World Bank Annual KPMG
Workshop
Bank Regulatory Update
Washington, DC
May 20, 2015
Hugh Kelly
Principal, National Lead Partner
Bank Regulatory Advisory
Agenda
■
■
■
■
■
KPMG’s Global Regulatory Pressure Index
Regulatory developments
Impact of regulatory pressures on bank structure
What are banks doing?
What do banks need to do?
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1
KPMG’s Global
Regulatory Pressure Index
Regulatory Pressure Index
Global pressure continues to grow
Overall, regulatory pressures have risen again this year. In some areas this reflects the continuing challenges of implementing regulatory
reforms, now that the details of the regulations have become clear. This includes:
■ Most of the core Basel 3 capital and liquidity standards;
■ Risk and performance-adjusted remuneration; and
■ Some market infrastructure requirements.
Global regulatory pressure index 2011- 2015
33.7
2011
36.7
2012
36.7
2013
37.0
39.0
2014
2015
Note:
1. The regional numbers are the sum of the scores in each region across the ten individual areas of regulatory pressure.
2. Mexico is included in the Latin America data.
3. From 2011 to 2013 the global pressure index is the unweighted average of the indices for North America, EMA and ASPAC. In 2014 and 2015 the global pressure index is a weighted average of
North America (one-third), EMA (one-third), ASPAC (one-sixth) and LATAM (one-sixth).
4. Data for LATAM is only available for 2014 and 2015.
Source: KPMG International Survey, 2015.
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3
Regulatory Pressure Index
Regulatory change – Regional divergences
■ Pressures remain highest in North America and Europe, with the most severe pressures in the areas of capital, systemic risk, conduct
and culture, and the intensity of supervision.
■ Steady increase in regulatory pressure on banks in the Asia-Pacific region has continued, particularly in liquidity and retail and wholesale
conduct.
■ The highest regulatory pressure in LATAM is in the areas of financial crime and tax.
■ In other areas the regulatory pressures reflect the continuing development of regulatory initiatives that are at various stages of evolution,
including the risk weighting of assets, the designation and regulatory treatment of domestic systemically important banks (D-SIBs),
macro-prudential policy, retail and wholesale market conduct and culture, risk governance, and recovery and resolution planning.
Key
1
Our regulatory pressure
index is based on a
combination of the views of
regulatory experts from
across KPMG’s global
network and banking clients
across the Americas (where
we separate out Latin
America from North
America for the first time);
Europe, the Middle East
and Africa; and the AsiaPacific region.
2
3
Low Regulatory
Pressure
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4
5
High Regulatory
Pressure
4
Regulatory Pressure Index
Key areas of regulatory pressure by region
Capital – Even as the core Basel 3 standards are being implemented, the shift towards ‘Basel 4’ continues, with the calibration of the
leverage ratio either set higher than 3 percent (as in Switzerland and the United States, and proposed in the United Kingdom) or yet to be
determined, and new pressures on banks emerging from stress testing and from wide-ranging revisions to risk-weighted assets, including
the Federal Reserve’s proposed risk-based capital surcharge for global systemically important bank holding companies (GSIBs).
Supervision – In addition to the generally tougher supervision that has emerged in all regions since the financial crisis, making the ECB
the single banking supervisor in the Banking Union area has already led to a more demanding supervisory approach for many banks
subject to direct supervision by the ECB.
Governance – Banks are coming under increasing pressure from supervisors to demonstrate that they are meeting the corporate, risk,
and data governance requirements in the series of FSB papers on risk governance, the Basel Committee’s revised governance principles,
and the Basel Committee’s principles for risk data aggregation and risk reporting. Some countries (including the United Kingdom and the
United States) are also seeking to increase the personal responsibility and accountability of senior managers and executives.
Source:
KPMG International Survey, 2015.
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5
Regulatory Pressure Index
Key areas of regulatory pressure by region (continued)
Liquidity – Further revisions to the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) calculations have, on balance,
reduced the pressures here, in particular in Europe through the more generous treatment of covered bonds as a source of high quality
liquid assets. However, as with capital requirements, the overlay of stress testing (already underway for the largest US banks), Pillar 2, and
macro-prudential requirements for liquidity may increase the regulatory pressures on banks significantly.
Systemic risk – Increasing pressures, particularly in Europe and the United States, are building from the designation and regulatory
treatment of GSIBS and D-SIBs, minimum requirements for banks to issue long-term bail-in liabilities, and the increasing use of macroprudential instruments.
Culture & Conduct – A series of misconduct episodes in the retail, wholesale, and capital markets has left banks and regulators seeking to
improve conduct and culture. Regulation and supervision are becoming increasingly intensive in this area.
Source:
KPMG International Survey, 2015.
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Regulatory Pressure Index
Key areas of regulatory pressure by region (continued)
The highest regulatory pressures here concern financial crime and tax. Banks face increasing demands to demonstrate they
meet the stringent requirements of the Foreign Account Tax Compliance Act (FATCA) and of local rules on anti-money
laundering and terrorist financing. Meanwhile, an increasing number of countries are entering into information-sharing
agreements on tax, requiring banks to report large amounts of information.
Source:
KPMG International Survey, 2015.
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7
Regulatory developments
Regulatory developments
Regulation: The road to implementation
The volume of unfinished business is diminishing somewhat as more regulations are moving through the design and calibration
stages to implementation, and fewer regulatory reform initiatives remain at an earlier developmental stage.
