As the Financial Stability Board unveiled its latest list of global systemically important banks in November 2015, Intesa Sanpaolo was absent from the list that includes many of Europe’s national champion banks. That places its markets and investment banking arm, Banca IMI, outside the top tier of global players subject to greater regulatory scrutiny. But Massimo Mocio, head of global markets at Banca IMI, is certainly not complacent about the impact of regulation.
In particular, one of his major concerns is the growing illiquidity visible in bond markets as dealers shrink inventories due to the pressure from the capital requirements directive (CRD IV). This obliges banks to hold more capital against their trading positions. CRD IV is also bringing in the liquidity coverage ratio and net stable funding ratio that put pressure on banks to hold larger stocks of liquid assets, or reduce their holdings of less liquid assets.
