Banking

The death knell for the global benchmark interest rate LIBOR has rung, and the impact of its demise will be widely felt. The time to prepare for the switch to alternative risk-free rates has arrived; the back book will need to be transitioned, and products based on the new rates will need to be launched. What are the three main risks during this period, and what is the major opportunity?

The word revolution isn’t used lightly, so when we are told that we are in the midst of Industrial Revolution 4.0, we can expect to see major changes—especially in that most fundamental of industries, banking. Providing guidance to their 33,000 strong membership, in the midst of the upheaval, is the UK’s Chartered Banker Institute, which through multiple avenues is preparing bank professionals, current and future, to serve their customers well during the transformation.

UK banks have achieved success in many areas, but when it comes to earning and retaining customer trust, they have fallen short. In an era of big bank failures, scandals and outright greed, public trust in the banking sector has been one of the main casualties. The good news is that it doesn’t have to be that way; banks can turn the tables and win back that crucial trust. But how?

The best banking institutions in retail, commercial, private and investment banking are highlighted along with two outstanding CEOs from their regions.

The London Inter-bank Offered Rate, LIBOR, has for 50 years served as one of the most widely used benchmark interest-rate indexes. But its reputation has been tarnished by concerns that it has been manipulated by banks, and the United Kingdom’s FCA has pulled the plug on LIBOR submissions after 2021. Its successors—risk-free rates—are lining up to take over, but the transition is definitely not guaranteed to be smooth.

Given the prevailing financial infrastructure that exists today, international transfers continue to remain costly, time-consuming and risky—and even more so when there is a need to exchange currency. Such transactions normally undergo a series of stages that invariably include the involvement of intermediary parties and the foreign-exchange market

Central banks, guardians of financial systems, consider multiple factors when determining policy; today, as countries suffer the effects of severe weather, central banks feel impelled to include the risks associated with climate change. Groups such as the Network for Greening the Financial System, which unites central banks to address climate-change financial risks and aids the private sector toward achieving a more sustainable future, allow central banks to pool their resources to combat this threat.

Vietnam’s banking sector has needed a reboot for some time. Impacted by bad debt, corruption and lax regulation, banks have not reached their potential. In response to the multiple problems, Vietnam is implementing a development strategy to strengthen the sector. The pressure is on banks to comply with new regulations, such as adhering to Basel II capital standards, but banks along with rating agencies generally have an upbeat view of Vietnam banking’s future.

Australia, famous for its coral reefs and koala bears, is also home to some of the world’s most brazen banks. The Royal Commission that spent months investigating the actions of the nation’s top banks uncovered a hornet’s nest of misconduct and customer exploitation. Needless to say, remedial steps are in effect, and the banks involved have been left with little choice but to take swift corrective measures.

For several years now, anti-financial crime (AFC) regulations have prohibited the operation of shell banks.  A shell bank is a bank that has no physical presence in the jurisdiction where it is incorporated or licensed and no affiliation with a regulated financial group.