4
3
1
2
4
2
■
Size limits on banks
and/or trading entities
■
■
■
■
■
New macro-prudential
tools (e.g. credit
controls)
■
■
■
Further bans on sales of
certain products to retail
consumers
Unknowns
■
Austerity-led pension
and other welfare
reforms
3
Under development
■
1
5
■
■
■
■
■
■
■
■
■
■
Single counterparty credit limits
(US)
Revised risk weights
Capital floor
Simplicity versus complexity
Capital requirements for simple
securitisations
IRRBB as a Pillar 1 requirement
EU legislation on structural
separation
Pillar 3 disclosure (phase 2)
MiFID2 technical standards
ESAs guidelines on retail
conduct issues
EU fourth AML directive
EU Capital Markets Union
MiFIR technical standards
EU legislation on benchmarks
EU legislation on MMFs
Financial Transactions Tax
Designed
■
■
■
■
■
■
■
■
■
■
■
■
■
Key:
Leverage ratio
D-SIB designation and GSIB riskbased capital surcharges
TLAC and MREL
FSB risk governance and risk
governance principles
BCBS corporate governance
principles
BCBS risk data aggregation and
risk reporting principles
Macro-prudential tools
Haircuts on securities financing
transactions
Pillar 3 disclosure (phase 1)
FSB on assessing risk culture
Some EMIR technical standards
IOSCO principles for benchmarks
ELTIFs
Financial stability
Conduct and culture
Calibrated
■
■
■
■
■
■
■
■
NSFR
BRRD bail-in powers
IFRS 9/ECL accounting
Disclosure of securities
financing transactions
MiFID2
MiFIR
AIFMD
MAR and MAD2
Market infrastructure
Implemented
(usually on phased-in basis)
5
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
■
Basel 3
G-SIB designation
Enhanced Prudential Standards
OCC Heightened Standards
CCAR and stress testing
Resolution and recovery planning
Risk weights on exposures to CCPs
Volcker
Capital treatment of securitisations
Macro-prudential tools (some countries)
LCR
Large exposures
COREP/FINREP
National structural separation legislation
BRRD resolution powers
Deposit Guarantee Schemes
National and single resolution funds
EBA SREP guidelines
ECB supervision in Banking Union
Remuneration
Mortgage credit directive
EMIR
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Regulatory developments
Key regulatory developments: from design to implementation
Six areas where banks will need to respond to the continuing evolution of regulatory and supervisory requirements:
1. Macro-prudential regulation
2. Risk-weighted assets
3. Comprehensive Assessment
4. Enhanced Prudential Supervision Standards
5. Total loss-absorbing capacity (TLAC) and minimum required eligible liabilities (MREL)
6. Culture/Conduct
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Regulatory developments
1. Macro-prudential regulation – watch this space
Institutional structures
Institutional structures for macro-prudential policy are taking shape across the globe.
Powers
National authorities (and the ECB) are putting powers in place for the use of a wide range of macro-prudential policy tools. In the United
States and EU, many of these powers and tools include:
■ The counter-cyclical capital buffer (along the lines set out in Basel 3);
■ A systemic risk buffer (SRB), where the Financial Conduct Authority’s Capital Requirements Directive (CRD IV) provides discretion for
member states to impose an SRB in order to address long-term non-cyclical systemic risks not already covered by the minimum capital
requirements;
■ Proposed risk-based capital surcharges on G-SIBs and other systemically important financial institutions; and
■ Additional macro-prudential tools, such as large exposure limits, liquidity requirements, sector-specific risk weights to target asset
bubbles in the residential and commercial property sectors, limits on intra-financial sector exposures, and disclosure requirements.
Implications for banks
■ Banks need to understand what macro-prudential policy measures might be applied to them, when, by whom, and on what basis.
■ These measures may be difficult to predict and follow, especially where new and multiple agencies are involved.
■ Macro-prudential requirements can be large – both absolutely and relative to other regulatory requirements.
■ Macro-prudential requirements can also be wide-ranging – they can operate not just through additional capital requirements, but
also through leverage, liquidity, lending standards, sectoral risk weightings, and property taxes.
■ Additional complexity may arise through the patchy application of reciprocity across countries to banks’ cross-border exposures.
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11
Regulatory developments
2. Risk-weighted assets (RWAs)
The intention of the standard setters and regulators is clear: to introduce a revised set of standardised approaches, and to use these to
constrain the extent to which banks can reduce their capital requirements through the use of internal models. Completing the ‘Basel 4’
picture, these RWA revisions will then complement the development of international standards on leverage and the use of severe but
plausible stress tests as additional determinants of minimum capital requirements.
Implications for banks
■ Potentially reduce significantly the benefits to banks from the use of internal model-based approaches to credit, market, and
operational risk.
■ For some banks, increase the capital required under the standardised approaches and the Collins Amendment’s capital floors.
■ Systems and data management enhancements to calculate the new standardised approaches – including by banks using internal
model-based approaches.
■ Supervisory checks that banks are collecting and applying accurate data on their risk exposures, including the valuation of
residential and commercial real estate, and the calculation of corporate leverage ratios. Deficiencies here could lead to the
imposition of additional Pillar 2 capital requirements.
■ Wider implications on the economy as banks re-price and pull back from some activities. The move to risk drivers and more risksensitive risk weightings will accentuate the capital requirement cost to banks for exposures judged under the proposals to be at
the riskier end of the spectrum. This could increase the cost – and reduce the availability – of bank finance and other services for
borrowers and other customers.
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12
Regulatory developments
2. Risk-weighted assets (RWAs)
(continued)
Rationale and overall regulatory approach
Credit risk: standardised approach (cont.)
Regulators are concerned that:
■ Banks – replace external credit ratings with two risk drivers: the
capital adequacy ratio and an asset quality ratio of the borrower,
to determine risk weights ranging from 30-30%.
■ The standardised approaches to credit and counterparty risk
relied too heavily on external credit ratings;
■ Some banks have been too aggressive in the use of internal
model-based approaches to drive down risk weightings; and
■ Risk weightings generated by internal models are too
inconsistent, complex, and opaque, and this lack of transparency
constrains the scope for relying on market discipline.
■ Credit risk mitigation – amend the framework by reducing the
number of approaches, recalibrating supervisory haircuts, and
updating corporate guarantor eligibility criteria.
■ Sovereigns, central banks and public sector entities – no changes
at this stage, pending a wider review of sovereign exposures.
Credit risk: standardised approach
■ Corporate exposures – replace external credit ratings with two
risk drivers: the revenue and leverage of the borrower, to
determine risk weights ranging from 60-30%.
■ Residential mortgages – determine risk weights by two risk
drivers: loan-to-value and debt-service coverage ratios, with risk
weights ranging from 25-10%.
■ Other retail – tighten the criteria to qualify for the 75% preferential
risk weight.
■ Exposures secured on commercial real estate – two options here:
(a) to treat these as unsecured exposures to the counterparty,
with a national discretion for a preferential risk weight under
certain conditions, or (b) to determine risk weights on the basis of
the loan-to-value ratio, with risk weights ranging from 75-120%.
Operational risk: standardised approach
■ Banks – proposed revisions include: (a) refining the operational
risk proxy indicator by replacing gross income with a statistically
superior measure of operational risk termed the Business
Indicator (BI) and comprised of the three macro-components of a
bank’s income statement: the “interest component,” “services
component,” and the “financial component,” and (b) improving the
calibration of the regulatory coefficients, preliminarily identified as
a five-bucket structure with corresponding coefficients increasing
in value from 10 percent to 30 percent as the BI increases in
value.
