, banks are grappling with collapsing local economies, and many borrowers across the nation cannot meet their monthly mortgage...
During the last few weeks, the volume of loans issued by banks has snowballed as governments release programmes to bail out businesses affected by Covid-19. As a result of these higher volumes, the exceptional increase in underwriting activity raises several...
Gender equality, while not systematically embedded in national laws, is clearly set in European law. The Capital Requirements Regulation (CRR) requires financial institutions to adopt a policy promoting diversity within their management bodies and, for the most significant ones, to...
The Risk-Free Rates Working Group (RFRWG) published an update on the impact of COVID-19 on the timeline for firm’s plans to transition away from GBP LIBOR on the 29th April. While the central assumption of LIBOR’s publication being ceased after...
What is the purpose of a bank? Does it have a responsibility to society at large, over and above its duties to its shareholders, customers and employees? The purpose of banks - to make a profit or be socially useful?...
Pierre Latrobe at Mazars discusses recent HKMA initiatives taken in response to Covid-19 and their implications for Hong Kong banks, highlighting credit risk as a growing threat. The Hong Kong economy has been confronted by several downside factors over the...
Mazars provides an update on recent developments affecting financial institutions’ credit capital and provision models with focus on the EBA IRB Roadmap and COVID-19 relief measures. Before the onset of the COVID-19 global pandemic, regulatory bodies across the Eurozone published...
The Alternative Reference Rates Committee (ARRC) continues to support market participants in their efforts to transition from USD London Interbank Offered Rate (LIBOR) towards the Securities Overnight Reference Rate (SOFR). Following the Financial Conduct Authority’s (FCA) March 2020 statement that...
At first glance, regulatory authorities appear to have deprioritised the issue of climate change. However, a closer look would suggest otherwise and climate change in reality remains a key long-term priority of national and European regulators. In some areas, regulatory...
The current pandemic is having far reaching consequences across all aspects of society. Compared to other industries the impact on the credit card industry is relatively mild and from a customer perspective the value of on-demand liquidity is now clearer...
Covid-19 disruption to the banking sector is widespread, including changes to working patterns, changes in customer behaviour, changes to partner-supplier dynamics and direct impacts on profit and loss accounts. The phase of immediate action to ensure business continuity is now...
With banks no longer the weak link in the financial system, they now have a key role to play in supporting the real economy to survive the crisis caused by the Covid-19 pandemic. The significant strengthening of prudential regulation over the...
As we continue to feel the effects of the global pandemic, the banking sector, like many other sectors, now faces unprecedented uncertainty about the economic outlook ahead. While banks go into this pandemic in a stronger position than the global...
The European Securities and Markets Authority (ESMA) has issued a public statement to announce the delay of the industry’s compliance with phase one of the Securities Financing Transactions Regulation (SFTR). This is in response to ESMA’s awareness of the financial...
The Covid-19 outbreak and the unprecedented emergency it presents has created a unique threat to the world’s economy. Like all sectors, banking has been impacted, and its stakeholders have felt excessive pressure over the last few weeks to get things...
The expected 2021 disappearance of LIBOR requires robust fallback language for cash products and derivatives alike. Industry associations have taken initiatives to reform the historic fallback language of securities, with ISDA proactively leading the way on derivatives and national working...
Since Libor was first used in financial markets in 1986, it has become the foundation of the global interbank funding market. However, regulators ruled that Libor’s volatility during the last global financial crisis (GFC) and a rate-rigging crisis in 20121...
One year on since the HKFRS 9 standard on financial instruments came into force in Hong Kong and two years since the First Time Application (FTA), trends and insights into impacts of the standard are beginning to evolve. As a...
In recent years, disruption to the banking sector has seen an increasing number of partnerships between banks and FinTechs, as banks look to acquire the digital expertise now required for 21st century banking and FinTechs look to tap into the...
At the end of nearly two years of legislative work, the reform of the prudential regulation of investment firms completed its final phase with the publication in the Official Journal of the European Union of two new regulatory texts: Regulation...
Under the terms of the Fundamental Review of the Trading Book (FRTB), a bank wishing to apply the Internal Modal Approach (IMA) to calculate its capital charge associated with market risk must carry out: backtesting on the Trading Book (TB)...
With Libor’s cessation date at the end of 2021 looming, global regulators are hastening their IBOR fallback strategies. Yet while market momentum has increased for multiple published RFR indices, among them the GBP SONIA, the EUR €STR, and the USD...
