Risk Management: focus on regulatory developments

ABBL Published 07.12.2018

The third edition of the ABBL & ALRiM Risk Management conference on December 4th 2018 was dedicated to new regulatory developments, Anti-Money Laundering (AML) and to Brexit.

The large audience, consisting of around 175 risk managers and other concerned financial professionals, amply demonstrated that these issues are followed with great interest by the Luxembourg financial community.

In his opening speech Luc Neuberg, Chairman of ALRiM, stressed the importance of sound risk management practices to cope with the fast-changing regulatory landscape and with the uncertain economic environment.

Pierrot Rasqué, Advisor at the Luxembourg Finance Ministry, provided an overview of the ambitious Risk Reduction Measures package, encompassing the review of the Capital Requirements Regulation (CRR II) of the Capital Requirements Directive (CRD V) and of the Bank Recovery and Resolution Directive (BRRD II). The negotiations of the package, proposed by the European Commission in November 2016, are making substantial progress in light of the political agreement reached notably on proportionality, credit risk, the home-host balance, the requirement to set up Intermediate Parent Undertakings (IPUs). Mr. Rasqué completed his presentation by summarising the recent EU Commission proposal aiming at reducing the level of non-performing loans held by European banks, among others by means of a prudential backstop.

The conference continued with a lively panel discussion moderated by Gilles Pierre, Head of Banking Regulation at the ABBL. The panel was composed by Martine Wagner, Deputy Head of Banking Supervisory Policy and SSM Coordination at CSSF, Mr. Rasqué, and two high-level senior bankers, Elisa Alonso Sanz, Head of Control, Governance and Regulatory Compliance at State Street Bank Luxembourg, and Alexandra Merlino, Regulatory Affairs Coordinator at Banque Pictet Luxembourg. The panellists debated on the coming revised EBA guidelines on outsourcing regulation, which were subject to public consultation from June to September 2018. The subject is all the more relevant since outsourcing is a long-standing practice in the banking industry, which contributes to the efficiency and to the competitiveness of banks’ business models.

The panellists also exchanged views on two priority issues for Luxembourg banks, i.e. intra-group outsourcing and outsourcing to service providers located in third countries. On the Risk Reduction Measures package, the discussion focused on proportionality alleviating the cost of regulation for small and non-complex banks and on waivers. Eventually, Mr. Rasqué reported on the state of play of the ESAs review, i.e. the revision of the statutes, powers and governance of the three European Supervisory Authorities EBA, ESMA and EIOPA. The initiatives of the Luxembourg Finance Ministry, actively supported by the lobbying actions of the ABBL, aim at rebalancing the EU Commission’s text in order to preserve the vital interests of the Luxembourg financial sector.

Claude Wampach, Head of Risk Management, Banking Supervision, at the CSSF presented the views of the CSSF on the topical subject of AML/CFT, which will be a top priority for 2019. Mr. Wampach explained how the risk-based approach of the CSSF on AML/CFT relies on detailed risk assessment and scoring and emphasised the interactions between prudential and conduct risks. Within banks, such interactions should take the form of exchange of information and of cooperation between Compliance and Risk Control functions. On the supervisory side, authorities in charge of prudential and conduct supervision should also opt for a cooperative framework.

The second panel of the conference addressed the implications of Brexit on the Luxembourg financial place and was moderated by Thierry Lopez, Chief Risk Officer at Northern Trust Luxembourg.  Yves Nosbusch, Chief Economist at BGL BNP Paribas, reviewed the three most likely macroeconomic scenarios, while Mehtap Numanoglu Tasiopoulos, Chief Risk Officer at Brown Brothers Harriman Luxembourg, described the consequences of Brexit from a service provider perspective. Finally, Fred Mouchel, Chief Executive Officer of J.P. Morgan Bank Luxembourg, concluded the discussion by highlighting the challenges ahead for Luxembourg to remain attractive in the post-Brexit world. The key drivers for the attractiveness of the Luxembourg financial centre will continue to be the regulatory and tax environments as well as the capacity to attract skilled human resources.

Mr. Pierre drew the conclusion of the conference and invited the audience to take part in the fourth edition of the ABBL & ALRiM Risk Management conference in December 2019.

By Gilles Pierre, Adviser to the Management Board – Head of Banking Regulation, ABBL

Picture gallery

Third edition of the ABBL & ALRiM Risk Management Conference, 4 December 2018 – Picture gallery



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