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Regulatory developments
3. Comprehensive Assessment – immediate and longer-term impacts (continued)
During 2014, the ECB conducted a Comprehensive assessment of 130 major banks from 18 member states in the euro area, constituting
around 85 percent of euro area bank assets. The two main elements of this assessment were an asset quality review (AQR) and a stress
test (conducted jointly with the EBA on an EU-wide basis).
Asset quality review
■ As expected, the AQR identified a series of issues, reflecting in part the application of a common approach to impairment criteria and
provisioning levels across the euro area.
Implications for banks
■ Post-AQR follow-up agenda set out by the ECB.
■ Incentive to sell off non-performing exposures.
■ Wider range of banks subject to stress tests specified by the EBA and ECB, requiring these banks to provide more detailed
reported data.
■ Greater emphasis in future stress tests on specific areas of banks’ activities (sovereign debt, household sector, trading book,
international and emerging market exposures), the leverage ratio, funding and liability structure, and operational risk and the costs
of misconduct.
■ Greater emphasis in future stress tests on banks’ processes and systems for converting macro and financial variable stress tests
into an impact on their capital ratios.
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Regulatory developments
3. Comprehensive Assessment – immediate and longer-term impacts (continued)
ROE
NPE
Less than 10%
More than 10%
Less than 5%
55
21
Between 5 and 10%
17
2
Above 10%
30
5
50
45
40
35
30.5
30 25.3
23
25
19.6
20
15
10
5
0
Large
Large
corporates
SME
Pre-AQR
Source:
ECB/EBA; KPMG Analysis.
Source:
Post-AQR
250
44.6
39.7
200
150
100
1.7
2.2
5.9
7.3
1.5
2.6
50
Additional provisions in basis
points of credit exposure RWAs
Number of banks by NPE and RoE buckets
Total provisions (€bn)
Provision reclassifications
Non-performing exposures and returns on equity
(number of banks)
0
Real
Other
Shipping
estate
related
Additional provisions in basis points of credit exposure RWAs
Project
finance
European Central Bank, 2014.
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15
Regulatory developments
3. Comprehensive Assessment – immediate and longer-term impacts (continued)
The ECB intends to follow up the key shortcomings revealed by the AQR.
AQR shortcomings
Fair value hierarchy
Banks will need to revisit their internal definitions and ensure they are aligned to accounting policies adopted by the EU.
Forbearance
Banks will need to meet revised expectations on how they identify exposures to which forbearance should apply.
Provisioning
Large AQR adjustment to carrying values highlights the poor coverage ratios across the industry and a need for banks to improve their
provisioning processes.
Collective provisioning
The AQR revealed that a number of banks were out of line with accounting standards in (i) not drawing a clear distinction between
individual and collectively provisioned exposures; (ii) not justifying and quantifying emergence periods applied to incurred but not reported
calculations; and (iii) using nominal or market rates rather than the effective interest rate.
Data systems and quality
Some banks lacked easily accessible financial information for debtors such as earnings before interest, taxes, depreciation and
amortisation (EBITDA) and cash flows, making it difficult for them to assess the true financial health of borrowers.
Trading book processes
Banks were found to have weaknesses in model validation; credit valuation adjustment (CVA) calculation methodologies; fair value
adjustments; independent price verification; and management information on P&L attribution.
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Regulatory developments
3. Comprehensive Assessment – immediate and longer-term impacts (continued)
Stress tests
The EBA stress test was applied to 124 banks across the EU,
covering at least 50 percent of the national banking sector in each
member state. The results of the AQR informed the starting point of
the stress test for banks in the euro area.
Comprehensive assessment adverse scenario impact on
capital ratios
12%
11.8%
0.4%
2.1%
10%
0.8%
CET1 capital ratio
8.4%
8%
6%
4%
2%
0%
2013 bank
reported
Source:
AQR
impact
Stress test
effect
Stress test
RWA effect
2016 adverse
stress test
European Banking Authority 2014.
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17
Regulatory developments
4. Supervision – a new world for large banks
Large banks should expect a demand for more data at a very granular level, as regulators undertake large-scale programs and
information collection activities that leverage technological advances for analyzing data.
Implications for banks
■ Increasing data demands – so banks need a technical infrastructure which is both flexible enough to allow for changing requests and
well-enough embedded in a bank’s risk management infrastructure to facilitate periodic exercises such as stress tests.
■ An increasingly pan-European approach to supervision and the phasing out of national discretions.
■ Rigorous supervisory assessment of key supervisory review and evaluation process (SREP) areas.
■ Higher Pillar 2 capital requirements.
■ Increasing number of inspections – both bank-specific and as part of horizontal reviews.
■ New ECB supervisory culture.
ECB supervision
Large banks supervised
directly by the ECB will
be supervised by joint
supervisory teams, drawn
together from the ECB’s
own staff and staff from
the relevant national
supervisor(s).
Key features of ECB supervision will include:
■ A common SREP, following the ECB’s Guide to Banking Supervision and the eBa’s SREP guidelines
(December 2014).
■ A series of horizontal reviews, including a review of variations in risk-weighted assets across
jurisdictions arising from differences in national requirements and supervisory approaches to banks’
use of internal models.
■ Rigorous risk analysis at a sector and systemic risk level, based on very detailed data from the banks.
■ Follow-up to the deficiencies uncovered in the AQR and the stress test.
■ Pressure from the ECB on national supervisory authorities to apply more consistent approaches to the
banks they continue to supervise, in line with the ECB’s approach to directly supervised banks.
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18
Regulatory developments
5. TLAC and MREL – new kids on the block
The FSB issued a consultative paper on TLAC (total loss absorbing capacity) just ahead of the G20 Brisbane summit in
November
■ The FSB proposals are limited to G-SIBs (excluding those from emerging economies) and will not apply until 2019.
■ The EBA proposals for EU credit institutions to hold minimum required eligible liabilities (MREL) will apply a similar approach to the
TLAC proposal – and apply it much sooner – to a wider range of banks in Europe.
Implications for banks
■ Banks subject to a TLAC and/or MREL requirement may need to raise additional debt that qualifies for inclusion, or to convert
some existing long term debt into eligible debt instruments.
■ Banks funded primarily by customer deposits – may have to replace some of these deposits with long-term debt.
■ G-SIBs in the EU will have to meet whichever requirement is higher for them – the RWA-based TLAC or the total liability-based
MREL.
■ In addition banks will need to take account of:
– Strategic considerations;
– Balance sheet management;
– Risk management; and
– Local requirements.
