June 2013 Blog Posts (12)

Australian Housing Bubble Has Chinese Overtones

The Australian housing bubble is looking to be a bigger problem for that country than the U.S.' was in 2008-09. Australia differs from the U.S. both in terms of relative economic conditions and the health of its property markets. The mountain of debt is Australia is mostly private - housing - and dwarfs public-sector debt.

Australians have gone heavily into debt to buy houses that cost more than ever, especially the land component; and there's no sign this trend will end anytime soon.…

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Added by Cole Pham on June 21, 2013 at 5:28am — No Comments

Dollar Weakness Masked By Gold Rout

The U.S. dollar is losing its status as the world's reserve currency. It's not happening all at once, but slowly and methodically as the dollar is used to settle international trade less and less. The Federal Reserve continues to rig the markets to foster weakness in gold (GLD) prices through a combination of continued ETF outflows and upheaval in the foreign exchange markets created by the debasement of the…

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Added by Cole Pham on June 21, 2013 at 5:27am — No Comments

To Peg Or Not To Peg: Singapore And Hong Kong Dollars

A number of past financial crises have had their roots in countries pegging their currency to the U.S. dollar. The Thai baht was at the epicenter of the Asian Crisis of 1997/98. Argentina's hyperinflation of 2001/2 was also caused by a disastrous currency peg. Today there is not much left of that policy, but there are two notable exceptions and they are two of the most important currencies in Southeast Asia, the Singapore dollar (…

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Added by Cole Pham on June 21, 2013 at 5:23am — No Comments

Vietnam Creates Bad Bank But Not Comprehensive Reform

Vietnam's central bank cut interest rates again last week as inflation slowed, joining central banks from Sri Lanka and Australia to the ECB in easing monetary policy. It is seeking to spur lending and boost consumption after having to rein in a credit boom that has slowed economic growth to a 13-year low. But with the announcement that the Prime Minister's office had given its approval for the creation of the Vietnam Asset Management Company - a Vietnamese version of the Resolution Trust…

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Added by Cole Pham on June 21, 2013 at 5:22am — No Comments

SE Asian REITs Diversify In Search Of Yield

In Asia, REITs are gaining popularity because both Singapore and Hong Kong have performed very well in recent years as recipients of real estate investors from markets such as China, the Philippines and Indonesia due in large part of central bank policy which target the U.S. dollar directly in the case of Hong Kong, or U.S. interest rate policy, in the case of Singapore.

REITs continue to attract investors because their dividends are more appealing than other investment opportunities…

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Added by Cole Pham on June 21, 2013 at 5:20am — No Comments

Notes on a presentation by Alexis Keivkovich from McKinsey on Operational Risk at the RiskMinds USA Boston

Alexis:

The OCC deems ops risk at the top of safety and soundness.

Legacy systems that don't speak to

Misaligned incentives

Poor oversight of third parties

Procedural breakdown of processes

How the CROs to identify and elevate the right decision points



Challenges

Challenge 1

Op risk is a different animal.



Opportunity 1

Treat op risk as unique. Root cause and scenario vs statistical approach

Diffuse decision making vs a few… Continue

Added by Sohayla Fitzpatrick on June 20, 2013 at 2:42pm — No Comments

Notes from the CRO discussion on Risk Culture at the RiskMinds USA in Boston,

What is risk culture?

System of values and mandates and has to evolve. It has to be imbedded. If business presents Wednesday and risk Thursday there needs to be an embedding



Regulations are too prescriptive...when their knowledge of our business is not as rich as it could be.



How do you design and Benchmark for risk culture? It is company specific...a range of options, i.e., a monthly risk meeting with the management and showing metrics to demonstrate what has changed… Continue

Added by Sohayla Fitzpatrick on June 20, 2013 at 2:32pm — 4 Comments

Notes from a presentation on Behavior Risk Culture by Juergen Fiedler Deutche Bank at the RiskMinds USA in Boston.

Notes from a presentation on Behavior Risk Culture by Juergen Fiedler Deutche Bank at the RiskMinds USA in Boston.

What does Risk culture look like?

It is One of five strategic objectives

Buy in from the top

Dedicated risk culture program



Place co. Reputation at heart of everything

Four program work streams implemented:

Communication:

Set expectations, corp wide and divisional via senior Management videos and intranet… Continue

Added by Sohayla Fitzpatrick on June 20, 2013 at 2:20pm — No Comments

Notes from the RiskMinds Conference..Boston

Notes from the presentation by Elizabeth Mays PNC Financial on Running an Efficient Model Risk Management:



Creation of a MRM Framework:

Roles responsibilities

Policies procedures

Governance oversight, risk appetite

1. Roles of MRM: risk Identification

2. Identify tier models

3.Identify Sources of model-related risk:

Faulty models

Misuse of models

Models operating in an uncontrolled environment

4. Identify mofdel-specific risk… Continue

Added by Sohayla Fitzpatrick on June 20, 2013 at 2:09pm — No Comments

Trade recs: on the fast track or stuck in the sidings?

The average tier one investment bank today is dealing with a very complex trade processing infrastructure.  You’d expect the infrastructure to resemble a high speed rail line fully optimised to deliver trades from execution venue to settlement in the shortest possible time. The reality is that most banks are dealing with multiple branch lines, sidings and frequent level crossings which all serve to provide significant obstacles to the journey of the average trade. 

It is not unusual…

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Added by NeilVernon on June 17, 2013 at 3:29pm — No Comments

Credit Unions Choosing Cloud based Solutions for ERM

Increasingly, organizations across all industries are charged with managing risk in a complicated compliance environment. Over at the Credit Union Times, Danny Baker, Vice President of Product Management, Risk & Compliance at Fiserv Inc., thinks he’s found a solution in the Cloud. In his recent…

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Added by Steven Minsky on June 17, 2013 at 2:00pm — No Comments

Companies should consider alternative sourcing of financing trade

As domestic and international trade continue to grow, companies are starting to consider the benefits of alternative sources of trade financing, according to David Hu, Managing Partner, IIG Trade Finance LLC.

 

“The cost of capital for banks, the traditional providers of trade finance, has increased tremendously. They also have other issues, such as the setting of LIBOR, which is being questioned right now. With the increasingly tighter capital requirements of Basel III, banks…

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Added by Michele Westergaard on June 4, 2013 at 4:27pm — No Comments

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