Central Bank of Ireland: Keeping the countercyclical capital buffer at zero?

In reference to Irish Central Bank maintains countercyclical capital buffer at zero by Peter Hamilton on 27 June 2017 in the Irish Times.

The Central Bank of Ireland decided to keep its countercyclical capital buffer at zero. Only if the current credit conditions remain restrained.

What is a countercyclical capital buffer?

A countercyclical capital buffer (CCyB) is a quarterly decided rate that applies to banks and investment firms. It’s a capital requirement designed to help banks save during the good months to prepare for the bad months. The CCyB will increase if the credit growth is excessive then is released during a period of systematic stress.

Currently, the Central Bank of Ireland said it will remain at zero.

Bank of England, on the other hand, has raised its buffer from zero to 0.5 percent. This leaves bank having to raise an altogether buffer of 11.4 billion euros in 18 months. The Bank of England is also planning on raising the buffer to 1 percent by the end of the year.

The Financial Policy Committee (FPC) of the Bank of England …

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2013 the year banks told borrowers to hand back the keys?

We help different people with different things, and while most of our debt problem clients face broadly similar reactions from the banks, we think it’s important to post the documents which show a presence of lashings and lashings of stupid. To see the full letter click on the image at the bottom of the post

One such document was received by a client recently from the Irish Civil Service building society, also known as ICS and a subsidiary of Bank of Ireland. It’s no secret that posting these documents makes us highly disliked by the banks,  but if people don’t expose them then the great farce will go unchallenged.

What makes this case interesting is that the bank offered a short term forbearance plan which the client asked them to tweak. Then they turned around and changed their mind and went from ‘we can give you a few months to get your affairs in order’ to ‘sell the house or even abandon it’.

In 2008 to now I have never heard a bank say that walking away (also called jingle …

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Are banks breaking rules by charging account fees?

“AIB will charge me for not having enough money in my account, apparently I can’t even afford to be broke.”

Regulation is a tricky area, it is a branch of law more than of finance and like law it is open to interpretation, precedent and individual cases.

So when I see Anne Fitzgerald of the NCA say that AIB is ‘breaking the rule that required it to act in the best interests of its customers’. I am concerned because it doesn’t present the context of the rule, rather it just makes a statement.

The actual rule being mentioned is Section 2.1 & 2.2 of the 2012 Consumer Protection Code. Chapter 2 in general covers consumer credit, payment services, and electronic money. The actual text of this section (2.1/2.2) is as follows:

“A regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it that it (2.1)acts honestly, fairly and professionally in the best …

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Central Bank Reform Bill 2010

We all want ‘tough regulation’, I would argue it doesn’t need to be tougher, rather it needs to be more pragmatic and enforced, and of those two criteria enforcement being the greater.

The Central Bank Reform Bill 2010 is going to give God powers to the Central Bank/Financial Services Authority of Ireland. Essentially it sets out a framework whereby they can call all of the shots, right down to how companies promote people.

In Part 3 s20(2) they can determine either by their interpretation of title or their interpretation of a persons role, whether they have any controlling function, and if so they require CB/FSAI authority in order to do their job, this is an additional layer of HR activity that will be injected into financial services companies.

Part 3 s35(i) states that a function requires pre-approval if the CB/FSAI deem it to be so on grounds of ‘size or complexity’, yet they don’t state any parameters for same, meaning a mom & pop shop could fall under these rigours based upon the …

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Banks need to stress test themselves

Reverse stress testing has been advised by the FSA (Financial Services Authority) in the UK who have said that stress testing in UK financial firms is too weak to prevent another Northern Rock crisis. They are advising firms to do “reverse stress tests” to identify high-risk scenarios. The want banks, building societies, investment firms and insurers to consider scenarios that may cause their firms business to become unviable.

Normally ‘stress testing’ refers to something banks do when considering clients, they stress loan rates taking into account potential rate hikes, but they have never been asked to stress test their own business models in the way they are presently being asked to do.

In a consultation paper published yesterday, the FSA said UK firms were still not testing themselves against sufficiently severe scenarios. The proposed changes are intended to better reflect the importance that is attached to robust stress and scenario testing and to clarify the Regulators expectations of firms.

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