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19
Regulatory developments
5. TLAC and MREL – new kids on the block (continued)
What do TLAC and MREL provide?
What is included in TLAC and MREL?
TLAC and MREL take the resolution powers of national
authorities one step further, by requiring systemically important
banks to hold a minimum amount of ‘junior’ liabilities that could
be bailed in ahead of ordinary ‘senior’ creditors, and without
disrupting the provision of critical functions or giving rise to
material risk of successful legal challenge or compensation
claims.
The TLAC and MREL proposals differ slightly in their eligibility
criteria, with the MREL proposals based on the provisions of the
Bank Recovery and Resolution Directive (BRRD), which do not
require eligible liabilities to be subordinated to all other non-TLAC
liabilities.
TLAC
MREL


More than one year remaining maturity


Unsecured and uninsured


Tier 1 and tier 2 regulatory capital
Debt that is:

Not subject to any depositor preference
Contractually (or under governing law)
subject to bail-in in a resolution

Subordinated to all other non-TLAC liabilities

Source:
KPMG International Survey, 2015.
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20
Regulatory developments
6. Culture/Conduct
As regulators believe cultural deficiencies were a key contributor to the financial crisis, fostering a sound risk culture
that emanates from the top of the house and cascades downward will continue to be a focus
■ Banks are struggling to instill a sustainable risk culture and manage conduct risk
■ Cultures are not always consistent across divisions, business lines, or legal entities
■ Effectively monitoring culture and conduct risk is also posing a challenge
■ Key indicators for measuring culture can include attrition, level of Board engagement, demonstration of effective challenge,
and willingness of Boards to quickly address risk appetite breaches
Implications for banks
■ Regulators will likely continue to looking for evidence that banks are reinforcing a consistent risk culture through:
– Training and awareness programs
– An active communications strategy
– Alignment of their compensation policies with their risk appetite
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21
Regulatory developments
6. Culture/Conduct (continued)
A “good culture” is marked by specific values - integrity, trust, and respect for the law – carried out with the spirit of a fiduciarytype duty toward customers and a moral obligation toward market integrity. It fosters an environment conducive to timely
recognition, escalation, and control of emerging risks and risk-taking activities that are beyond a bank’s risk appetite statement.
A culture is influenced by multiple facets, though indicators of a “good culture” include:
1
2
3
4
5
Focus on the
“customer” –
Doing what is
“right” (i.e., right
price, right
allocation, equal
treatment) and
keeping the
customer’s best
interests at the
heart of the
business model
Tone from the
top – The board
and senior
management set
the core values
and expectations
for the firm and
their behavior is
consistent with
those values and
expectations
Accountability –
All employees
know the core
values and
expectations as
well as that
consequences for
failure to uphold
them will be
enforced
Effective
Challenge –
Decision making
considers a range
of views, practices
are tested, and
open discussion is
encouraged
Incentives –
Financial and
nonfinancial
compensation
available to all
levels of
employees reward
behaviors that
support the core
values and
expectations
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22
Impact of regulatory
pressures on bank
structure
Numerous issues are driving changes for banks
A number of regulatory pressures are driving changes in
bank structure. Some of the commercial and operational
synergies that many bank business models were based
upon are being undermined by these pressures, especially
at universal and cross-border banks.
Regulatory pressures on bank structure
Capital
Central
counterparty
clearing
The regulatory pressures on bank structures include:
■ Higher costs of doing business (higher of minimum
requirements for capital, leverage, eligible bail-in liabilities,
liquidity, risk governance, and the trading, clearing and
reporting of derivatives);
Macroprudential
Liquidity
Securitizations
Bank
■ Constraints on balance sheet composition, business
activities, and legal and operational structure; and
structure
Capital markets
union
■ Supervisory intervention in banks’ business models and
strategy.
Localization
Resolution
and recovery
planning
MREL and
TLAC
Structural
separation
Supervisory Governance
review of
and risk
business
management
model viability
Source:
KPMG International 2015.
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24
Numerous issues are driving changes for banks
Banks also face a variety of economic and commercial pressures.
Together, these pressures are driving changes in bank structure.
The rules of the game have changed and the business model needs to change accordingly. Banks need to
focus on:
1. Product and customer propositions and pricing;
2. Balance sheet size and composition, and capital planning;
3. Legal structure, across types of business and across jurisdictions; and
4. Operational structure, including governance, management, organisational structure, risk management and
compliance, distribution channels, payment and settlement arrangements, trade and other transaction booking,
and the provision of services to support critical economic functions.
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25
Other pressures on banks
Complying with ever more complex and extensive regulatory requirements has increased costs significantly at a
time when many banks are struggling with the impact of the weak economic environment and falling revenues.
European banks are struggling with high costs and
low profitability
Percent
80
70
Banks need to develop and implement viable and
sustainable business strategies in order to meet the
expectations of their investors, regulators and
customers.
60
50
20
Percent
10
0
-10
-20
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Cost to income ratio
Source:
Dec-11
Dec-12
Dec-13
Jun-14
Return on equity (RoE)
ECB consolidated banking data for all EU banks.
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26
Other pressures on banks
Customers
Banks need to respond to multiple pressures
Customers
■ Fewer, more expensive, products and services
■ Regulatory constraints on product and service
offerings
■ Less liquid securities
■ Driven to alternative channels of intermediation
■ Customer focus
■ Cultural change
■ Rebuild trust
■ Simplicity
■ Digital channels
Investors
■ Looking for adequate returns
■ Prepared to accept lower returns if risk is
correspondingly lower
■ Debt coupons will reflect threat of bail-in
■ Effective use of data
CHALLENGES
FOR BANKS
Regulators
■ Banks and the financial system sounder
and more stable
■ Higher costs for banks and their customers
■ Lack of trust in banks
■ Promotion of non-bank sources of financing
Source:
KPMG International, April 2015.
