Financial Regulatory Forum

ANALYSIS-Markets fret, but chance of big bank crash slim

By Steve Slater and Alex Chambers

LONDON, May 28 (Reuters) – This week’s market jitters that banks were heading back to the darkest days of 2008 look overdone because lenders have vastly improved their assets and central banks stand ready with abundant funding.

Bank of Spain’s bailout of a small regional bank has brought back the spectre of another systemic crash after the demise of Lehman Brothers in 2008, this time on concerns about the financial sector in the euro-zone’s periphery.

But the conclusion is too hasty, analysts said — and a recovery in markets since the middle of the week is confirming that view.

“We’re not back to the crisis days of 2008. The banks are not going into this period of turmoil with anything like the balance sheet structure they had two years ago, they are in much better shape,” said Simon Maughan, analyst at MF Global.

Not only have banks more capital and liquidity, there is also less economic stress. “We were heading into a recession in 2008, we’re heading out of one now,” Maughan added.

UK won’t tighten liquidity rules on banks for now

By Huw Jones

LONDON, March 8 (Reuters) – Banks operating in Britain were given more breathing space on Monday when their regulator, the Financial Services Authority, said it would not demand higher liquidity levels until the economy is recovering properly.

The FSA angered local banks last year by pushing ahead with a new liquidity regime requiring then to hold buffers of cash or highly-liquid assets like government bonds to withstand market shocks for a week or more without having to raise fresh capital.

The watchdog began rolling out the new regime last October, which includes frequent reporting of liquidity levels as part of wider efforts to learn from the financial crisis and lessen the need for more massive taxpayer bailouts of banks.

S.Korea restricts trading in FX forwards

   By Seo Eun-kyung and Cheon Jong-woo
   SEOUL, Nov 19 (Reuters) – South Korea announced measures on Thursday aimed at tightening control over foreign exchange liquidity to make the banking system (more…)

UK bank liquidity rules phased in over years

fsa_logo By Huw Jones
LONDON, Oct 5 (Reuters) – Britain’s financial watchdog said on Monday that banks will have several years to comply with tougher liquidity rules aimed at ensuring the sector can navigate sudden market storms without government help. (more…)

BoE says opens monetary framework to smaller banks

BRITAIN-BANK/RATES    LONDON, Oct 5 (Reuters) – The Bank of England said on Monday it will give more banks access to its open market operations to help smaller institutions better manage their liquidity. (more…)

Major central banks, regulators working on exit strategy system – official

PARIS, Sept 15 (Reuters) – Central bankers are working on a system to ensure they coordinate exit strategies to avoid any untoward consequences of removing stimulus at different times, a Financial Stability Board official said on Tuesday.