The Prudential Regulatory Authority (PRA) has set out its priorities for 2023 in a letter to a number of key CEOs.
According to The Paypers, the top priority set out by regulators was to improve risk management and governance frameworks to build financial resilience, addressing the blind spots exposed by the energy crisis and other major economic events which have impacted financial markets over the past few years.
The PRA said, “It’s important that regulators work closely with banks and financial services organisations to improve risk management. All too often, manual systems remain in place for managing complex and time-consuming tasks related to anti-money laundering, risk, and compliance.”
It claimed that itself and the Bank of England continue to prioritise resolution as this is an important component of ensuring that the UK has a resilient, efficient and competitive banking system.
The Bank of England has also updated their approach to categorising the ‘potential impact’ of firms, reducing the number of categories from five to four. The bank has also refined their risk assessment framework and their core assurance work.
PRA remarked, “The impact of increasing interest rates, inflation, and high cost of living, geo-political uncertainty, and supply chain disruptions is expected to pose challenges to firms’ credit portfolios.
“Firms need to be ready for a prolonged period of stress. Therefore, it is important that firms ensure their credit risk management practices are robust, portfolios are closely monitored, customer support, and collections arrangements are appropriately scaled, and expected credit loss provisions are recognised in a timely manner.”
In 2023, for Internal Ratings Based models (IRB), the Bank of England said it continues to focus on three key workstreams: the implementation of IRB Hybrid mortgage models; the IRB Roadmap for non-mortgage portfolios; and IRB aspirant firm model applications.
The PRA stated that these issues have continued, despite regular messaging around addressing the risks that arose following the collapse of a major hedge fund in 2021.
The Reserve Bank of India plans to raise $2bn in its first-ever green bond offering to support green infrastructure projects in the country.
Copyright © 2023 FinTech Global