■ Drive RoE above
cost of equity
■ Viable and sustainable
business model
■ Identify profitable
opportunities
■ Cost reduction
■ Ability to issue new
capital and bail-inable
long-term debt
■ Meet capital, liquidity,
resolvability & governance
requirements
■ Effective risk management
■ Viable and sustainable
business model
■ Cultural change
■ Rebuild trust
Investors
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Regulators
27
Regulatory pressures on banks’ balance sheets: Assets
Assets
Regulatory pressures
■ LCR
HQLAs
Regulatory pressure
for change
Impacts
■ Low yielding
■ Unattractive to banks facing leverage ratio constraint
■ Shortage of eligible assets in some countries
Other
securities
Interbank
lending
■ Higher capital charges, margins and haircuts
■ Structural separation and resolvability
■ Reduced secondary market liquidity, especially in
corporate bonds
■ Leverage ratio (constraint on holdings of lower risk weight
assets)
■ Supervisory pressures on booking of trades across a
banking group
■ NSFR constraints on securities financing transactions
■ More expensive for customers issuing and trading
securities
■ LCR and NSFR
■ Contraction in interbank market
■ Large exposure rules, especially on SIBs
■ Leverage ratio
Residential
mortgage
lending
■ Higher risk weights on IRB model approaches
■ More expensive for borrowers
■ Revised standardised approach
■ Will margins be sufficient for banks to achieve a
respectable return on equity?
■ Leverage ratio
■ NSFR
■ Lower capital charges on simple securitisations?
Unsecured
credit to
households
Note:
■ Limited impact of changes in sector-specific risk weights
■ NSFR
■ More expensive for borrowers, especially where
maturity above one year
The number of arrows indicates the extent of regulatory pressure. Upward arrows indicate regulatory pressure on banks to increase a type of asset or liability, while downward arrows indicate
regulatory pressure on banks to reduce a type of asset or liability.
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28
Regulatory pressures on banks’ balance sheets: Assets
(continued)
Assets (cont.)
Regulatory pressures
Regulatory pressure
for change
impacts
Unsecured
credit to
households
■ Limited impact of changes in sector-specific risk weights
■ NSFR
■ More expensive for borrowers, especially where
maturity above one year
Corporate
lending
■ Revised standardised approach for credit risk
■ More expensive for customers to borrow from banks
■ Tougher supervisory classification of non-performing loans
■ Uneconomic for banks to lend to highest quality
corporates
■ Stress tests
■ Simple securitisation proposals include SME lending
■ Competition from non-banks and capital markets
Infrastructure
lending
■ NSFR
■ Limited bank involvement in infrastructure lending
Off-balance
sheet
activities
■ Leverage ratio
■ More expensive for customers
■ Central clearing, exchange trading and reporting of OTC
derivatives
■ Reduced availability and higher cost of risk
management products and services
■ Potential leverage constraint if low risk weighted (e.g.
government guaranteed)
■ Structural separation proposals
Note:
The number of arrows indicates the extent of regulatory pressure. Upward arrows indicate regulatory pressure on banks to increase a type of asset or liability, while downward arrows indicate
regulatory pressure on banks to reduce a type of asset or liability.
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29
Regulatory pressures on banks’ balance sheets: Liabilities
Liabilities
Regulatory pressures
CET1 capital
Regulatory pressure
for change
impacts
■ Higher minimum, buffer and macro-prudential capital
requirements
■ Higher risk weights and capital floor
■ Stress tests
■ Leverage ratio
AT1 capital
■ Limited role of AT1 capital, but relevant if leverage ratio
calibrated using total tier 1 capital
Tier 2 capital
■ Diminished role of tier 2 capital, but important for TLAC
and MREL requirements
Other debt
meeting TLAC
and MREL
requirements
■ TLAC and MREL
Other medium ■ LCR and NSFR
and long-term ■ Structural separation
wholesale
funding
(unsecured)
Note:
■ Higher cost of funding, not fully offset by reduced cost of
other liabilities
■ Location of issuance increasingly constrained
■ Local requirements for subsidiaries of international
banks
■ Smaller banks may struggle to raise longer-term
unsecured wholesale funding – high cost and limited
availability
■ Impact of structural separation on cost and availability of
trading entity funding
The number of arrows indicates the extent of regulatory pressure. Upward arrows indicate regulatory pressure on banks to increase a type of asset or liability, while downward arrows indicate
regulatory pressure on banks to reduce a type of asset or liability.
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30
Regulatory pressures on banks’ balance sheets: Liabilities (continued)
Liabilities (cont.)
Regulatory pressures
Secured
medium and
long-term
funding
■ LCR and NSFR
Unsecured
short- term
wholesale
(and large
corporate)
funding
■ LCR and NSFR
Secured short
term funding
■ Capital, haircuts and NSFR constraints on securities
financing transactions
■ Capital requirements still evolving for issuers and holders
Regulatory pressure
for change
impacts
■ Investors keen to hold secured liabilities to avoid threat
of bail-in
■ Regulatory concerns over excessive asset encumbrance
■ In EU, covered bonds attractive to other banks as HQLAs
■ Tighter large exposure limits for lending between SIBs
■ Possible use of wholesale funding as a criterion for setting
capital buffers
■ Regulatory pressure to reduce structural funding gaps
■ Contraction of short-term wholesale funding
■ Higher cost of alternative sources of funding
■ LCR constraint on very short term repo funding
Retail funding
■ LCR and NSFR
■ More competition for retail deposits
■ Depositors better protected under deposit protection
schemes and creditor hierarchy in bail-in
■ Shifts to less stable types of retail deposit will reduce the
share of deposits that
■ Structural separation and RRP pressures to move retail
deposits into a separate and ring-fenced legal entity
■ count for the most favourable (stable) LCR and NSFR
treatments
■ Moves to make IRRBB a Pillar 1 requirement
■ Higher cost to banks of retail deposits
■ Tougher consumer protection measures
Note:
The number of arrows indicates the extent of regulatory pressure. Upward arrows indicate regulatory pressure on banks to increase a type of asset or liability, while downward arrows indicate
regulatory pressure on banks to reduce a type of asset or liability
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31
Other pressures on banks
In the euro area in particular, weak (or even negative) economic
growth has increased the level of non-performing exposures,
reduced the demand for borrowing from banks, and made it more
difficult for banks to increase their lending margins.
Non-performing exposures
European banks’ costs and margins
80
Percent
Weak economic environment
The AQR identified the need for major banks across the euro area to
reclassify 18% of reviewed loans from performing to non-performing.
70
60
50
Low margins
5
High costs
4
Percent
Complying with ever more complex and extensive regulatory
requirements has increased costs significantly, at a time when many
banks are also struggling with the impact of the weak economic
environment and falling revenues.
3
2
1
0
Dec-06
Dec-07
Dec-08
Cost to income ratio
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Jun-14
Net interest margins
Loan impairments (doubtful and non-performing loans as a percentage of total loans and
advances)
Source:
ECB consolidated banking data for all EU banks.
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32
What are banks doing?
What are banks doing?
