nzriskmanager.com

New regulation in Canada

nzriskmanager — Wed, 17 Feb 2010 22:18:12 +0000

Canada’s government has this week decided introduce new banking regulations. From mid April borrowers in Canada will have loans assessed as if they were taking out a five-year, fixed-rate mortgage, for which rates are higher than on shorter, variable-rate loan. Equity withdrawals will also be limited where someone refinances, with an upper limit on refinancing of [...]

New APRA liquidity rules

nzriskmanager — Mon, 21 Dec 2009 21:14:40 +0000

APRA has announced that it is looking to introduce prescribed liquidity requirements for Aussie Banks. Its early days, but it appears the proposal is that banks would be allowed to count only government and semi-government bonds as liquid assets. Effectively, Banks will have restraints on other bank paper or bank bills in their liquid assets [...]

Credit risk modeling

nzriskmanager — Sat, 19 Dec 2009 07:28:45 +0000

Financial institutions have been taking on more complex types of credit risk than ever before resulting in the need to be able to manage credit risk more effectively. Credit risk modeling enables these institutions to estimate how much credit is ‘at risk’ in the event of default or due to changes in credit risk factors. [...]

Securitisation

nzriskmanager — Fri, 04 Dec 2009 01:54:55 +0000

Securitisation is the process of converting tranches of assets, such as residential mortgages, into tradeable securities. Some banks securitise components of their loans for the following reasons; Reduce their regulatory capital requirement Achieves a lower cost funding source Transfers their portfolio credit risk Liquidity management Securitisation options are either “traditional” or “synthetic”. The traditional method requires the bank to sell [...]

Policy – Income and employment requirements

nzriskmanager — Tue, 01 Dec 2009 05:30:58 +0000

The following is a policy guide on appropriate employment and income evidence requirements to support personal lending: PAYE – Full time 100% of the gross monthly income may be utilised for DTI calculation purposes subject to: Borrower must be employed by current employer for twelve (12) months or more, alternatively a borrower may be employed by their [...]

Updated: Are Australasian banks that strong ?

nzriskmanager — Tue, 24 Nov 2009 20:13:57 +0000

UPDATE: Standard & Poor’s Ratings Services said today (26 Nov) that Australian major banks’ AA/Stable ratings remained unchanged in the context of recently released research on our risk-adjusted capital framework (RACF). “While Australian banks’ RAC scores are close to or slightly higher than the global average for major banks, and capital is a slight weakness [...]

Job advert

nzriskmanager — Tue, 24 Nov 2009 19:02:57 +0000

I had to cringe when I saw the following job recently advertised. This would be one of the primary reasons why we have seen so many failures in the Finance Company sector in NZ. There needs to be a clear segregation of duties between sales and credit. Related postsNew regulation in CanadaPolicy – Income and employment [...]

Models assessing risk

nzriskmanager — Mon, 23 Nov 2009 23:53:14 +0000

I have just read a interesting article from the Harvard Business Review, most of their articles are “pay per view”, but this was a free one. The most interesting part for me was a small segment on the models used for assessing risk. Pretty obvious stuff, but some of the comments were: Models are not decision [...]

Loss provisions – the difference between IFRS and Basel II

nzriskmanager — Fri, 20 Nov 2009 22:22:45 +0000

This is a short post to highlight the different loss provisioning principles between IFRS and Basel. Basel objectives are to ensure the Bank has sufficient provisions to absorb “expected losses” and sufficient capital to absorb “unexpected losses”. IFRS objectives are to ensure that the financial statements of the bank reflect the true financial position of [...]

Loss provisions

nzriskmanager — Mon, 16 Nov 2009 23:14:22 +0000

This is a high level review of loan provisioning – the recognition of potential losses is prescibed in both the Basel accord and IAS 39 (International Accounting Standards). Note. IFRS 9 (Intl Financal Reporting Standards) is soon to replace IAS 39 and uses a single approach to determine whether a financial asset is measured at “amortized [...]