Federal Reserve Bank of Philadelphia’s Post

Criat's PD displayed early warning signals of NYCB's distress. ---- NYCB's stock price has plunged to a 27 year low on the back of Moody's downgrade on it's LT issuer rating to speculative grade (Ba2). Criat's PD, in relation to NYCB's relative riskiness compared to its peers, provided an early warning trigger that suggested that the companies PD implied Rating (PDiR) had already reached speculative grade near the end of Sep-2023. Provided in the snapshot below are the PDs of the top 20 riskiest regional banks that are constituents of the KBW regional banking index as of 6th Feb 2024. As the anniversary of last year's regional banking crisis comes close, the top 4 banks could especially provide cause for concern regarding systemic risk build-up. Get in touch with us at enquiry@criat.sg for more data-driven credit monitoring and risk solutions. #NYCB #CreditDistress #EWS

When we think of the largest financial institutions we think of Bank of America, Wells Fargo and CitiBank. Traditional banks aren’t the only players that can send the world economy into recession or crisis. Shadow banks such as black rock, J.P. Morgan Chase & Co, hedge funds, money market funds, private credit institutions, insurance companies, bank holding companies etc. are all financial institutions that can send the economy into a crunch with risky dealings which can cause insolvency and domino effects. Shadow banking was the cause of the 2008 global financial crisis with the infamous mortgage backed security. It’s not the federal reserve that you have to worry about, it’s the shadow banking system which are large unregulated financial institutions that act as banks and have lots of power. #Banking #Markets #Riskmanagement #Economics #TooBigToFail #Lehmanbrothers #AIG

📉The Collapse of Barings Bank: Unpacking the Lessons from Nick Leeson's Fraud In the mid-1990s, the financial world witnessed a seismic event that highlighted the devastating impact of rogue trading. Nick Leeson, a seemingly successful derivatives trader, was at the center of a scandal that led to the downfall of Barings Bank, a venerable institution with a history dating back to 1762. 🏦 Leeson's unchecked speculative trading in futures contracts, hidden through falsified accounts, resulted in staggering losses of £827 million. The bank, unable to absorb these losses, declared bankruptcy in 1995. This event is a stark reminder of the perils of inadequate oversight and poor risk management. 🔍 Key Takeaways: 🔒 Robust Oversight: Leeson's ability to circumvent internal controls underscored the need for stringent supervision. Effective oversight mechanisms are crucial to detect and prevent unauthorized activities. 📊 Risk Management: The Barings debacle underscored the importance of a comprehensive risk management framework. Institutions must continually assess and mitigate risks to protect their financial health. ⚖️ Corporate Governance: Strong governance structures, including clear roles and accountability, are vital to ensure ethical practices and transparency within organizations. 🛡️ Reflecting on the Barings Bank Collapse: 🔍 What measures can organizations implement today to prevent similar incidents? 📈 How has risk management evolved since the Barings Bank collapse? 📉 Are there recent examples of financial fraud that offer new lessons? 🌐 The Barings Bank collapse is not just a historical event but a learning opportunity for the entire financial sector. It emphasizes the need for vigilance, transparency, and continual improvement in governance and risk management practices. Let's learn from the past to build a more secure and resilient financial future. Share your thoughts and insights below! 👇 #Finance #RiskManagement #CorporateGovernance #BaringsBank #NickLeeson #FraudPrevention #FinancialHistory

There is no single definition of #systemicrisk. One perspective describes it as the risk of a strong systemic event adversely affecting several systemically important intermediaries. It can lead to a domino effect: if one institution falls or is severely impacted, it can create a chain reaction that further impacts others. This can happen for various reasons, such as interconnectedness from common exposures 🏦 In this #PhDcartoon, the bowling pins represent banks, and the bowling ball represents an exogenous systemic risk originating outside the banking sector, such as a prolonged economic downturn 📉 While systemic risk isn’t limited to banks, the different pins in the #PhDcartoon could easily represent various financial institutions or markets, including banks and non-bank financial institutions (NBFI) 🏦 Have you encountered the term systemic risk before? Do you find visuals helpful in explaining complex concepts in your field of work? Share your thoughts below! 💭 ❓

Goldman-Backed Starling Bank Fined $38.5M for Lax Crime Controls https://lnkd.in/g8H8_Jku Starling Bank, a UK-based digital bank that received backing from Goldman Sachs, has been fined $38.5 million by the UK's financial regulator for failing to have appropriate controls in place to prevent money laundering and financial crime. #starlingbank #goldmansachs #financialregulation The Leaders Magazine

In his keynote address at the Federal Reserve Banks of Dallas and Atlanta research conference on “Exploring conventional bank funding regimes in an unconventional world”, General Manager Agustín Carstens described the imperative of taking an integrated approach to promote a safer and more resilient banking system. In his speech, Mr Carstens discussed the importance of sound bank governance, risk management and bank supervision in the light of the March 2023 banking turmoil. He emphasised the need to consider liquidity risk in a holistic and integrated way, as liquidity problems often reflect underlying solvency and business model concerns. The failures of Credit Suisse and Silicon Valley Bank were triggered by their inability to raise unexpected additional capital, revealing poor governance and risk management practices. Mr Carstens highlighted the role of prudential supervision, regulation and the implementation of Basel III reforms in enhancing banks’ resilience. He also outlined improvements in approaches to prevent or manage liquidity distress, including strengthening supervision and enhancing central bank liquidity provision. He also discussed the potential benefits and drawbacks of pre-positioning collateral and the importance of banks’ preparedness to tap central bank liquidity facilities. He concluded by emphasising the need for a comprehensive approach to containing liquidity risk and addressing the challenges posed by non-bank financial intermediaries. https://lnkd.in/eWnxWNkr #BankingResilience #BaselIII #LiquidityRisk #RiskManagement

Prepare for the worst, Train in the fog of war, Lift your own rocks, Break stuff, Know your ‘phone a friends..’. Just a few of the crisis management tips discussed at the North Carolina Banking Institute’s conference: One Year Later - How banks are mitigating reputational and strategic risks that buried SVB. Such an honor to share the time with Tom Eck, Kellie Bickenbach and Eric Spitler. #usaaemployee #reputationmanagement

Balance Sheet Concentrations - Inevitable or Avoidable? What is the importance of appropriately identifying and managing funding concentrations? In the latest issue of Community Banking Connections, Lead Examiner Andrew Giltner from the Federal Reserve Bank of Chicago discusses some of the most prevalent balance sheet concentrations held by community banks, highlighting key concentration risks and discussing the current guidance and supervisory expectations for prudent concentration risk management practices. Read the article here: https://bit.ly/4cSxIQS #CapitalPlanning #CRE #CommercialRealEstate #RiskManagement #CommercialProperty #CommunityBank #Banking #AssetManagement

Great article describing how community banks are vital to our economy's success and tips on risk management pertaining to deposits.

Very interesting but kind of beside the point in my view. As I’ve said before, moving risk around doesn’t make it go away. The fact that some credit risk may have left bank balance sheets isn’t the question we should be interested in. Do we really know who is holding the bag on synthetic risk transfers for bank capital arbitrage and how the leveraged NBFI holders, in turn, are financed? I doubt it. We’ll only find out when that risk falls out of the sky onto our heads. In the new world where the Fed bails out NBFIs as well as banks in systemic events, what does any of this accomplish? More reason to widen the regulatory perimiter and more reason to ditch the risk-based capital format that encourages this kind of “innovation.” #banks #systemicrisk #nonbanks