Balance sheet adjustment
Consolidated banking data for the EU show:
Total assets, loans and advances
■ European banks have re-focused on core activities and markets,
and on domestic activities – many banks have retrenched
selectively from international markets, both within the EU and
especially from outside the EU.
35,000
70
■ Loans and advances flat, but increasing as a proportion of total
assets.
30,000
60
■ Within loans and advances, increase in mortgage lending but fall
in corporate lending.
25,000
50
20,000
40
15,000
30
10,000
20
5,000
10
■ Increased holdings of cash and sovereign debt.
■ Some signs of a pick-up in loans and advances in the first half of
2014.
€ billions
80
0
Dec-08
Dec-09
Total assets
Source:
ECB consolidated banking data for all EU banks.
Source:
Dec-10
Dec-11
Loans and advances
Dec-12
Dec-13
Jun-14
Percent
40,000
0
Loans and advances as % total assets
ECB consolidated banking data for all EU banks.
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34
What are banks doing? (continued)
Trading assets and derivatives
■ Substantial reduction in financial assets held for trading (30
percent decline) and derivatives held for trading (50 percent
decline) between 2008 and 2013 – this accounts for most of the
€4 trillion reduction in total assets.
7,000
6,000
€ billions
■ Shift by some banks to more fee-based and less capital intensive
activities, including mergers and acquisitions, securities
underwriting, and asset and wealth management.
8,000
5,000
4,000
3,000
2,000
1,000
0
Dec-08
Dec-09
Dec-10
Financial assets held for trading
Note:
Source:
Dec-11
Dec-12
Dec-13
Jun-14
Derivatives held for trading
Data for derivatives for June 2014 was not available.
ECB consolidated banking data for all EU banks.
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35
What are banks doing? (continued)
Capital ratios
2000
15
1879
■ Improvement in tier 1 capital ratios (up from 8.5% in 2006 to
13.3% in 2014).
■ Improvement in leverage ratio through combination of higher
capital and deleveraging.
1794
13.11
13.32
12.02
12
10.53
1385
1500
10.65
9.92
9
Percent
■ Decline in RWAs from combination of smaller balance sheets,
expanding use of internal model based approaches for calculating
capital requirements, and shift in asset composition to lower riskweighted assets.
1811
1760
1878
8.9
8.45
8.3
1000
€ billions
■ Banks holding more equity capital.
6
5.18
4.3
4.46
4.34
5.28
4.67
500
2.94
3
0
0
Dec-06
Dec-07
Dec-08
Equity
Source:
Dec-09
Tier 1 ratio
Dec-10
Dec-11
Dec-12
Dec-13
Jun-14
Tangible equity/tangible assets
ECB consolidated banking data for all EU banks.
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36
What are banks doing? (continued)
Deposits
■ Substantial decline in deposits from other credit institutions.
16,000
■ Substantial increase in deposits from non- credit institutions.
12,000
€ billions
■ So rising customer deposit to loan ratio and fall in wholesale
funding.
14,000
10,000
8,000
6,000
4,000
2,000
0
Dec-08
Dec-09
Dec-10
Deposits from credit institutions
Source:
Dec-11
Dec-12
Dec-13
Jun-14
Deposits from non-credit institutions
ECB consolidated banking data for all EU banks.
The picture is different for many banks in the Middle East, where difficult conditions in traditional domestic markets (relatively small
populations, highly competitive markets for lending to large corporates, and problems in some large borrowers) have led to attempts to
expand some large borrowers) have led to attempts to expand lending to SMEs, and to an expansion of overseas activity, including in
support of trade between the Middle East and Turkey, Africa and Asia.
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37
What do banks need to do?
What do banks need to do?
Banks need to build a viable and sustainable business model, which
delivers adequate returns, adequate capital and liquidity resources,
and acceptable resolvability.
At the center: Sustainability and viability of banks’
business models
Profitability
• RoE more than covers cost of equity
• Successful provision of profitable
business lines
• Cost control
Viable and sustainable business model
A fundamental overhaul of a bank’s business model requires:
■ A clear understanding of performance, including at business
activity level;
■ Managing out non-performing exposures;
■ Capital optimisation;
■ Re-pricing;
■ Cost reduction; and
■ The development of a revised strategy.
1
Liquidity
Capital
• Meet all regulatory
liquidity
requirements
• Meet internally
assessed
liquidity
and funding
requirements
• Liquidity planning
• Ability to access
additional liquidity
as and when
required
• Meet all regulatory
capital and leverage
requirements
• Meet internally
assessed capital
requirements
• Capital planning
• Ability to access fresh
equity as and when
required
4
Viable and
sustainable
business
model
2
3
Resolvability
• Meet all legislative requirements on structure and
resolution
• Credible and effective recovery and other
contingency planning
• Facilitate resolution planning by the authorities
• Legal and operational structure, continuity of
critical economic functions and of the services
that support them
• Sufficient loss absorbing capacity
Source:
KPMG International 2015
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39
What do banks need to do? (continued)
Re-pricing
Repricing to cover return on equity shortfalls
Banks need to improve their net interest and operating margins as
one element of improving profitability.
10
70
63
9
7.8
54
50
8
7
6.4
41
Percent
This amount of re-pricing is unlikely to be achievable. Banks
attempting to deliver such an increase would lose business to other,
less pressured, banks and to non-banks. The IMF therefore uses
this measure not to predict how far margins will actually rise, but as
an indicator of how far banks still have to move in their transition to
new business models.
8.7
8.5
60
40
5.2
6
5.0
32
30
23
5
4
Basis points
The IMF estimates that banks in some countries would need to
increase their margins by more than 50 basis points on average
across all their assets in order to generate a 10% return on equity in
2015 – and these estimates assume that these banks do not face
capital constraints and are able to increase their customer lending.
63
22
3
20
2
10
1
0
0
Smaller
vulnerable
euro area
Germany
Italy
France
Austria
Spain
UK
IMF estimated RoE (percent) for sample of banks(a)
Repricing (in basis points) of net interest margin required to increase RoE to 10%
Note:
Source:
(a) Based on analysts' forecasts for 2015
IMF Global Financial Stability Report, October 2014
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40
What do banks need to do? (continued)
Cost reduction
Banks also need to cut costs. Some progress has been made here since the financial crisis, but the rising cost to income ratio for
European banks shows that significantly more progress needs to be made. Banks in the Middle East (where cost to income ratios are
generally lower than in Europe) are also focusing increasingly on cost reduction, not least in response to the sharp decline on oil prices.
Five areas provide significant scope for many banks to reduce costs
Salary costs
On average, bank salaries have continued to rise more rapidly than in most other sectors of the economy, and have not reflected the
declines in bank income and profitability since the financial crisis.
