The UK’s Senior Managers Regime seeks to formalise responsibility for risk, yet the threat of cyber attack sits outside of traditional risk governance standards, and means that protecting against such attacks will require a rethink of the traditional ‘three lines of defence’ model.
Latin American banks may lag behind their counterparts elsewhere in the world when it comes to digital innovation, but German Pugliese Bassi, co-founder and chief marketing officer at Miami-based technology provider Technisys, believes that attitudes towards technology are changing, making it the ideal time to launch a digital-only bank in the region.
Protecting the banks’ crown jewels – money and personal data – may have become more difficult than ever, but financial institutions have fortified their defences with a little help from their fintech friends.
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Hyperactive, yet passive
The Lloyds-HBOS affair
An unhappy financial marriage is examined in court
LLOYDS TSB was boring and stodgy—the slow and steady tortoise of British banking. HBOS fancied itself as racy and exciting but, when it blew up in 2008, needed a rescuer. Waiving the usual competition rules, the government steered HBOS into the arms of Lloyds. An initial bail-out of £17 billion ($31 billion) left the government holding a 43.4% stake in the combined company. It also held £4 billion of preference shares and tried to charge Lloyds a £16-billion fee for insuring its balance-sheet. The newly renamed Lloyds Banking Group subsequently issued £13.5 billion in new shares to buy its way out of the latter two entanglements.
A lawsuit working its way through the High Court has shone new light upon the events of 2008. By gobbling up HBOS, Lloyds TSB’s management created Britain’s largest banking …
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Clear thinking needed
Italy’s bad debts
The government tries to relieve banks of non-performing loans
BANKS in Italy fared better during the financial crisis than many of their peers, sparing Italian taxpayers the bail-outs their counterparts in other countries had to shoulder. But although they stuck to their cautious business models and avoided fuelling a big housing boom and bust, Italy’s protracted recession has enfeebled them. It has caused bad loans to soar, which in turn has prevented them from supporting a still weak recovery with new lending.
The burden of non-performing loans (NPLs) in Italy is now immense: they amount to €350 billion ($370 billion), the equivalent of 21% of GDP. With these unproductive assets tying up their capital, Italian banks are unable to extend new credit to businesses. In fact, they are lending out less in an effort to shore up their balance-sheets (see chart).
The government would …
Over the past three years, BNY Mellon has assembled the building blocks for the digital transformation of its business. Today, it is putting this work into practice and aims to be a change engine within the financial industry.
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How to fight back
Spain’s multinational banks
Foreign subsidiaries are proving a headache for big Spanish banks
DURING the financial crisis, it looked like a stroke of genius. Huge foreign operations helped succour Spain’s two biggest banks, Santander and BBVA. Last year Santander boasted that it was one of the few big international banks not to have suffered a single quarterly loss throughout the crisis. But diversification cuts both ways: turmoil in emerging markets is now sapping profits at Santander and BBVA just as their home market recovers.
Less than 30 years ago, Santander was a smallish Spanish retail bank. Now it is a titan, operating in ten “core” countries, including emerging markets such as Brazil and mature ones such as Britain. BBVA, too, boasts a big retail-banking operation in multiple countries.
With a global majority preferring digital access to banking, the cost of serving a dwindling number of customers through expensive analogue channels is growing, something that will eventually lead to banks disposing of these channels altogether.
As 2015 comes to an end, The Banker has brought together a group of high-profile experts in the world of finance and economic research to predict what will happen in the next 12 months. Silvia Pavoni asks them to share their views on the global economy and on what factors will shape banking in the future.
Commercial cards have become so much more than a piece of plastic and 16-digit number that completes a transaction. Not only are they an important payment tool in a treasurer’s kit, but also the cornerstone of a working capital management programme.