Global Banking Update: 22nd Nov 2024

The past week has brought important developments in the financial world, offering critical lessons for treasury professionals navigating an increasingly dynamic environment.

In global news, from fraud prevention breakthroughs in Australia to regulatory adjustments affecting global institutions, the stories dominating the banking landscape point to a clear need for proactive risk management and forward-thinking strategies. Whether it is adapting to shifting credit risks in Europe or responding to leadership transitions in innovation banking, one thing is certain: banks should remain prepared to stay ahead of these changes.

In this edition, we explore the stories that matter most and discuss their strategic implications for treasury teams worldwide.

Key Highlights:

• Australian Banks Take on Scammers with BioCatch Trust Australia’s major banks, including ANZ and Westpac, have joined forces to launch the BioCatch Trust pilot project. This initiative leverages behavioural intelligence to combat the growing threat of financial scams, intercepting fraudulent payments before they are completed. For treasury professionals, this collaboration signals a broader industry trend towards integrating advanced technologies into fraud prevention systems. Institutions should evaluate their fraud detection mechanisms and consider adopting similar proactive measures to safeguard customer assets and institutional reputations.
• Santander UK Faces ￡295 Million Regulatory Provision Santander UK has allocated ￡295 million to cover potential costs associated with car finance compensation claims. This follows a landmark ruling against undisclosed commissions paid to car dealers. For treasury teams, this highlights the financial and reputational risks tied to regulatory non-compliance. The key takeaway is to strengthen oversight frameworks and allocate sufficient capital reserves to manage unforeseen regulatory liabilities without destabilising liquidity positions.
• UBS Reports Credit Loss Amid Weak European Growth Sluggish economic activity in Europe has prompted UBS to report a credit loss expense of CHF 150 million in its personal and corporate banking division. This comes alongside challenges integrating Credit Suisse following its acquisition. Treasury professionals should monitor exposure to regions with weaker economic performance and consider diversifying portfolios to reduce concentration risk. Strengthened risk analytics can help navigate such uncertainties more effectively.
• HSBC Appoints New CEO for Innovation Banking HSBC has named Emily Turner as the CEO of its Innovation Banking unit, signalling its intent to strengthen its footprint in the innovative banking sector. Treasury teams in banks looking to enhance their competitive edge can draw lessons from this appointment by fostering strategic leadership and investing in forward-looking sectors like fintech and digital finance.
• Wall Street Prepares for Trump Administration Policies Following Donald Trump’s re-election, markets are bracing for potential changes to economic and regulatory policies. While initial optimism for deregulation has been tempered, treasury professionals should anticipate shifts in interest rates, currency values, and cross-border flows. Preparing for rate adjustments through interest rate sensitivity analysis, liquidity planning, and robust hedging strategies will be essential in maintaining stability during policy transitions.

Treasury professionals play a pivotal role in shaping their institution’s ability to adapt to these changes. By staying informed and adopting a proactive approach, banks can successfully manage risks while seizing opportunities in this evolving financial landscape.

For deeper insights and actionable strategies, explore the full report.

New Course: Modelling Core Deposits

We are pleased to announce the addition of a new Advanced Strategy course to the Global Banking Hub members area: "Modelling Core Deposits." This specialised course has been developed to enhance your expertise in deposit dynamics and provide advanced modelling techniques to support strategic treasury decision-making.

Course Overview:

• Core Deposits Explained: Understanding their importance in bank liquidity and stability.
• Advanced Modelling Techniques: Applying statistical and behavioural approaches to analyse core deposits.
• Deposit Stability and Stress Testing: Designing effective tests to evaluate deposit resilience.
• Strategic Treasury Insights: Utilising deposit modelling for asset and liability management and profitability optimisation.

This course offers a structured, in-depth approach to managing deposit stability and improving treasury operations. Members can easily identify advanced courses by their red border in the “short courses” section of the members area.

Access the Course Here and further develop your professional capabilities.

Hub Highlights: Top Tips for Members

"We built our entire stress testing framework from scratch using the 'Stress Testing How-To Guide,' and the impact has been remarkable. The step-by-step approach made a daunting task manageable, guiding us from scenario design to actionable insights. It not only helped us meet regulatory standards but also revealed key vulnerabilities we had overlooked. Now, stress testing is central to our decision-making, and our team feels more prepared than ever for any financial shocks."

It is fantastic to see how members are making the most of the resources on the Hub. Success stories like this show the real value these tools bring to the banking profession. I would love to hear more about how you are using the Hub to tackle challenges or improve processes—please share your feedback, and I will feature in a future newsletter to inspire others!

Free Article of the Week: FAQs in ALM

This week, I wanted to share something a bit different—a comprehensive FAQ guide on ALM. Based on questions I frequently receive from my LinkedIn followers and inbox, this article addresses the most common queries about this essential banking function.

Key topics include:

• What is ALM and why is it critical? Explores the purpose of balancing risks and returns to maintain liquidity and financial stability.
• Managing Risks in ALM: Insights into addressing interest rate, liquidity, and market risks effectively.
• Tools and Techniques: Covers gap analysis, stress testing, and behavioural assumptions for realistic risk management.
• Regulatory and Strategic Aspects: Discusses Basel III requirements, climate risk, and the role of ALM in long-term planning.

This detailed FAQ offers practical, actionable insights for anyone looking to enhance their understanding of ALM. If you are involved in treasury or ALM, it is worth exploring for valuable takeaways you can apply directly to your role.

Let me know how you find it—and as always, I welcome your feedback!

Thank you for reading this week’s Global Banking Update. The information and resources shared highlight the dynamic challenges and opportunities in the banking and treasury world. Whether it is adapting to regulatory shifts, leveraging fraud prevention innovations, or enhancing your expertise with advanced courses, there are plenty of actionable insights to apply.

I would love to hear how you are using the Hub’s tools and resources to tackle challenges or improve processes. Your feedback helps us improve and may feature in future newsletters to inspire others.

Looking forward to next week, keep exploring opportunities, refining strategies, and driving success in your role. Thank you for your ongoing support!

Warm regards,

Claire Trythall

Director/Founder | Global Banking Hub