Staff numbers
The closure of, or reduction in, some business lines, branch closures, and greater reliance on digital delivery channels for products and
services all provide scope for a further reduction in staff numbers.
Simplification
Some of the cost base of banks reflects the complexity of their products, services, legal and operating structures, operating platforms
and systems, and booking models. There is scope to simplify in all these areas, and to drive down costs accordingly.
Investment in technology
Combined with less complexity, IT investment is capable of reducing costs over the longer term, while also improving (or at least
protecting) income through improved customer service, risk management and cyber security.
Outsourcing/shared services
Banks should be able to benefit from centralised and streamlined infrastructure platforms capable of supporting multiple business and
customer propositions, on either an internal or outsourced basis.
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41
What do banks need to do? (continued)
Strategy
Banks are pursuing different strategies. There is no unique path to a viable and sustainable future.
Five approaches can be identified:
Some banks already have a successful business model which has proved to be robust during the financial crisis, delivering across
the dimensions of profitability, capital and liquidity.
A small number of banks have moved decisively to a different and viable business model in response to the financial crisis, not
least by moving quickly to identify and develop successful core business activities, shedding activities deemed to be insufficiently
profitable, and simplifying and rationalising legal and operational structures.
Some banks are adopting a proactive approach to strategic change, but without a very clear sense of an end point. The jury is still out
on whether this will be sufficient to generate a viable and sustainable future.
Many banks have been forced to contract and restructure to survive, but very reactively in response to losses and capital
shortfalls. This may have enabled these banks to meet minimum regulatory requirements, but it remains uncertain whether they
have a viable and sustainable future in terms of profitability.
Too many banks are hoping that a battered model will somehow pull through in the end, without the need for significant strategic
change.
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42
What do banks need to do? (continued)
Conclusion
Pressures on banks
Banks face a myriad of commercial and regulatory pressures, as
illustrated in the Pressures on Banks graphic below. All banks face
higher costs from regulatory reforms and commercial pressures to
become more profitable.
Improve
profitability
Improve
profitability
Expand
Successful
Successful
Smaller
separated
Return on equity
All banks face higher costs
from regulatory reforms and commercial pressures
to become more profitable. Large banks face
various regulatory pressures to become smaller
and, in some cases, to restructure.
Expand
Higher costs
Higher costs
Cost
of equity
(10-12%)
Improve
profitability
Retrench
and improve
profitability
Unsuccessful
Improve
profitability
Unsuccessful
Smaller
separated
Exit?
Higher costs
Smaller banks and niche players
Regulatory pressures
Higher costs
Larger banks
Bank size and
complexity
Commercial pressures and opportunities
Source: KPMG International 2015.
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43
Questions?
Hugh Kelly
KPMG LLP Principal & U.S. Lead Partner for Bank Regulatory Advisory
Hugh is a KPMG U.S. Principal and the Lead National Partner for Bank Regulatory Advisory Services. He
is the U.S. Co-Lead Partner for KPMG’s Global Regulatory Center of Excellence and member of KPMG’s
Global Basel & Global FS Regulatory Steering Committees. Key responsibilities and accomplishments:
• Governance, Risk & Compliance:
Hugh C. Kelly
Principal & National Lead Partner – Bank
Regulatory Advisory
KPMG LLP
1801 K Street, NW
Washington, DC 20006
Tel 202 533 5200
Cell 301 938 5423
hckelly@kpmg.com
Education, Licenses &
Certifications
 Bachelor’s degree in Finance from
Loyola Marymount University, Los
Angeles, CA
 Graduate of Pacific Coast
Graduate Banking School; ABA
International Banking School
 Commissioned National Bank
Examiner
•
Lead partner on engagements assisting large systemically important financial institutions enhance
governance, risk and compliance management frameworks, including risk culture, capital and liquidity
planning, risk appetite process, operational risk management, third party risk oversight and internal audit
processes.
•
Conducts independent “Get to Strong / Heightened Expectations” assessments focused on meeting
regulatory expectations, enhancing effectiveness and clarity of roles/responsibilities across the “three lines of
defense” and promoting sustainability and effective challenge of the risk governance framework.
•
Assists numerous bank and non-bank prepare for OCC and Federal Reserve examinations as well as
effectively address regulatory matters ( i.e., MRA, MRIA, enforcement actions).
• Operational Risk Management and Third-Party Risk Management
•
Industry leader in designing and implementing enhanced Risk & Control Self Assessment (RCSA) and
Third-Party Risk Assessment frameworks to meet the heightened regulatory expectations and need for
consistent risk intelligence to improve decision-making, reporting and practical integration with risk appetite.
•
Leading driver for KPMG International being been named “Best Overall Consultancy” by Operational Risk
and Regulation magazine, whose annual awards recognize companies that demonstrate innovative thinking
and provide useful solutions to the operational risk management challenges faced by the financial services
industry.
•
Led KPMG/RMA’s Operational Risk Management Excellence - Get to Strong Survey of large financial
institutions to provide benchmarking intelligence on leading industry ORM practices in support of enhanced
business value, heightened regulatory expectations for “strong” risk management and Basel AMA “use test”
requirements.
•
Led KPMG’s assistance to BITS and The Financial Services Roundtable on a study on Reconciliation of
Regulatory Overlap for Management and Supervision of Operational Risk in U.S. Banks, which identified
overlapping regulatory compliance requirements in SOX 404, FDICIA, GLBA 501b and the Basel II AMA
Guidance for Operational Risk Management.
(continued)
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45
Hugh Kelly
KPMG LLP Principal & U.S. Lead Partner for Bank Regulatory Advisory
(continued)
• Bank/BHC Charters/Licenses , IHC and Cross-Border Regulatory Challenges:
•
Assists numerous U.S. and foreign institutions apply for and establish US branch and bank licenses, plan for and implement legal entity and
governance frameworks for an Intermediate Holding Company (IHC) under Section 165 - Enhanced Prudential Standards and Early Remediation
Requirements for FBO’s, including focus on risk appetite, risk culture, credible challenge, regulatory reporting, and Regulation W compliance
•
Co-leader of KPMG’s Global Regulatory Center of Excellence (COE), which is focused on providing clients with timely and insightful thought
leadership on emerging global regulatory developments and challenges.
•
Assists numerous global financial institutions manage cross-border “home-host” regulatory challenges.
•
Member of the Institute of International Finance’s (IIF) Effective Supervision Advisory Group and Shadow Banking Working Group.
