The COVID-19 crisis is not a financial crisis and so it has had less of an impact on the financial sector than on many other sectors. Most financial service providers are well prepared for crises and well capitalised. However, the crisis is not yet over: the second wave of the pandemic is upon us, and a mass vaccination programme still some way off. The longer the crisis continues, the more the risk of loan defaults grows, so banks need now to be monitoring their capitalisation more closely, expanding their stress-testing tools, taking short, medium and long-term steps to boost their capital resources, and optimising monitoring of their loan portfolio.
Modern slavery is the third largest source of criminal profits globally with the majority of these profits passing through the global financial system undetected. Financial institutions have an important role to play to combat modern slavery in their own operations and with the clients and companies they provide services to. Expanding, updating and developing the necessary frameworks to identify actions and associated risks are vital to combat modern slavery.
The objective of the Net Stable Funding Ratio (NSFR) is to reduce liquidity risk over a longer time horizon by requiring banks to fund their activities from sufficiently stable sources. The new regulatory ratio will enter into force in Switzerland on 1 July 2021. What do Swiss banks need to do?
Prioritise climate risk management to protect your future: The impact of climate-driven regulatory initiatives on Swiss financial institutions
Swiss financial institutions will need to adhere to enhanced climate-risk disclosure obligations, in line with new ambitious targets for reducing domestic emissions of CO2. Companies operating in the financial services industry should take a proactive approach to understanding the implications of climate risk for their business and reporting requirements. They should also ensure that any reporting is assured by an independent third party to establish its reliability and gain the confidence of stakeholders.
Deloitte’s 2020 global survey on the OECD’s Base Erosion and Profit Shifting (BEPS) initiative shines a spotlight on the next wave of the Global Tax Reset. What are the key finding and impacts on the financial services industry?
The asset management industry has shown its resilience over the past decade and during the recent March sell-off. However, according to the joint committee report on risks and vulnerabilities in the EU financial system, published in September 20201, some sectors of the industry have struggled with redemption requests during the COVID-19 crisis. Bond fund outflows reached record highs during this period, amounting to 4% of the sector Net Asset Value (NAV). This follows prominent fallouts in previous years of various asset managers, and as a result fund liquidity has become a top priority for the entire fund industry.
In parallel, regulators across Switzerland and the EU have been tackling the liquidity issue by developing new regulatory requirements. In the EU, ESMA introduced a requirement having come into force at the end of September 2020 for asset managers to develop a comprehensive Liquidity Stress Testing (LST) framework for funds. In Switzerland, FINMA has carried out a consultation on a new financial institutions ordinance (FINIO-FINMA) requiring liquidity stress testing, currently expected to be adopted by end 2020.
Under Australian domestic law, eligible foreign pension funds deriving Australian source interest and dividend income are eligible for Australian withholding tax exemptions. The Australian government introduced new laws in early 2019 to amend the rules in respect of Australian withholding tax exemptions for foreign pension funds.
Why delivering enjoyable client experiences is still a challenge for many banks, and how to make it a success
Banks in Switzerland struggle to exploit the potential of digital client experience (CX) programs. We have identified two areas where failure with CX initiatives can be avoided by taking the right approach and understanding the typical pitfalls and mistakes.