Financial market participants – at least the largest ones – are actively preparing for the expected discontinuation of the London Inter-Bank Offered Rate (LIBOR) after 2021. Transitioning towards a LIBOR-free world is a challenge that requires the involvement and coordination...
The methodology for an exercise to assess the resilience of EU banks to adverse market conditions and test the state of their capital allocations has been released by the European Banking Authority (EBA). The exercise – part of EU-wide stress...
Persistant negative interest rates, the inherent risk of a trade war between China and the United States, fears of a recession... all worrying signs of an imminent new crisis. However, the real question is not if but when the next...
With little more than two years to go, Libor’s cessation date continues to near. The voluntary agreement of panel banks submitting to Libor will conclude at the end of 2021, from which risk-free rates (RFR) are expected to replace Libor...
Pierre Latrobe at Mazars discusses the measures the HKMA has taken so far to strengthen its macroprudential supervisory toolkit and address potential risks to the wider financial system. The Hong Kong economy is suffering from several lingering negative factors, the...
With significant IBOR reform on the horizon, Mazars brought together industry experts, practitioners and regulators to discuss the challenges and opportunities they face. Speakers included the Bank of England Market Division’s Alastair Hughes, EFRAG’s Didier Andries and Mazars’ IBOR lead,...
The British political landscape has been unsettled and uncertain. Boris Johnson defeated Theresa May in July 2019 to become Prime Minister with his “do or die” conviction for the UK’s exit from the EU, with or without a deal. While...
In 2018, the Bank of England (the “BoE”) set up a project called “Future of Finance” aimed at anticipating the upcoming changes in financial services for the next decade, and the impact of these changes for market participants, customers and...
Robotic process automation (RPA) is software that sits on a PC or workstation and is programmed to mimic the activities that a member of staff would perform. It will open applications, copy and paste data, and follow predefined rules. A...
Whether the launch of Facebook’s Libra will threaten global monetary and financial stability is a question that has been on all regulators’ and politicians’ minds since Facebook announced its cryptocurrency project on June 18, 2019. Donald Trump himself tweeted that,...
September 2018 saw the tenth anniversary of the collapse of Lehman Brothers, the US corporate and investment bank that was symbolic of Wall Street. Its failure is still fresh in the mind, and marked a turning point for banking and...
A raft of recent consultations on Ibor reform indicates that we may finally be making some progress. We have seen the International Swaps and Derivatives Association (ISDA) issue another round of consultations for Inter-Bank Offered Rates (IBORs) trying to solve...
The standard IFRS 16 on leases is applicable to financial periods current at 1 January 2019. It applies to listed companies, their consolidated subsidiaries and entities presenting their accounts under international financial reporting standards (IFRS). The standard seeks to improve...
Mass data... The real estate sector is gradually going digital, and recent constructions now incorporate equipment and connectivity to allow both use and maintenance to be optimised. However, as the renovation of the stock is naturally slow, the majority of...
During a meeting of the Special European Council on the 10 April 2019, EU leaders agreed to a flexible Brexit extension until 31 October 2019, to allow for the ratification of a withdrawal agreement. Despite this extension, there is still...
New technology, regulatory developments and societal changes, including those linked to strengthening stakeholder engagement, are substantially impacting financial services as well as the rest of the business community. For businesses to succeed in this fast-changing environment they must be led...
With 2019 marking a move for the European Banking Authority (EBA) to Paris in April, regulatory priorities will see the EBA preparing the work of transposing the last Basel III agreements. Following a quantitative and qualitative study, the Commission will be...
Brexit preparation is one of the largest undertakings that regulators and market participants have ever done, considering the uncertainty and the impact it carries. Many financial institutions have stopped waiting for lawmakers to finalise negotiations over the terms of the...
At the last G20 summit in Buenos Aires, leaders called for the full implementation of all major international financial reforms intended to improve the financial system, in particular, those drawn up by the Financial Stability Board (FSB) and the Basel...
On March 11 and 12, 2019, Mazars attended the 30th annual conference organized by the Institute of International Bankers (IIB). Agencies and regulators serving as speakers and panelists this year, included: •The Federal Reserve Board (FRB) •The Department of the...
Today’s world is witnessing an explosion of data, including personal data: your civil status, what you do and don’t like, your holidays, your favourite leisure activities. The exploitation of all this data is multiplying through the use of innovative IT...
