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Jobs and Career Management in the Financial Markets, Banking & Finance |
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TOP STORIESStress Tests – Inoculation or Gimmick?11 May 2009By Jon Jacobs COMMENTS"Stress test is not a gimmick. The only way to regain investor confidence is if they see an independent body policing and safe guarding their retirement fund and savings." Read all comments »Are the US government's much-ballyhooed bank stress test results improving transparency, risk management, and therefore building confidence in the ultimate solvency of the system's largest institutions? Or, are the stress tests a largely political exercise, tantamount to putting a Band-Aid over a gangrenous limb? Will the burst of confidence that the government's official verdicts on 19 large banks seem to have instilled in markets since the beginning of May, prove all too fleeting?
COMMENTSGary, Investment Banking / M & A, Mon 25 May 09Stress test is not a gimmick. The only way to regain investor confidence is if they see an independent body policing and safe guarding their retirement fund and savings. In fact in Australia an independent stress test should also be conducted. This is because almost all banks have exposures to toxic assets that may result to banks under reserve. There are also RMBS originated in Australia and most Australian banks and foreign banks have exposure to US and local RMBS. Exposure to toxic assets was a result of poor operation, IT (trading and risk system) and risk management in the past 5 years in the industry. This was also a result of dishonest portfolio managers and traders conspiring with IT and operation in non-disclosure of CDS and other derivatives to head office or management. A good example is Socgen Australia where even the head of credit and head of audit put a blind eye for the past 4 years. This has been happening as well to Deutche Bank, UBS and other foreign banks. The big 4 also have the same practice. The only difference is that they do not have the same level of operational risk because local banks do not have overseas operation. Add your comment »Gary, Investment Banking / M & A, Tue 26 May 09JP Morgan is also a good example.....The big 4 had their own stress tess early this year.
Gary, Investment Banking / M & A, Tue 26 May 09Particularly if they have little sales margin from their sales desk and the trading portfolio are not making good profits since 2007.
Gary, Investment Banking / M & A, Tue 26 May 09Weakness in transparency, operation and risk management to foreign banks did not just happened in 2008. This is a build up from years prior 2008. Hence you will find that appropriate action from foreign bank head office/managmennt is already over due.
Gary, Investment Banking / M & A, Tue 26 May 09Weakness in transparency, operation and risk management to foreign banks did not just happened in 2008. This is a build up from years prior 2008. Hence you will find that appropriate action from foreign bank head office/managmennt is already over due.
Gary, Investment Banking / M & A, Tue 26 May 09It is very important and in fact critical to a banking business with overseas operation to have honest employees with excellent business ethics that upholds both the customer and share holders interest in the front office. It is also critical that there are excellent skills from operation and IT support. The implementaion and updating of system (trading and risk) are major tasks of their IT and operation team. Past experience does not show efficiency from the support groups. There was also lack of quality skills and knowledge from the credit group. While the risk monitoring staff and portfolio manager in the front office lacks honesty and transparency. Add your comment » |
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