Regulators want closer scrutiny of shadow banks

06 February 2019 | Sakenuus
Huw Jones - Better data is needed to spot risks from "shadow banks" stepping up credit to heavily indebted companies, an annual survey of the non-banking financial system said on Monday.

The Financial Stability Board (FSB), a body of regulators that coordinate financial rules for the Group of 20 Economies (G20), said leveraged loans warranted closer attention given the potential for spillovers into other markets if something went wrong.

"Given these developments ... it is important to consider enhancing data/information collection so as to have clearer view of the market and its risks," the FSB said in its Non-Bank Financial Intermediation report for 2017.

Non-bank or "shadow bank" finance refers to credit generated outside banks, such as by collective investment vehicles, broker-dealers and funds that invest in bonds and money markets.

Shadow banking, with its pejorative connotations, is a term the FSB no longer uses as it seeks to emphasise how the sector can provide valuable credit to the economy as banks rein in risk-taking to cut down on how much expensive capital they must hold.

The FSB said its "narrow" measure of shadow banking grew by 8.5% to US$51.6 trillion in 2017, or 14% of total global financial assets.

Two-thirds

Since 2011, just four countries, China, the Cayman Islands, Ireland and Luxembourg, have accounted for over two-thirds of the US dollar value increase, the FSB said.

The report said non-banks are playing a growing role in the US$1.4 trillion to US$2.4 trillion market for leveraged loans to companies that have high levels of debt and a credit rating below investment grade.

About two-thirds of collateralised loan obligations (CLOs) that repackage the loans are held by non-bank investors, including pension funds, insurers and investment funds, the FSB said.

Regulators are sometimes unable to see who is ultimately exposed to leverage loan debt piles that have grown rapidly and now exceed pre-crisis highs, and whether they could absorb shocks as some don't have substantial capital buffers like banks.

Earlier this month, Bank of England governor Mark Carney likened leveraged loans to subprime mortgages that defaulted a decade ago in the United States to trigger the global financial crisis.

The FSB said its broad measure of shadow banking, which includes pension funds and insurers, grew by 7.6% to US$116.6 trillion in 2017, a record 30.5% of global financial assets.

The FSB also said financial technology, or fintech, businesses were a growing feature in shadow banking, extending about US$284 billion in credit in 2016, but data was too poor to get a full picture. – Nampa/Reuters

Soortgelyk

 

NSFAF sluit ooreenkoms met Bank Windhoek

1 dag gelede | Onderwys

Die Finansiële Hulpfonds vir Namibiese Studente (NSFAF) en Bank Windhoek het vandag ʼn ooreenkoms aangegaan vir ʼn nuwe stelsel waardeur geld aan kwalifiserende studente gestuur...

Chinees Dinsdag in hof ná werker se skietdood

1 dag gelede | Misdaad

Die man wat gister na bewering deur sy Chinese werknemer in die Andara-nedersetting doodgeskiet is, is as mnr. Andreas Hausiku (32) geïdentifiseer.Hausiku was ‘n inwoner...

Twintig jaar tronkstraf vir verkragter

1 dag gelede | Howe

‘n 34-jarige man van Otjiwarongo is gister 20 jaar tronkstraf opgelê nadat hy skuldig bevind is aan die verkragting van ‘n minderjarige. Die dogter was...

Taking charge

1 dag gelede | Mense

Mariselle Stofberg Anthea van Heerden decided to take a leap of faith to start her own company in Windhoek.She is the managing director and...

Moontlike deurbraak

1 dag gelede | Misdaad

Denver KistingDie man wat gisteroggend weens Maandag se bloedbad op Arandis aangekeer is, het glo vir etlike ure geweier om met die polisie saam te...

Só staan sake in die Namibiese huis

1 dag gelede | Regering

Denver KistingPres. Hage Geingob het gistermiddag gesê sy boodskap van “welvaart vir almal” moenie verkeerd verstaan word nie.Volgens hom was die bedoeling nooit om oordaad...

Kabajani blossoms at GIPF

1 dag gelede | Mense

Michelline Nawatises Annette Likeleli Kabajani is a holder of a bachelor’s degree from the University of Namibia (Unam). She has also attained several management and...

Baking a name for herself!

1 dag gelede | Mense

Ester Kamati At the age of 28, Alma Tangi Nakanduungileh is climbing the entrepreneurial ladder and adding sweetness to her clients’ lives. A qualified...

A passion to unlock potential

1 dag gelede | Mense

Ester KamatiJustina Mulokoshi is a chartered accountant (CA) at PwC who has big dreams and is constantly on the lookout for new ways to improve...