Following a majority vote against Theresa May’s Brexit deal on 15 January 2019, and with only 3 weeks until the proposed deadline of 29 March, financial services authorities in the UK and EU have been urgently preparing for an increasingly...
Could the transition period towards the new alternative Risk-Free Rates (RFRs) be more complex than initially envisaged? The speech given by Edwin Schooling Latter, Director of Markets and Wholesale Policy at the Financial Conduct Authority (FCA), on the 28 January...
The financial sector is bursting with disruptive Fintech start-ups at present who are shaking up the banking and insurance sector with innovations varying from online mortgage banks to online payment services. With innovation occurring at such a rapid pace, how...
Seven years after the first Basel Committee on Banking Supervision’s (BCBS) consultative paper on the Fundamental Review of the Trading Book (FRTB) and three years after the publication of the revised Market Risk Framework, is the 14 January 2019 release...
With rising global temperatures[1] comes an ever-growing pressure on the financial services sector to respond and prepare for the far-reaching effects of climate change. The impacts upon the sector are already being felt – extreme weather events are creating significant...
Which is the more significant - the tenth anniversary of the collapse of Lehman Brothers, or the tenth anniversary of the opening of the App Store? For the global financial community world, 15 September 2008 is a key date, weighted...
In the second installation to our Brexit Watch, the delay of the House of Commons vote and subsequent negotiations increases uncertainty, with multiple possible scenarios set to emerge. Brexit preparation has been one of the largest undertakings for regulatory bodies...
On Friday 2 November, as expected, the European Banking Authority (EBA) published the results of the 2018 EU wide stress tests on European banks’ solvency in the event of macro-economic shocks. This was the fourth exercise of the now-biannual testing...
The sweeping growth and prolific collection of technologies that make up cryptoassets today have made it incredibly challenging for regulators worldwide to standardize and issue authoritative guidance. Professional accounting standard-setting bodies, like the Financial Accounting Standards Board (FASB) and the...
As negotiations on the UK’s exit from Europe continue, albeit slowly, regulatory bodies in the UK and Europe are beginning to issue regulatory changes to cope with all eventualities, including the UK leaving Europe without a deal. As a result,...
With a portfolio in excess of €1300 billion in 2017, euro savings are firmly established as the preferred life-insurance product for people in France, thanks to their threefold benefits of guaranteed capital, attractive returns and instant liquidity. However, recent financial...
Integrated Reporting applies principles and concepts that are focused on bringing greater cohesion and efficiency to the reporting process, and adopting ‘integrated thinking’ as a way of breaking down internal silos and reducing duplication.The Framework has been tested and assessed...
The new standard IFRS 9 on financial instruments has been effective starting 1st January 2018 for most entities but insurance groups have the possibility to defer its application to 2021, the year when the new standard IFRS 17 on insurance...
Reinsurance, also known as the “ insurers’ insurance ”, plays a key role in the global market economy today. Several factors, such as the strengthening of capital requirements, the increasing level of significant NAT CAT events or the need for...
While 2018 has witnessed some turmoil in the crypto-currency markets, interest in this new asset class - and also in investment funds which allow easy access to crypto-currencies - remains high. On 26 June 2018 CBOE Global Markets filed an...
Tax legislation generally includes promises to simplify the process of computing taxes. But in the process of transforming legislation into law, those good intentions often are overshadowed by new complexities. The Tax Cuts and Jobs Act of 2017 is no...
The whole financial system relies on reference interest rates, more precisely on InterBank Offered Rates (IBORs) whose integrity and reliability have raised some concerns since the 2008 financial crisis and the LIBOR manipulation scandal. These IBORs are used to determine...
After many years of development, in May 2017, the International Accounting Standards Board (IASB) published a new standard for insurance contracts. Coming into effect on January 1st 2021, the IFRS 17 standard introduces a new model for accounting and measuring...
S.1255 the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Senate Banking Bill”) was passed on March 14, 2018 after a strongly bipartisan 67-31 vote. On May 22, 2018, the House passed the Senate Banking Bill with 258 yeas...
Fintech is prominent in today’s business lexicon, having migrated from the back office to a prominent position in both consumer and commercial finance. Its core functionality on mobile devices and wide application in artificial intelligence (AI) spans blockchain, smart contracts,...
