2015年-德勤中国_全球银行入账模式_19页_3mb

Summary of "Global bank booking models. Making a success of structural reform"

Core Content

This document explores the evolving landscape of global banking booking models and their alignment with regulatory reforms. It highlights how structural changes, such as ring-fencing and resolvability requirements, are reshaping the way banks operate internationally. The paper is aimed at senior management and board members, particularly CFOs and CROs, of global banking groups with significant trading activities.

Main Viewpoints

• Regulatory Impact: Regulatory reforms are significantly influencing the structure and operations of global banks. These reforms are pushing for simpler, more transparent legal entity structures and a focus on local risk management and capital adequacy.

• Booking Models as Strategic Tools: Booking models are not just operational frameworks but strategic tools that can help banks align with regulatory expectations while improving business efficiency and cost control.

• Supervisory Scrutiny: Supervisors are increasingly scrutinizing booking practices, especially remote booking, back-to-back transactions, and the economic justification of legal entities involved in transaction chains. Clear documentation and transparency are essential to meet these expectations.

• Fragmentation and Decentralization: The trend towards fragmentation and decentralization is accelerating due to regulatory pressures. Local entities are being encouraged to operate more independently, which may challenge the traditional centralized risk management models.

Key Information

Regulatory Drivers

• Resolvability: Resolution planning is becoming a key factor in shaping booking models. Authorities are using it to identify operational and structural inefficiencies that may hinder resolution efforts.

• Ring-fencing:

  • In the UK, by 2019, major deposit-takers will be ring-fenced, separating retail and investment banking activities.
  • EU legislators are considering similar ring-fencing requirements.
  • Swiss banks are also restructuring to separate retail operations from investment banking.
  • US banks with significant assets face the IHC requirement, which enhances transparency and local governance.

• Prudential Framework: Regulatory changes are affecting capital requirements, stress testing, and risk management practices, which in turn influence booking model design.

Business Needs

• Efficiency and Simplicity: Banks need to simplify their booking models to reduce complexity, improve transparency, and align with regulatory expectations.

• Cost Control: Efficient booking models can help reduce costs, improve capital utilization, and enhance the profitability of the group.

• Operational Streamlining: Reviewing booking practices can uncover redundancies, trapped capital, and inconsistent procedures, offering opportunities for improvement.

Challenges

• Documentation and Transparency: Many banks lack robust documentation of their booking practices, making it difficult to explain the rationale and ensure compliance.

• Fragmented Operations: The use of both branches and subsidiaries in the same jurisdiction creates challenges for supervisors, who expect clear delineations of responsibilities and risk management.

• Data Complexity: Sourcing and organizing data for a comprehensive booking model review is a significant challenge, requiring integration across multiple systems and jurisdictions.

Conclusion

The strategic review and documentation of booking models are essential for global banking groups to navigate the evolving regulatory environment. This process enables banks to identify inefficiencies, align with supervisory expectations, and improve business outcomes. A well-structured booking model should reflect a clear understanding of the rationale behind practices, support regulatory compliance, and enhance operational and financial efficiency.

Appendix Overview

• Prudential Framework: Includes capital requirements and stress testing.
• Derivatives Regulation: Focuses on transparency and risk management in derivative transactions.
• Market Access: Affects the ability of banks to operate in different jurisdictions.
• Contacts: Provides details for further inquiries or discussions.

Strategic Recommendations

• Comprehensive Review: Conduct a detailed and consistent review of current booking practices.
• Documentation: Ensure robust and clear documentation of all booking-related processes and rationale.
• Integration: Align booking model changes with broader regulatory and business strategies.
• Local Focus: Consider the implications of local capital, liquidity, and risk management requirements.
• Stakeholder Alignment: Meet the expectations of customers, investors, and regulators by delivering transparent, efficient, and compliant operations.

By addressing these areas, global banking groups can better position themselves for the future regulatory landscape while enhancing their operational and financial performance.