Scandinavian Banks, G-20 Meeting, Everbright: Compliance Scandinavia’s biggest banks have failed to curb funding risks linked to financial innovation and will probably only avoid downgrades if national regulators force through stricter measures, according to Standard & Poor’s.

2. Scandinavian Banks, G-20 Meeting, Everbright: Compliance
Scandinavia’s biggest banks have failed to curb funding risks
linked to financial innovation and will probably only avoid
downgrades if national regulators force through stricter
measures, according to Standard & Poor’s.
Steps taken to date by lenders including Denmark’s Danske Bank
A/S (DANSKE) and Nykredit A/S, as well as Nordea Bank AB
(NDA) and Svenska Handelsbanken AB (SHBA) in Sweden, aren’t
enough, said Per Tornqvist, a Stockholm-based analyst at S&P.
As competitive pressure “forces banks to maintain short-term
funding,” regulators need to step in and help banks extend their
funding maturities, he said.
AAA-rated Scandinavia’s biggest banks are more vulnerable to
funding shocks than their peers in the U.S., France and Italy,
according to a July analysis by S&P, which measured liquidity
risks five years after the collapse of Lehman Brothers Holdings
Inc. paralyzed the global financial system. The rating company

3. Swedish banks are more dependent on market funding
than banks in most other countries, according to the
Financial Supervisory Authority in Stockholm.
In Denmark, home to the world’s largest mortgage bond
market per capita, banks refinance as much as $228
billion annually, spread over quarterly auctions. About 50
percent of Danish borrowers refinance their mortgages
annually, according to the FSA in Copenhagen.
Efforts to sidestep funding mismatches by inventing new
securities will do little to persuade S&P the lenders are
really addressing liquidity risks, Tornqvist said.
Banks are responding to the latest regulator demands
that they protect themselves against funding
misalignments by inventing new securities.

4. Merkel Says G-20 Agrees on Regulation Plan for
Shadow Banks
Group of 20 summit leaders in St. Petersburg Sept. 6
agreed on a road map for regulating shadow banks
throughout the G-20, German chancellor Angela
Merkel told reporters after the meeting.
Leaders from outside Europe “recognize that the euro
areas crisis isn’t over yet but that confidence is
returning, and when structural reforms continue and if
we keep to our commitments and show we’re reliable -
- that then we can overcome this crisis step by step,”
Merkel said.
Merkel also said the G-20 leaders agreed to extend a
commitment to refrain from new protectionist

5. Carney Calls for Bank Risk-Model Clampdown to
Repair Trust
Regulators must restrict lenders’ ability to escape tougher
capital rules by changing how they measure risk, Financial
Stability Board Chairman Mark Carney said, as he urged
nations to finish an overhaul of bank rules.
“The risk models that banks use to calculate their capital
needs show worryingly large differences,” Carney, governor
of the Bank of England, said in a letter Sept. 5 to leaders from
the Group of 20 nations meeting in St. Petersburg, Russia.
“This must be addressed for depositors, investors, clients
and authorities to have full confidence in the strength of bank
balance sheets and their resilience during a downturn.”
The Basel Committee on Banking Supervision, an
international regulators group, said in July that some lenders
were backing investments with as much as 20 percent more

6. Read more:
http://www.topix.com/forum/world/germany/T1UDP084AMMC1
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