In this podcast, Greg Simpson discusses the Prudential Regulatory changes proposed by Basel 3. Together with Phuong Gomard and Bowen Lu, regulatory specialists in Mazars’ Banking Consulting practice, they highlight the impact on the standardised approach to credit risk and...
The FinTech model is reaching a new level of maturity. The first stage saw them disrupt the traditional banking business models using technology to impact the customer experience and relationship. The second wave offers FinTechs the opportunity to expand their...
Within the insurance industry, automatic exchange of information under Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) is mainly relevant to life insurers, since non-life insurance and reinsurance activities generally do not give rise to classification...
The complexities of creating and implementing a due diligence framework to monitor and measure the impact financial services have on human rights can be overwhelming. The EU recommended UN Guiding Principles on Business and Human Rights Reporting Framework (www.UNGPreporting.org) -...
Prominent real estate owners and developers are sourcing an attractive form of capital—bonds issued and traded on the Tel Aviv Stock Exchange (TASE). It’s a creative concept, with benefits for both sides of the transaction, and is also attractive for...
Big data analytics is one of the most discussed topics in the world of finance. Application of these methods has led to better assessment of credit quality, improved pricing of insurance contracts as well as automation of client interaction. Processes...
By Bisnow, sponsored by Mazars New York City was both the most liquid hospitality market in the country[i], and global hotel investors’ destination of choice in 2015, according to JLL. That year, its transaction volume exceeded $6.6B, outpacing London by...
The Tax Cuts and Jobs Act (the “TCJA”), signed into law in December 2017, and applicable to taxable years beginning after December 31, 2017, contains several provisions that will have a significant impact on specific types of entities and investments. ...
By Bisnow, sponsored by Mazars Millennials have surpassed baby boomers as the largest living generation[i], and they are spending a larger share of their incomes on experiences[ii] like travel and dining than on possessions. Winning over this generation, which controls...
It is truly amazing the turmoil 88 pages can produce. Yet while the whole Banking Industry is strongly opposed to some of the new Fundamental Review of the Trading Book (FRTB) requirements, such as the Profit & Loss Attribution (PLA)...
On February 1, 2018, just one day after the European Banking Authority (EBA) officially kicked off its EU-wide stress test exercise, the Federal Reserve Board (FRB) released the applicable scenarios for its own US stress test. 2018 US Stress Test...
The Solvency II Directive increases the requirements for transparency vis-à-vis both the regulatory authorities and the stakeholders, including policyholders, financial analysts and investors. In this context, insurance undertakings and groups were, for the first time, required to publish a narrative...
At the end of February 2018, all the major European banks published information on the impact of the implementation of the new standard IFRS 9. IFRS 9 introduces numerous changes (classification, impairment, hedging, etc.). Their impacts at the transition date...
On 6 February 2018, EIOPA published its latest risk-free interest rate curve to be taken into account for the purposes of Solvency II calculations. Based on calculations for January 2018, the curve is slightly different from previously published curves. This...
Because of the 2008 financial and economic crisis, banks have accumulated billions of non-performing loans (NPLs) on their balance sheets. Even 10 years after this major economic event, the situation is not yet back to normal in some countries. In...
Because of its importance in society, the insurance industry has always faced a considerable amount of regulatory requirements at the national (BaFin) and international (EIOPA) level. Although this is generally something to be welcomed, this also presents a range of...
Digital transformation has expanded the need for security, continuity and resilience. Today’s business must embrace an enterprise risk management strategy that includes legal, regulatory and political considerations. Enterprises today face a significant level of security challenges across their organizations. IT...
In recent years, we have seen a tremendous surge of interest in measuring and managing operational risks, both as a result of regulatory developments in corporate governance and capital adequacy, as well as due to a growing realisation that an...
While whistleblowing laws and initiatives might differ from country to country, whistleblowers in the financial industry are now well recognized and have gained international attention. Here we analyse the steps taken in the USA to strengthen whistleblowing procedures and practices....
On 7 December, after several years of negotiations (starting in 2012 with the market risk review), Mario Draghi, chair of the Basel Committee’s Group of Governors and Head of Supervision (G-HOS), announced the finalisation of the Basel III agreements. These...
In the financial industry in general and the insurance sector in particular, traditional business models are increasingly coming under pressure – a trend that reflects technological, economic and social changes. At first glance, this represents a risk for insurance firms,...
Non-performing loans (NPLs) remain at the forefront of the European regulatory agenda, with two major consultations run by the European Central Bank (ECB) and the European Commission (EC) over the recent weeks, both in relation to the introduction of minimum...
