Banks – Europe: ECB's introduction of deposit tiering system will mitigate effect of low interest rates on EU banks’ margins
13 Sep 2019|Moody's Investors Service
On 12 September, the European Central Bank (ECB) announced that it will introduce a two tier system for banks’ reserve remuneratio The new two-tier remuneration of ECB reserves, will reduce by around €2 billion the annual charge paid by EU banks on their liquidity placed at the central bank.
Global Systemically Important Banks: Shortfalls in TLAC disclosure obscure impact of resolution on creditors of G-SIBs
12 Sep 2019|Moody's Investors Service
Inconsistent reporting of TLAC by the world’s largest banks means that investors may still lack important information about how losses might be allocated between creditors should they fail.
10 Sep 2019|Moody's Investors Service
European banks have become financially stronger in recent years and their credit profiles have improved but the debt they issue has become more risky. This apparent paradox is due to European Union (EU) regulation governing bank failures, which requires banks to issue more junior forms of debt to protect senior liabilities from losses.
Financial Institutions – US: Delaying FASB rules' adoption would reduce analytic comparability, a credit negative
04 Sep 2019|Moody's Investors Service
On 15 August, the Financial Accounting Standards Board (FASB) issued an exposure draft that proposed postponing the ffective dates for new accounting standards for leases, credit losses and hedging that apply to private companies, nonprofits and small reporting companies. Postponing implementation of the new standards would obstruct comparability and hinder credit analysis.
Banks – United States Streamlined Volcker Rule could increase risk-taking at US community, regional and custodian banks, a credit negative
23 Aug 2019|Moody's Investors Service
The changes aim to streamline but also improve the efficacy of the complex requirements first adopted in 2013. However, particularly when lower interest rates are putting pressure on bank net interest margins, the changes have the potential to encourage some banks to take greater risks, a credit negative.