Bank Risk management and Basel III.
You are required to write a final report as laid out below containing 3000 words (± 10%). References and other appendices are not included in the word count. Reference to be Harvard style. I have given a percentage weight to each section just as an indication for you.
CHOOSING A SPECIFIC EUROPEAN BANK, AND PRODUCE A FINAL REPORT COVERING THE FOLLOWING ISSUES:
1. Discuss different types of risks this bank manages. Gather evidence and discuss whether these risks have been sufficiently managed since 2005. (35 %)
2. Discuss the regulatory relationship and how this has influenced this bank’s risk management. (30 %)
3. With reference to both micro and macro prudential policy and regulation, critically analyze the impact of the Basel III Guidelines on this bank’s risk management. (35 %)
An introduction and a conclusion are required. Please use empirical evidence to support your answers and arguments.
THE FOLLOWING IS MY RECOMMENDED OUTLINE FOR THIS ESSAY WITH EMPHASIS ON EACH SUBJECT TO BE DEALT WITH WHEN ANSWERING EACH QUESTION.
Contents Introduction (1) (2) (3) Conclusion Reference list
(1) It is important you choose a European bank i.e. a bank domiciled in Europe. Look to the risks the bank faced prior to the financial crisis then the level of exposure the bank faced following the crisis. Capital requirements, liquidity issues, loan book problems, reputation, pending money laundering/illegal activity, compliance failures, and changes in the regulatory landscape, with a brief comment on changes in technology and digital activity. Look to the costs of restructuring and strategic implications.
(2) Again you need to consider the regulatory framework under which your chosen bank operates. How is the bank adapting to domestic legislation and to BIS regulations and policies, in the main three Basel Accord. Also you need to consider the implementation of EU money laundering legislation and the push towards increased information sharing. If you have chosen a UK Bank, then a comment on Brexit would be useful.
(3) Consider costs, and strategy changes, investment decisions linking to wider economic factors. You might also consider the readiness of banks to implement changes.
Try to give critical thought, how effective is a banks compliance and risk management if they are subject to litigation for money laundering, what does it say about senior management. Be critical of reputational risk management, trust issues, and large management incentives.
