Financial Crime World

Banking Industry Regulatory Updates: South Georgia and South Sandwich Islands

The Federal Reserve Board (FRB) has released its semiannual reports on Supervision and Regulation and Financial Stability. These reports highlight key regulatory developments and trends in the banking industry, providing insights into the FRB’s supervisory priorities and actions.

Increasing Regulatory Findings

The reports indicate that there are increasing numbers of outstanding supervisory findings for institutions of all sizes. Only about one-third of large financial institutions have satisfactory ratings across all three rating components:

Outstanding Supervisory Findings

  • Governance and control issues: approximately two-thirds of large institution’s outstanding findings
  • Liquidity risk management practices
  • Interest rate risk management practices

Supervision and Regulation Report

The FRB’s Supervision and Regulation Report assesses current banking conditions and transparency into the FRB’s supervisory priorities and actions. Highlights include:

Key Findings

  • Increasing numbers of outstanding supervisory findings
  • A supervisory focus on liquidity, interest rate, and credit risk management
  • Declining numbers of institutions with satisfactory ratings

Financial Stability Report

The Financial Stability Report presents the FRB’s current assessment of the stability of the overall U.S. financial system. The report notes:

Key Findings

  • Increasing asset valuations, improving financial conditions for households and businesses, sound levels of overall leverage, and ample liquidity in the financial system
  • Concerns around interest rates and inflation, geopolitical tensions and policy uncertainty, and deteriorating real estate market conditions

Regulatory Developments

The FRB has highlighted regulatory developments since November 2023, including:

Key Initiatives

  • An interagency request for comment on reducing regulatory burden
  • Guidance on third-party risk management (TPRM) for community banks

Supervisory Priorities

The report outlines the FRB’s supervisory priorities for large financial institutions, community banking organizations, and regional banking organizations. These priorities include:

Key Areas of Focus

  • Capital planning and liquidity risk management
  • Governance and controls
  • Recovery and resolution planning
  • Credit risk management
  • Liquidity risk management

The report includes data indicating that supervisory findings for large financial institutions, CBOs, and RBOs continue to increase. The top outstanding findings relate to governance and control issues, followed by an increasing number of findings related to liquidity and interest rate risk management practices.

Relevant Regulatory Alerts

Emerging regulatory focus: operational resilience Heightened risk standards: focus on risk frameworks, processes, and controls