Economy
UK watchdog to ‘ramp up’ checks on how banks assess risks
© Reuters. FILE PHOTO: A person walks alongside the River Thames during sunrise, with London’s financial district in the background, in London, Britain, April 13, 2023. REUTERS/Henry Nicholls/File Photo
By Huw Jones
LONDON (Reuters) – Britain’s financial watchdog told banks on Friday it would “ramp up” checks on whether they were properly assessing and managing risks from large customers to avoid any liquidity crunch in stressed markets.
Failure to properly appreciate the risks from customers can affect a bank’s ability to have enough liquidity in challenging markets, as recent events have shown, the Financial Conduct Authority (FCA) said in a letter to chief executives of wholesale banks which was made public.
It did not specify the events, but liquidity in markets has become a key issue since the turmoil in bond markets following former Prime Minister Liz Truss’ ‘mini budget’ last September forced the Bank of England to intervene to improve liquidity.
“We will carry out supervisory testing on the embeddedness of improvements in risk management by looking at the process through which new products and some transactions are produced,” Simon Walls, FCA director for wholesale sell-side, said in the letter.
“For example, we have noted instances of poor management of client relationships, including inadequate knowledge of clients’ business profiles,” he said.
“We are ramping up our testing programme to look at how banks are controlling these risks, including more in person supervisory assessments.”
Many UK-based trading banks have opened hubs in the European Union to avoid disruption to business after the City was largely cut off from the bloc by Brexit.
Under pressure from the European Central Bank, bankers have moved from London to staff these hubs, raising questions about sufficient staff in UK units.
“While there are various booking and organisational arrangements underpinning these activities, there should be appropriate oversight for any business booked into the UK,” Walls said.
The FCA said it may also check how banks deal with non-financial misconduct, such as sexual harrasment.
“Within 2 months, we expect all CEOs to have discussed this letter with their fellow directors and/or Board and to have agreed actions and/or next steps,” Walls said.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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