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The Bracken column

Bracken

The Bracken column is named after Brendan Bracken, the founding editor of The Banker in 1926 and chairman of the modern-day Financial Times from 1945 to 1958.

Latest articles from Bracken

Financial regulatory systems made simple

December 23, 2010

While the worst seems to be over for the financial sector, this is not a time for complacency or a return to business as usual. With the passage of the Dodd-Frank Act last July, US banking is entering a new era - but a workable system must be based on simplicity.

How Islamic finance can close the credibility gap

December 8, 2010

The Islamic banking and finance sector risks losing a golden opportunity to demonstrate an alternative system that could prevent a future credit crunch and share risks. With the conventional banking sector slowly coming to terms with its high-profile collapses and bailouts, and the Islamic sector suffering only mild aftershocks, why are savers and investors not flocking to sharia-compliant banking? Could Islamic finance lack a certain degree of credibility? And if so, why?

Rating the rating agencies

December 8, 2010

Credit rating agencies received a lot of publicity in the financial crisis. Famously they gave glittering ratings to investments which later became worthless.

Stress testing should be a habit, not a one-off

September 29, 2010

After the majority of European banks passed their landmark stress tests, equity markets climbed, credit default swap spreads tightened, high-risk sovereign debt rallied and the euro extended its gains against the dollar.

Who should decide on distributable income?

August 30, 2010

One of the most debated issues since the beginning of the financial crisis is the extent to which fair value accounting contributed to the stress faced by financial institutions. Contrary to what many observers believe, the recent accounting debate has focused less on the choice of measurement criteria - amortised cost or fair value - than on how changes in value should be reported in the income statements.

Avoiding pitfalls in the new bank governance framework

July 28, 2010

Before the onset of the financial crisis, bank regulators left governance arrangements to the discretion of individual institutions. Very few jurisdictions had devised extensive bank-specific governance requirements. It did not matter how boards governed their banks, as long as they met substantive prudential requirements.

Reinventing the commissioner for competition

May 28, 2010

The European commissioner for competition is one of the most important and influential officials of the EU. In her own words, the incumbent, Neelie Kroes, believes that the aim of promoting a fair and free environment for businesses in the European single market has to be pursued by acting as a referee.

The rush to uncertainty

May 5, 2010

On December 17, 2009, the Basel Committee on Banking Supervision (BCBS) published its much-anticipated proposals for strengthening the resilience of the banking sector and the international framework for liquidity risk management. The proposals are wide ranging and will have a significant impact on banks and other regulated financial institutions.

The uncosted rewards of bankers' bonuses

March 3, 2010

A bank employee recently asked me: "As a trader, my bonus is derived directly from my profit and loss, which is accrued over the quarter and kept in a separate account. It does not go into the firm's bottom line and then back out to me. Also, like most traders, I accrue 2% of my gains in a loss provision account in case I have a major write-down in the year. My bonus is 10% of my profit for the year. If I make $50m for the year my bonus is $5m. What does my bonus have to do with the mortgage-backed securities [MBS] trader who is sitting on losses? Did I or did I not show a profit of $40m to the firm's bottom line?"

New regulations mean a more robust industry

February 1, 2010

The financial crisis of 2007-08 had an immediate impact on the world's economies, with deep recession experienced across the globe. The longer-term impact on the banks will also be significant, as regulatory authorities learn lessons from the crash and implement new supervisory rules. Regulation arising as a result of the crash will indeed heavily influence bank business models, compared to what was practised in the past decade. In this article we discuss how banks will have to adjust their strategy and approach in response to new regulatory requirements.

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