Business models and risk weighted assets

Business models and risk weighted asset calculation

These areas are a top priority for the ECB.

These areas are a top priority for the ECB.

Since banks’ internal models must be approved by their regulators, the ECB is now in the driving seat to shed some light on how banks assess asset risk. It is the role of the ECB, among others, to maintain risk sensitivity and the incentives for internal modelling. Meanwhile, it has been the supervisor’s stated objective to drive a harmonised model of supervision and the construction of a level playing field in the euro zone. The ECB has made business models its top priority for 2016 and will critically review the calculation of risk-weighted assets in order to reduce excessive variability, thereby restoring confidence in the calculation of risk-weighted assets.

The articles in this section focus on bank structure, and the search by many banks for a viable and sustainable future amidst increasing regulatory and commercial pressures. What bank models work in this new environment and how can banks factor in the higher costs of doing business, constraints on balance sheet composition, business activities, legal and operational structure; and supervisory intervention all at the same time.  

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Non Performing Exposures

The ECB considers that levels of Non Performing Exposures (NPE) on Banks under its supervision are too high.

 
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MDA Mechanism – The most relevant policy decision to be taken by the SSM

How the MDA will be calculated is under current SSM consideration and a decision is imminent.

 
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The demise of the AMA operational risk approach?

The AMA has been debated since 2014 and may need to be simplified.

 
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Evolving Banking Regulation: Design to Implementation

This report looks at recent and forthcoming banking regulation in EMA.

 
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Evolving Banking Regulation: Viable Strategy

Banking structure may need to strategically evolve to fully contemplate new...

 
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The role of the SSM and Banking Union

Overview of the SSM and its role in the banking union.

 
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Maximum Distributable Amount – some clarity achieved

Despite the clarity offered by the EBA and ECB, confusion still looms.

 
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Non-performing loans – setting expectations

NPLs are an ECB top priority, but what are they, and how can they be deleveraged?

 
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New NPL guidance from the ECB

New NPL guidance from the ECB highlights key problem with banks

 
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