PSD2 will supersede PSD1 on 13 January 2018, retaining key benefits from PSD1 such as increased competition with facilitated market entrance for regulated non-bank players, improved economies of scale, enhanced transparency, but also incorporating technological innovation, enhancements and protection into...
The new Investment Tax Act in Germany introduces new rules on investment taxation in the country. Coming into force on 1st Jan 2018, a widespread reform will apply to domestic and foreign investment funds with the transfer of transparent to...
The vast array of legal and supervisory requirements for determining a business model draws attention away from the inherent and indispensable need that a successful entrepreneur has for such a model. In the past, was an entrepreneur who had decided...
In this third article of our thought leadership programme around the transformation of Financial Services, we are focusing on how new business models are emerging. “THIS IS A WORLD OF SIX-MONTH PRODUCT DEVELOPMENT CYCLES AND CONSTANT UPDATES, PRIMARILY OF SOFTWARE,...
I was recently invited to speak at the 25th birthday conference of the Bulgarian Insurance Association in Sofia. The request came from my colleague, Thanos Petropoulos, who runs Mazars Bulgaria. As an integrated, international partnership, opportunities to work with our...
As recent as 26 September 2017, the European Banking Authority (EBA) under the Directive 2013/36/EU published its revised guidelines on harmonising the internal governance arrangements of banks across the European Union. The EBA Guidelines will apply as of 30 June...
One of the main differentiators FinTechs have is their current positioning within the financial services value chain ecosystem: they focus on customer experience while their operations execution and control activities are often outsourced to banking institutions. However, is this likely...
A holiday photo on Instagram, a “like” on Facebook, a PayPal transfer to pay for your Airbnb, or just a bank card payment or an ATM withdrawal: every day, we feed data into greedy and enthusiastic algorithms that are gathering...
On September 27, 2017, the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency (the "Banking Agencies") issued a proposed joint rule to simplify several requirements in the Banking Agencies’ regulatory capital...
In August 2017, S&P Global Market Intelligence published an analysis of where banks will set up their European hubs. Germany, namely Frankfurt and Berlin, came first with 13 financial institutions. Dublin came a close second attracting 12 banks, insurers or...
A new prudential framework applicable to banks and credit institutions in the West African Economic and Monetary Union (WAEMU) is set to come into force on 1 January 2018. However, a significant delay has been observed in implanting reforms in...
Reforms to an accounting system that has been in force for nearly 20 years will help to increase the security and robustness of the West African financial system, while improving the quality of financial reporting. The Revised Banking Chart of...
Despite “reform fatigue” and squeezed profit margins, financial services firms are dealing with a continued flood of regulation. Some are turning to new technologies for compliance help. In this article, written by the Economist Intelligence Unit and sponsored by Mazars,...
The term “ICO” is a common buzzword in investment circles these days. While these “Initial Coin Offerings” are distant cousins of IPOs (in the sense that both share the objective of helping firms raise capital from various sources), their likely...
Over a decade ago looking at the state banking webpage for my home state of New Jersey, there were approximately 250 banks doing business in the state then. A similar check today would yield a list of less than 150...
The FX Global Code (Code) was finally published by the Foreign Exchange Working Group (FXWG)[1] on 25th May 2017, clearly laying down the guidelines for good practices in the FX Wholesale marketplace. With numerous scandals causing turbulence in the FX...
Along with Mazars banking regulatory advisory specialists Pauline Pelissier and Audrey Cauchet, Greg Simpson provides an overview of the banking regulatory outlook in the UK and Europe over the next 12 to 18 months. They also discuss IFRS9 in the...
The Asset Management industry is positioned to be the main focus of the Financial Conduct Authority (“FCA”). On 28 June 2017, the FCA published the final report of its Asset Management Market Study. This follows on from the interim report...
The lines between financial services and high technology are becoming increasingly blurred. Four major technological changes will disrupt financial services in the years ahead. In this article, written by the Economist Intelligence Unit and sponsored by Mazars, we are discussing how technological...
With Solvency II fully in force, the insurance industry has entered a new phase of transformational development. For many insurance companies, Solvency II has provided the opportunity to make better sense of risk and yet, insurance companies continue to operate...
In this podcast Greg Simpson discusses cyber security with our expert Francisco Sanches. They discuss major threats such as emerging risks, FCA guidance on cloud data storage and the cyber security skill gaps to name a few. Podcast player [audio...
