TLAC | Final standards are only the start of a longer journey

Final standards are only the start of a longer journeyOriginally posted by David Strachan, partner & co-head, Deloitte UK, EMEA Centre for Regulatory Strategy and John Andrews, manager, Deloitte UK, EMEA Centre for Regulatory Strategy on the Financial Services UK blog on November 10, 2015.

Global systemically important banks (G-SIBs) will be required to meet a new prudential requirement – Total Loss-Absorbing Capacity (TLAC) – by 2019, in line with a new global standard published by the Financial Stability Board (FSB).

TLAC is the focal point for resolution authorities in their drive to make the ‘bail-in’ of creditors a credible means of absorbing losses and recapitalising failing banks, thereby eliminating the need for public funds. TLAC will essentially require G-SIBs to hold a layer of long-term unsecured debt over and above their minimum regulatory capital requirements – debt which will be made unambiguously loss-absorbing through bail-in.

Continue reading “TLAC | Final standards are only the start of a longer journey”

Federal Reserve proposes rule to require largest banks to hold minimum amounts of unsecured long-term debt

Federal Reserve proposes rule to require largest banks to hold minimum amounts of unsecured long-term debt
Posted by David Wright on November 5, 2015.

On October 30, 2015, the Board of Governors of the Federal Reserve System (Federal Reserve) unanimously approved an important proposed rule that seeks to improve the likelihood that the largest banking organizations can fail without the use of taxpayer funds or destabilizing the financial system. The proposal would establish new Total Loss-Absorbing Capacity (TLAC) and related Long-Term Debt (LTD) requirements for US banking organizations deemed to be “global systemically important banks” (GSIBs) as well as US Intermediate Holding Companies (IHCs) of foreign GSIBs. In her prepared remarks for the Federal Reserve’s open meeting on the proposal, Chair Janet Yellen argued that the new rules, in conjunction with other regulatory efforts to improve the resolvability of GSIBs, would “substantially reduce the risk to taxpayers and the threat to financial stability stemming from the failure of these firms.”

Continue reading “Federal Reserve proposes rule to require largest banks to hold minimum amounts of unsecured long-term debt”

New global banking regulations require a fresh look at booking models

CCAR attestation change would be about more than just forms
Posted by David Wright and Irena Gecas-McCarthy, on October 12, 2015.

Booking models in banking have traditionally been driven by a diverse set of factors–such as business priorities, legal and regulatory requirements, tax, and financial performance. When those models change, it usually happens incrementally over time in response to specific opportunities and business needs. It also usually happens without a holistic analysis that accounts for an integrated or big-picture view. But now, the regulatory environment and business strategy questions are driving rapid change.

Regulatory reform–both at home and abroad-is creating new and complex rules that are having a major impact on the way products are booked. As banking organizations comply with new regulatory requirements and supervisory expectations, they are overhauling business models and transforming how they operate. The need for transparency around booking models lies at the center of this change, since booking models determine how and where banking organizations transact. They also determine how the resulting risks are managed, both individually within a specific jurisdiction and together across multiple jurisdictions. Booking models are increasingly under scrutiny, and regulation and supervision are now key drivers of cross-border practices.

Continue reading “New global banking regulations require a fresh look at booking models”

Risks and Challenges of Expanded Retail Pharmacy Offerings

Risks and Challenges of Expanded Retail Pharmacy OfferingsPosted by Kelly Sauders, Partner, Deloitte & Touche LLP

Many retailers are considering expanding their pharmacy offerings to tap into bigger margins and new revenue sources. Attractive opportunities range from high-priced specialty drugs to a variety of health and wellness services. However, as retailers broaden the scope of their pharmacy operations, they are likely to encounter a number of significant regulatory issues and risks. Including:

Continue reading “Risks and Challenges of Expanded Retail Pharmacy Offerings”

Making Progress on Health Insurance Exchanges Without Definitive Guidance

Making Progress on Health Insurance Exchanges Without Definitive GuidancePosted by Kelly Sauders, Partner, Deloitte & Touche LLP

Health plans are waiting for CMS (The Centers for Medicare and Medicaid Services) to provide detailed requirements and guidance about participating in federal health insurance exchanges. In the meantime, we believe their leading bet is to refer to the managed care manuals for Medicare Part C and D. Or in the case of a state-run exchange, it probably makes sense to follow the state’s Medicaid guidelines.

Continue reading “Making Progress on Health Insurance Exchanges Without Definitive Guidance”

HIX Compliance for Health Plans

HIX Compliance for Health Plans

New structures come with new rules and health insurance exchanges (HIX) are no exception. That said, health insurers need to know more than the new rules — they need to understand the protocols and priorities regulators intend to use in building out this new regulatory regime.

This is a significant compliance challenge, but it does not begin with a blank page. Other government programs’ (Medicare and Medicaid) compliance capabilities that may already be in place serve as useful models for the analogous requirements of HIX participation. In fact, many of the exchange compliance priorities the Centers for Medicare and Medicaid Services (CMS) shared in March 2014 are similar to those used to regulate Medicare Advantage and Part D plans. Following that logic, it is likely that enforcement measures on HIX plans may mimic these other existing federally-funded programs.

Continue reading “HIX Compliance for Health Plans”