In a wide-ranging interview in Frankfurt, Enria outlined plans to ease the burden of banks’ annual risk reviews and move away from higher capital requirements as the default tool for pushing lenders to fix problems. Instead, he wants supplement them with more “enforceable qualitative actions” such as sanctions or penalty payments that would allow the ECB to better tailor its oversight.
At the core of his efforts is the cumbersome annual examination of the risks that individual banks face, known as SREP. Enria wants to make it more efficient by differentiating between risk factors and processes that the ECB is quizzing banks on every year. Going forward, he said, some of those checks can be conducted over the course of several years.
Instead, non-compliant banks could face “periodic penalty payments.” Other tools could include sanctions or so-called fit-and-proper reviews for a bank’s leaders in cases of serious management or governance shortcomings. The ECB also needs to look at how authorities in other jurisdictions operate, Enria said, pointing to cease-and-desist orders that can constrain the ability of US banks to make acquisitions if they are found to have insufficient controls.
“We try to be open” and “maybe also less heavy-handed in terms of processes than it has been in the past,” he said. “I think these are all positive achievements that I leave to my successor.” The ECB is now challenging firms with “excessively rosy” projections for how their revenue will benefit from higher interest rates. The watchdog has also increased scrutiny of bank liquidity, a risk that came to the fore this year with the collapse of several US firms and the unraveling of Credit Suisse.
Finance Finance Latest News, Finance Finance Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: financialpost - 🏆 7. / 85 Read more »
Source: fpinvesting - 🏆 43. / 63 Read more »
Source: SaltWire Network - 🏆 45. / 63 Read more »
Source: globeandmail - 🏆 5. / 92 Read more »