Measuring banking risks is a difficult exercise, but striking a balance between simplistic and overly complex measurement techniques is the key to accurate risk measurement. This was the substance of the European Central Bank’s (ECB) Chair of the Supervisory Board,...
Efficient supervision of capital markets is a priority of the Capital Markets Union (CMU) given its role in facilitating market integration and European cross-border transactions. But there are currently a number of supervisory barriers halting progress of European mobilisation of...
The field of money remittance transactions in Japan is expanding and is attracting many overseas companies looking to operate fund transfer and virtual currency exchange businesses. A regulatory framework for FinTech firms in Japan now presents major opportunities and challenges,...
Greg Simpson, Head of Banking UK and banking experts Paul Hodgett and Pierre Latrobe discuss the implications of IFRS9, more specifically they share some of their experience on helping banks implement IFRS 9. As the standard starts on 1 January...
Personal data security is increasingly important, but many companies may not be ready to comply with the EU’s tough new data protection laws, which must be implemented by May 2018. All EU businesses that handle data will have to comply...
Cyber as an organsational risk In 93% of data breaches, the targeted systems were compromised within minutes. 83% of the time, those breaches were not discovered for weeks, leaving the attackers with plenty of time to do their damage and...
Solvency, liquidity, transparency and oversight requirements: as the Basel Committee meeting in Santiago, Chile in November 2016 demonstrated, there is still much to be discussed on the finalisation of the Basel III agreements. However, the inauguration of the new President...
Examination Cycle for Certain Small Insured Depository Institutions and U.S. Branches and Agencies of Foreign Banks Under $1 Billion in Total Assets. The Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve Board (“FRB”), and the Office of the Comptroller of...
In about nine months, IFRS 9 will replace IAS 39 and the new accounting environment won’t be the only element to be impacted. In recent months, the Basel Committee on Banking Supervision (BCBS), the EU Commission and the European Banking...
The figures speak for themselves: real estate investments in Germany rose to almost €66 bn in 2016, reaching almost €20 bn in the final quarter excluding residential, according to BNP Paribas Real Estate. Germany is now challenging the UK as...
There is a clear pipeline of jumbo disposal Non-Performing Loans (NPLs) in Italy, thanks to the ECB push, however vendors will need to take into careful consideration a few factors in their decision, such as recent regulatory reforms of insolvency...
After the Basel Committee consultation in October and then the European Commission’s legislative proposal of the package CRR II / CRD V in November 2016, the EBA has now given its opinion on the management impact of IFRS 9 on...
German Immobilien-Sondervermögen are domestic open-ended real estate funds without legal personality which are managed by an investment management company on behalf of its investors. It is the investment management company that buys, sells and manages property held within the fund...
Background and issues The Cambridge dictionary defines 'infrastructure' as ‘the basic systems and services that a country or organisation uses to work effectively’. This rather broad definition covers a wide range of assets at the heart of economic activity: they...
We look at the rise of ‘robostocks’ and algorithmic trading, and consider the repercussions on financial markets. An old investment adage mockingly states that “a failed trade becomes a long term investment”. The idea behind it is that if a...
Real estate structures and tax treaty issues: questioning current thinking Real Estate Investment Trusts ("REITs") give all investors the opportunity to invest in large-scale, diversified portfolios of income-producing real estate in the same way they typically invest in other asset...
The Securities and Exchange Commission (“SEC”) approved a plan on November 15, 2016, to create the consolidated audit trail (“CAT”), a central data source to collect and accurately identify every order, cancellation, modification and trade execution for all exchange-listed equities...
The principle of tax transparency for investment funds will soon be replaced by taxation at fund level with partial exemption for investors. This will also apply to foreign funds with German income. The new rules have been integrated in the...
Cyberattacks aren’t just getting more frequent, they are also becoming significantly more vicious and sophisticated. The majority of today’s data breaches result from human error, making cybersecurity a “people problem” as well as a technology issue. The solution to this...
Non-Performing Loans (NPLs) are a key issue and will continue to be on the European agenda as a top priority for a long time. On the one hand, the ECB guidelines are already applicable, as they represent a best practice...
On Wednesday 23 November, the European Commission presented its long-awaited revision of the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD IV), including the regulatory changes that mark the finalisation of the Basel III agreements. This revision follows five years of...