•
Active speaker and participant in international regulatory groups and fora sponsored by the IIF, Group of 30, Institute of Institutional Bankers (IIB),
Risk Management Association (RMA), The Clearing House, BITS, ORX, etc.
Prior to joining KPMG in 2004, Hugh had a 26 year career with the U.S. Office of the Comptroller of the Currency (OCC). Key responsibilities and
accomplishments:
•
Hugh joined the OCC in 1977 and was commissioned as a national bank examiner in 1980. He examined complex community, regional and money
center banks from the OCC’s Los Angeles Office, until he was assigned in 1985 to the OCC’s London Office to examine European operations of large
U.S. national banks. From 1988 -1998, Hugh was a lead capital markets specialist, the Executive Assistant to the Senior Deputy Comptroller for Bank
Supervision in Washington, DC, a Large Bank Examiner-in-Charge, and led domestic and international examinations at numerous large national banks,
including Bank of America, Bank of Boston, Banc One, Chase Manhattan, Citibank, Continental Illinois, First Chicago, Mellon Bank, Nations Bank,
Norwest, Security Pacific, and Wells Fargo.
•
From 1998- 2004, Hugh was the Senior Advisor for Global Banking and Head of the Global Banking Division responsible for formulating the OCC’s
supervisory plans for emerging global risks affecting U.S. large banks. During this time, Hugh was:
•
OCC representative to U.S. and global multilateral supervisory groups and associations, including the Basel Committee on Banking Supervision
(BCBS), for which Hugh represented the OCC on several working groups/task forces, FFIEC IT Technology Working Group; U.S. Interagency Critical
Infrastructure Working Group; U.S. Interagency Country Exposure Review Committee (ICERC); Shared National Credit (SNC) Program; Association
of Supervisors of Banks of the Americas (ASBA); Asia-Pacific Economic Cooperation (APEC) Bank Supervisors Committee; Caribbean Group of
Banking Supervisors (CGBS); President’s Council on Y2K; Global 2000 Coordinating Committee; IIF; Group of 30; IIB; FSR/BITS; and RMA
Operational Risk Management Discussion Group.
•
Co-leader in the development of OCC and U.S. Inter-agency and BCBS guidance implementing the Basel II Operational Risk Advanced
Measurement Approach (AMA), and supervisory guidance on third party risk management and off-shoring, Internet banking, IT risk management,
information security programs, country risk management, capital markets and foreign exchange trading.
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Lisa Newport
KPMG LLP Associate Director
LISA M. NEWPORT
Associate Director
KPMG LLP
1801 K Street NW
Suite 12000
Washington D.C. 20006
Tel 202-533-3075
Fax 202-315-3460
Cell 202-365-8875
lisanewport@kpmg.com
Function and Specialization
Professional and Industry Experience
Lisa has more than 18 years of experience in the financial services industry. She currently serves as an associate
director in KPMG’s Americas Financial Services Regulatory Center of Excellence, working with engagement teams
and clients to provide analysis and insights into the implications of regulatory changes, distill the impact of
regulatory developments on clients’ businesses, and advise them on adapting their business models to thrive in this
dynamic environment. Areas of focus include Basel III capital and liquidity standards; the Dodd-Frank Act (e.g., the
Volcker Rule, enhanced prudential standards, heightened standards, and CFTC/SEC-regulated swap, securitybased swap, and mixed swap markets); risk data aggregation, systems, and reporting; and operational risk
management.
Prior to joining KPMG, Lisa served as director of capital markets at Grant Thornton LLP for six years, leading the
group’s quantitative and qualitative research and analytical efforts analyzing debt and equity market trends. Prior to
that, she worked for the Federal Reserve Board for over five years, leading policy initiatives, rulemaking, and
supervisory reviews related to Basel II operational risk management and measurement in the Division of Banking
Supervision and Regulation. Lisa also spent more than seven years at The NASDAQ Stock Market, specializing in
financial industry research and equity market structure.
Sample Publications
“Regulatory Practice Letters,” KPMG (2015).
Lisa’s focus is financial risk management specializing in
policy analysis and research related to quantitative and
qualitative risk management, banking safety and
soundness, and capital markets.

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“Meeting the Liquidity Requirements Without Breaking the Bank,” Bloomberg BNA (2015).
Education

“The Volcker Rule: A Deeper Look into the Prohibition on Sponsoring or Investing in Covered Funds,” KPMG (2015).
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MBA degree, Massachusetts Institute of Technology
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BA degree, mathematics, Mills College
http://www.kpmg.com/us/regulatorypracticeletters
http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/volcker-covered-funds-pov.pdf

“The Changing Face of Regulatory Reporting: Challenges and Opportunities for Financial Institutions,” KPMG (2014).
http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/regulatory-challenges/Documents/changing-face-regulatory-reporting-fs.pdf

“Operational Risk Management: Getting to Strong,” The RMA Journal, May 2014.
http://www.kpmg.com/US/en/services/Advisory/risk-and-compliance/financial-risk-management/Documents/rma-journal-orm-survey.pdf

Weild, D., E. Kim and L. Newport (2013), "Making Stock Markets Work to Support Economic Growth: Implications for
Governments, Regulators, Stock Exchanges, Corporate Issuers and their Investors," Organization for Economic
Cooperation and Development (OECD) Corporate Governance Working Papers, No. 10, OECD Publishing.
http://dx.doi.org/10.1787/5k43m4p6ccs3-en
© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or
trademarks of KPMG International.
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Americas Financial Services Regulatory Center of Excellence
KPMG’s Americas FS Regulatory Center of Excellence (CoE) is based in Washington, DC and is comprised of key industry
practitioners and regulatory advisors from across KPMG’s global network. These individuals work with engagement teams
and clients to provide insights into the implications of regulatory changes, distill the impact of regulatory developments on
clients’ businesses, and advise them on how to adapt their models to better thrive in this dynamic environment.
Recurring Publications
Visit Us
www.kpmg.com/us/thewashingtonreport
www.kpmg.com/regulatorychallenges
www.kpmg.com/us/regulatorypracticeletters
www.kpmg.com/us/regulatoryalerts
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© 2015 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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particular situation.
© 2015 KPMG International Cooperative (“KPMG International”).
KPMG International provides no client services and is a Swiss entity
with which the independent member firms of the KPMG network are
affiliated. All rights reserved. NDPPS 366348
The KPMG name, logo and “cutting through complexity” are
registered trademarks or trademarks of KPMG International
Cooperative (KPMG International).