This week's risk management news includes the test scenarios for EBA's second round of tests, CBRC's reduction of loans to local governments, and RBI's investigation into non-banking entities.
March 10, 2011 | The Asian Banker EditorTest scenarios for EBA’s second round of stress tests disclosed
Leaked documents say the London-based European Banking Authority (EBA) would test 88 banks, accounting for 65% of the eurozone bank assets. Earlier tests conducted last July involved banks accounting for a similar percentage of assets. At least 50% of the national banking sector, by consolidated assets at the end of 2010, of each European Union (EU) member state will be tested. As was the case with the July tests, regulators will look at the likely reaction of banks under an adverse macroeconomic scenario, comprising three elements – a set of EU shocks; a worldwide negative demand shock coming from the US; and a depreciation in the dollar against all major partners. The criteria for success were not revealed.
CBRC tells banks to reduce loans to local governments
China Banking Regulatory Commission (CBRC) has asked the country’s banks to stop giving loans to local government financing entities unless they were to be used for affordable housing projects. The regulator fears previously-issued loans may turn bad, increasing the risk for the country’s financial institutions.
RBI forms working group to study non-banking financial entities
The Reserve Bank of India (RBI) has formed a working group headed by Usha Thorat, its former deputy governor, to define and categorise non-banks, formulate new regulations and governance standards concerning these entities as well ass decide on their supervision.
Re-disseminated by The Asian Banker
...Categories:
Risk And Regulation Working Group