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. Topic 606, Revenue from Contracts with Customers, presents the new revenue recognition guidance. FASB also issued ASU 2015-14, Revenue from...
The European Central Bank (“ECB”) recently launched public consultation on guidance to banks on non-performing loans (“NPL”). Consultation periods runs until 15 of November 2016. As NPL harms the profitability, funding and capital of banks and more globally the real...
On 1 January 2018, banks applying IFRSs move into a new era with the implementation of IFRS 9 on financial instruments, which will supersede the existing IAS 39. Although adopting this new standard will lead to many changes, it was...
On 20th October, I was delighted to chair an event in collaboration with OMFIF on the implications of Brexit for the financial services industry. We had an excellent panel of experts representing banks and asset managers as well as the...
New York Department of Financial Services (DFS) has significantly raised the bar for cybersecurity programs, releasing regulations on September 13, 2016 slated to go into effect on January 1, 2017. The regulation will affect all entities with a DFS “license,...
On August 25, 2016, the Securities and Exchange Commission (the “SEC” or the “Commission”) adopted amendments to various rules under the Investment Advisers Act of 1940 (the “Act”). The amendments will be effective 60 days after the date of publication...
Saturday 1 October marked the 100th day since the result of the UK referendum to leave the European Union became known. And it seems neither the British nor their European neighbours have fully come to terms with the idea of...
Following the UK’s landmark referendum decision to leave the European Union, real estate investors have been dealing with the push and pull of post-Brexit market sentiment. Initial panic surrounding the outcome of the vote saw a raft of UK-based fund...
In the second of our blogs looking at how the UK’s decision to exit the EU is impacting key real estate locations, our experts shine a light on some of the challenges facing German real estate investors, as well as...
In the third of our blogs looking at how the UK’s decision to exit the EU is impacting key real estate locations, our experts outline some important post-Brexit political and practical considerations for French real estate investors. Need for visibility...
In the fourth of our blogs looking at how the UK’s decision to exit the EU is impacting key real estate locations, our experts in the US outline how the current lack of clarity opens the door of opportunity for...
Following the UK’s landmark referendum decision to leave the European Union, real estate investors have been dealing with the push and pull of post-Brexit market sentiment. Initial panic surrounding the outcome of the vote saw a raft of UK-based fund...
“Blockchain is a bit like gluten. Everyone is talking about it, but no one knows what it is,” said Tim Swanson, head of research at R3, the financial technology innovation firm that is leading a consortium partnership working on blockchain...
At a time when the European Banking Authority’s stress tests have provided valuable insights into the solvency levels of European banks, these banks are continuing their efforts to formalise the conceptual and operational framework of risk management. While changes in...
Brexit continues to be omnipresent. From British Airways’ Business Life (September 2016 p. 11-12, "Post Brexit, Brand Britain must show its mettle... and its sense of humour") to the Spectator, articles are a mixed cocktail of seeing Britain great again...
Over a beer with David Cameron in October last year, Chinese leader Xi Jinping expressed a very clear opinion on which way he wanted Britain’s vote on Brexit. He wanted a “prosperous Europe and a united EU” with the UK...
Greece’s financial systems have been tightly monitored by the institutions – once called the Troika – of ECB, IMF and EU Commission in recent years. The systemically relevant Greek banks are under close control of the Joint Supervisory Team (JST),...
Cyber attacks aren’t just getting more frequent, they are also becoming significantly more vicious and sophisticated. According to the latest figures from the Ponemon Institute, the average cost of a data breach has reached nearly $6.5 million in the US,...
Thanks to Advanced Analytics, insurance providers can bring claims management into a new era by combining automatic processing of large volumes of data with human expertise. Analyzing data in order to optimize the claims processing chain is not a new...
Recently released guidelines require institutions to adopt risk-based programs to monitor and filter transactions for potentially suspicious activity. Beginning January 1, 2017, financial institutions registered under the New York banking law are responsible for complying with anti-terrorism transaction monitoring and...
The impact of Brexit on foreign banks, and especially the larger ones, has already been the subject of extensive media coverage and speculation. Discussions on the advantages and disadvantages of Brexit for larger overseas banks have been wide-ranging. Will the...
In previous weeks, I have commented mostly on early signs and emerging risks in the banking sector, including some early warning shots in the property space in particular. But banks and funds invest in many other types of assets and...
