By Jason Penman, Head of Balance Sheet Management, NatWest Markets
Can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?
I enjoy working on the most complex business optimisation & financial management problems. The Banking industry has been rich with opportunities in that area and the pace of market and regulatory change is unparalleled.
Within balance sheet and capital management the focus continues to be on optimisation and ensuring we maximise returns, at the same time ensuring the business is resilient in stress conditions
What, for you, are the benefits of attending a conference like Risk EMEA 2019 and what have attendees learnt from your session?
Without doubt the ability to mix with other industry practitioners and experts to discuss issues ranging from future state planning & optimisation to resolution planning, understand how other institutions are approaching problems and change.
In the session, attendees gained an insight into the potential to use recovery and resolution requirements to understand the business and push this thinking upstream into business decision making.
Without giving too much away, how has the regulation surrounding recovery & resolution planning evolved?
In summary it has changed beyond all recognition, the level of analysis and detail required is at another level. Requiring analysis of each option in detail and challenge / corroboration across the organisation.
In your opinion, how can firms look to effectively leverage recovery & resolution as a business tool?
The recovery and resolution plans should be a direct derivative of business thinking on how businesses can adapt to changing circumstances. There are clear plans for growth and the same thinking needs to be applied to recovery and resolution. Organisations should reference past experience in relation to business reductions and read across the lessons learned. Most institutions will have this experience.
What advice would you give financial professionals looking to enhance their recovery & resolution plans?
Effective ownership and challenge. Businesses need to own recovery and resolution plans from the level where the positions are originated upwards.
Also its important in my opinion to avoid adopting a one size template format fits all approach. While a degree of standardisation is required there needs to be flexibility to recognise different businesses and positions may benefit from a different articulation of the recovery / resolution strategy.
How do you see the financial landscape evolving over the next 6-12 months?
I would expect Banks to continue to focus on navigating the uncertainties and volatility caused by macro events such as US/China trade, Brexit etc.
Continuing to work and invest towards meeting the existing stack of regulation that will come on line in a slightly longer timeframe (FRTB, SACCR, MREL requirements etc).
I feel there will also be a continued re-evaluation across the industry of businesses and business viability taking into account to full costs of doing business and the new requirements relating to capital, funding etc.