U.S. regulators step up warnings to banks for poor risk-spotting
U.S. regulators are sending some of the biggest global banks verbal warnings as they crack down on the firms’ poor grasp of their own weaknesses, and push for rapid improvements in risk assessment, according to two sources familiar with the matter.
The firms who received the warnings are among the largest banks in the world, but the sources declined to name individual firms because the enforcement actions are not public.
Banks are responding to the stepped-up pressure by hiring people with experience in data governance and analytics.
The world’s largest banks have only grown bigger since the 2007-2009 financial crisis, and now contain even more separate entities involved in a dizzying web of credit obligations and trading positions.
A senior bank supervisor said in an interview that these warnings a part of a “heightened expectations” program in which U.S. regulators have clamped down on the largest U.S. banks and foreign bank units with tougher risk management rules.
For example, the New York Fed sent a letter to Deutsche Bank (DBKGn.DE) in December that criticized the U.S. divisions of Germany’s largest bank for producing financial reports that were “low quality, inaccurate and unreliable,” said a source familiar with the letter.
The increased risk scrutiny from U.S. regulators is playing out on the international stage as well.
The Basel Committee of bank regulators in December said only one-third of the world’s 30 largest banks would have a sufficient grip on their data by 2016.
Source: Reuters
