Resultados de las pruebas de Owasp

8.24 The recent financial crisis and the subsequent public interventions have given rise to profound reappraisals of the regulatory environment in which financial institutions operate.

8.25 One of the issues being addressed is the moral hazard risk posed by systemically important banks, as outlined above. In the UK, the FSA has published a discussion paper setting out policy options to deal with systemically important banks.²³⁸ At the international level, the Financial Stability Board (FSB) has proposed principles for the development of a policy framework aimed at reducing the moral hazard risks posed by systemically important financial institutions (SIFIs).²³⁹ The reforms proposed by the FSB to address moral hazard concerns raised by SIFIs fall into three categories: ²⁴⁰

• reducing the probability and impact of failure mainly through capital and liquidity requirements

• improving the capacity to resolve firms in crisis, by improving ex ante preparedness, contingency planning and cooperation between relevant authorities, and

238 Financial Services Authority, Turner review conference discussion paper – A regulatory response to the global banking crisis: systemically important banks and assessing the cumulative impact, DP 09/4, October 2009. Available at www.fsa.gov.uk/pubs/discussion/dp09_04.pdf

239 Financial Stability Board, Reducing the moral hazard posed by systemically important financial institutions -- Interim report to G20 leaders, June 2010. Available at

www.financialstabilityboard.org/publications/r_100627b.pdf

240 Financial Stability Board, Overview of progress in the implementation of the G20

recommendations for strengthening financial stability – Report of the Financial Stability Board to G20 leaders, June 2010. (Available at

www.financialstabilityboard.org/publications/r_100627c.pdf)

• reducing interconnectedness and contagion risks by strengthening infrastructures and markets that link banks together.²⁴¹

8.26 Reducing risk can be achieved by reducing the probability of failure and/or limiting the impact of failure, by strengthening prudential

supervision and banks' capital and liquidity requirements, as discussed in Chapter 5.

8.27 Improving preparedness can be achieved by requiring banks and other systemically important firms to ex ante prepare plans in which they lay down the steps to be taken to recover from a crisis. In its discussion paper mentioned above, the FSA indicates that it is preparing guidance for systemically important firms to use in developing their 'Recovery and Resolution Plans' following the principles set out by the FSB. The

Financial Services Act passed in April 2010 requires the FSA to make rules requiring certain firms to prepare such plans.

8.28 Recovery and Resolution Plans will build on existing capital and liquidity requirements by supplementing details about the actions to be taken in case of a future crisis. They should include a detailed description of the banks' different lines of businesses and subsidiaries, in order to delineate which parts are to be supported and which ones can be sold to third parties if failure occurs and the SRR is triggered.

8.29 The Future of Banking Commission indicated in its report that so-called 'living wills' were important to re-designing the architecture of the financial services industry.²⁴² By publicly committing to a plan to be

241This category of reforms refers to the willingness to address the lack of resiliency of interbank and money markets observed during the recent crisis. Many commentators have argued that the current, decentralised, organisation of interbank markets (over-the-counter derivative contracts, bilateral obligations, etc.) had dramatically increased systemic risks and contagion effects. This topic is outside the scope of the present review and we will not address it further.

242 The Future of Banking Commission, report published in June 2010, available at

www.commission.bnbb.org/banking/sites/all/themes/whichfobtheme/pdf/commission_report.pdf

followed in case of a crisis, banks would be encouraged to adapt their behaviour with regards to the way they managed risk and extended credit.

8.30 As regards the deposit insurance scheme, the Banking Act 2009 extended the powers of the HM Treasury to make provision by

regulation to allow the FSCS to impose levies in advance of any default (pre-funding). This new funding arrangement has not been introduced yet and is expected to be the subject of future consultations. It may also allow contributions to the compensation scheme to be spread over a longer period of time, which reduces the burden on banks when failure actually occurs and financial stress is likely to be greater.²⁴³

8.31 The implementation of improved resolution regimes may, over time, change the expectations of systemically important firms' investors and creditors about the risk they bear in the event of failure. This could lead large institutions to be subject to greater market discipline and thus to be discouraged from taking excessive risks, which in turn will create a more level playing field upon which competition can take place, as the largest firms will not be able to rely on the Government rescuing them if their activities go wrong.

8.32 We also heard a concern around proposed changes to deposit insurance.

If regulators were to introduce an exit levy that applied to firms leaving the sector in respect of liabilities incurred while they had authorised status, such a levy, it was argued, this could create a barrier to exit through the creation of an additional legacy cost. Such concerns will need to be addressed as part of any revision to deposit insurance.

243 See Emilio Avgouleas, Banking supervision and the special resolution regime of the Banking Act 2009: the unfinished reform, Capital Markets Law Journal (2009), vol. 4(2), pages. 201-235.

Summary

8.33 Financial stability and the protection of depositors and public funds are the main rationale for regulations that seek to prevent the disorderly exit of systemically important financial institutions. The absence of, or

inappropriate, mechanisms can result in moral hazard issues. Moral hazard issues may distort market discipline and firms' behaviour and thus affect the likelihood of entry or expansion in the retail banking sector.

8.34 Currently, international bodies and domestic regulators are proposing principles for better regulation and prudential supervision, and for the development of a policy framework aiming at reducing the moral hazard risks posed by systemically important financial institutions. Such plans have the potential to cause banks to internalise the systemic risk their activities can generate. As such, these proposals could also reduce the competitive distortions entailed by moral hazard. These wider questions about trade-offs between financial stability and competition policy are beyond the scope of this review and are currently being considered by the ICB.

8.35 The regulatory landscape has changed substantially in the past few years, both in the UK and at the international level. The UK has

introduced a SRR that provides authorities with the tools necessary to deal with failing banks in a controlled manner. Depositor insurance has been amended to allow for a higher limit of compensation and a faster transfer to customers. These regulations have been designed with financial stability in mind and do not explicitly recognise competition goals. However, it is possible for the SRR to take account of the impact on competition when considering options for how they are used in particular circumstances. It would be beneficial to choose approaches that minimise any detrimental effects on competition where possible. In many cases, there may be no trade-off between ensuring financial stability and promoting competition.

8.36 Further, the OFT, or the European Commission, is able to evaluate the sale of bank assets through the merger regime and also the impact on competition ex post through its enforcement powers.

9 CONCLUSION

9.1 This review has considered the existence and extent of barriers to entry, expansion and exit are in retail banking in the UK. Building on existing studies, the OFT has received evidence from, and discussed the issues with, over fifty different parties, including banks, building societies, recent and prospective entrants, industry bodies and consumer groups.

The OFT has also worked with external partners in seeking primary evidence on consumer behaviour, as well as analysing public source material and market research data.

9.2 The findings of this review will assist the OFT and others in

understanding better barriers in personal and SME banking markets, and in understanding the long term competitiveness of the retail banking sector. The review is expected to contribute to the work of ongoing reviews into banking more generally, such as the work of the ICB.

9.3 Below we set out the key findings across our review's thematic areas of