The Brexit debate last week was overshadowed by Theresa May becoming the UK’s new Prime Minister and some of her more radical appointments to her Cabinet. On top came the horrific terror attack in Nice and the failed coup d’état...
Brexit continues to dominate the political and financial world across Europe and beyond as people wrestle with its impact. But there’s another massive storm on the horizon for the EU that has been brewing for some time and Brexit may...
As implied in the BCBS consultative document on November 2015, the BCBS published new standards on 11 July 2016 to include amendments on STC securitisations and thus make its final decision for their calibration. The securitisation framework was highlighted in...
Confronted with legislation that is becoming increasingly constrictive, banks must optimize the management of their data. It’s a challenge that is compounded by the fact that data is often dispersed throughout information systems - a fact that aggregators are capitalising...
It’s two weeks since the Brexit Referendum and it’s fair to say that its consequences are already being felt. At a broad economic level, sterling has hit a 31 year low and economists have revised down the economic outlook for...
The Federal Reserve disclosed the results of its annual supervisory stress tests and CCAR (Comprehensive Capital Analysis and Review) respectively on 23 and 29 June 2016. In a combined exercise which has been running since the financial crisis, 33 US...
Basel 4 and Single Supervisory Mechanism act to reduce the excessive variability in the results of internal model approaches to credit risk. For more than ten years, Basel reform has encouraged the development and use of internal models designed to better...
Business funding diversification, helping to increase options for savers and making the economy more resilient are some of the main objectives set out in the European Commission’s Action Plan on Building a Capital Markets Union (CMU) published on 30 September...
As part of the content program on digital finance that Mazars has launched in partnership with the Economist Intelligence Unit, we are exploring in a new article on how mobile money is driving Africa’s cashless future. Over the last few...
Over the last decade, Africa has become a global leader in mobile money. The statistics for the use of smartphones as a payment mechanism are compelling with M-Pesa, in particular, by far the continent’s biggest mobile money triumph. Backed by...
On 6 April 2016, the Basel Committee published a new consultative document outlining revision plans for the calculation of the leverage ratio and submit proposals for additional requirements applicable to systemically important banks (G-SIBs). This new consultation comes as no...
Banks prepare for the reinforcement of prudential supervision via the Single Supervisory Mechanism (SSM). After successive waves of new regulatory requirements in recent years, the outlook for the calculation of risks and Pillar 1 capital requirements is becoming clearer. At...
At the same time as regulators as a whole express their support for the harmonisation, transparency and comparability of banking models at the European level, a new consultative document published by the Basel Committee on 24 March 2016 partly calls...
The revised Payment Services Directive (PSD2) that comes into force in January 2018 will essentially remove many of the barriers to new players looking to enter the payments market by providing access to customer data and accounts through an EEA...
We recognise digitisation as an important topic for the financial services industry; for this reason, we have developed a content programme with the Economist Intelligence Unit that focuses on how Financial Services companies are adapting their risk and reporting procedures to...
UK Banks are already gearing up for the introduction of the revised Payment Services Directive (PSD2) that comes into force in January 2018. By providing clear guidelines and regulations, the Directive essentially removes the barriers to new players and opens...
A series of initiatives designed to help combat terrorism financing have put electronic payment cards in the spotlight due to the fact they guarantee anonymity in the use of small sums. Announced on 23 November 2015, these initiatives supplement the...
By 2025, The Wall Street Journal ([1]) estimated that Generation Y, also known as Millennials, would represent nearly half of the total active population in the world. The challenge for banks is to adapt their strategy to match Generation Y...
The number of electronic money players in the European market has increased in recent years, from 4 in 2010 up to 48 in 2014*. Add to this the fact that numerous players beyond the banking world have also created their...
Since the 2008 crisis, the financial sector has been under scrutiny. Identified as one of the crisis root causes, the importance of risk management framework and risk culture and its interconnectedness to ensure the long run financial stability of each...
Financial Technology (“Fintech”) companies have kick-started a revolution in the payments landscape. Using state-of-the art technology, fintech companies are transforming how payments are transacted and processed. Banks and traditional payment providers are having to entirely rethink their approach to how...
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To be a ‘good bank’, a bank must be efficient, innovative and trustworthy. Given its central role at the heart of the economy and financial system and the risks associated with fulfilling its role, banks have to operate within an...
The last five years have been a time of much challenge and change for the Central Banking Fraternity in Europe. Crisis, both economic and political, has been followed by much adjustment and change, including both practical economic and policy interventions,...
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