Benchmark – The cost of operational risk for large French banks



Operational risk constitutes a major risk for financial institutions post. According to Portail en ligne pour investir :If the cost of the credit risk remains very large majority (86% of the costs of Basle risk in 2014), operational risk is positioned as the second source of the most expensive risk (10%). We propose here a State of play of this risk in the major French banks, as well as its trends over the past years.

Brief reminders Basel

The calculation of own funds in respect of operational risk appeared in France at thebeginning of 2007, with the entry into force of the application of the Basel II agreements in the European area. Operational risk forming, with the credit risk and market risk, risks subject to a capital charge in respect of the “pillar I”. Three methods are available for calculating the own funds related to operational risk: and Choisor le meilleur courtier binaire on an approach basis, thestandard approach and the advanced approach (AMA), the latter being preponderant among the major players place. On the other hand we discuss here the cost of operational risk in terms of weighted assets, and not in charge of capital (which represents 8% of the weighted assets).


The place of operational risk under pillar I


If La Banque Postale introduces strongest weight of operational risk, should still measure this result on the basis of the youth of this banking institution compared to itscounterparts. Credit risk remains very majority as intrinsic to the banking activity to the general public.


After strong variations until 2012, the weight of the operational risk seems to stabilize over the last three years. The example of Société Générale, and quel strategie binaire choisir, or which the weightof the operational risk is the strongest, is stand out clearly this trend: between 2008and 2011, this share increased from 13% to 14.5% before returning to 12%. Since itstabilizes around twelve points. It goes same for other actors, on their respective levels. But more that a stabilization, there is also the reduction of the gap between themajor French banks: If in 2008 the extremes if ranged from 6.9% to 13.1% of weighted assets (i.e., a difference of more than 6%), today and since 2012, only 4% approximately between them.

Operational risk

The Basel accords provide cutting of operational risk in 7 categories of events that can generate a loss related to a factor of type “operational”. These positions generally have stable weight, both over time and between different actors considered here,with occasionally major events redistributing the weights. Posts ‘External fraud’, ‘ customers, products and practical commercial “and”execution, delivery and management of process”, represent the majority of operational risk. The remaining categoriesare very significant.


The three above-mentioned main positions explain between 76% and 94% of the cost of operational risk in the major French banks. The case of the NOPP on the position ‘ customers, products and practical commercial “is explained by the proceedingsby American regulators, following the embargo violations by the Bank, which led toa record fine of nearly EUR 9 billion in 2014. For comparison, the weight of this same post in the cost of the operational risk of the NOPP in 2013 was 18%.

The proliferation of subjects from regulators on operational risk says a lot about theimportance of its management. Off the “Review of the Principles for the Sound Management of Operational Risk” (BCBS 292) published end of 2014 by the Basel Committee, news around the operational risk is rich: consultation paper on Capital floors,”Revisions to the simpler approaches for Operational risk» (BCBS 291) or further refinement of the criteria for use of the AMA… And beyond the financial impact resulting from operational errors, hides an impact in terms of reputation (or even loss of approval in some cases) for banks, which can prove costly even in a context of mistrustof the public with regard to the financial industry.


Commodity Trade Finance

The ‘Commodity Trade Finance’ market

The ‘Commodity Trade Finance’ market is usually dominated by the banks. However,it does cover far more that half of this market (compared with 80% before the financial crisis of 2008). Increasingly stringent regulations (Basel III, EMIR, AML – CFT [1],KYC, etc) limit the banks in their lending capacity.

Fight against money laundering and the financing of terrorism

Since the crisis, the actors in the trading of raw materials suffer from a lack of credit while their default rate is at its lowest. In this context, traders and commodity producers are turning to other actors (investment funds, commodity-trading houses) in order to meet their needs.

The “Commodity Trade Finance.

Raw materials (“commodities” in English) is bought and sold directly between producers and users via long-term contracts or contracts in the form of trading short-term trade awards. A widespread fall in prices of raw materials were observed from thefinancial crisis. In addition, the rapid development of emerging countries and France, so it is important to Comprendre les marchés boursiers (includingthe BRIC [1]) and global population growth cause growth of the demand for raw materials, be they agricultural, metals for industry and energy sources such as gas andoil. Its funding is highly strategic for most countries, industrial enterprises and end users.

Commodity Trade Finance‘: supply chain


Since 2008, many banks financing and investment (BFI) leave the raw materials sector, considered less cost-effective, and highly consumer of own funds in the new prudential regulatory Basel III framework. Yet commodity trading is traditionally regarded as high-risk little in comparison to the market of the real estate for example. Banks that are among the best forex traders of this sector with a global reach have reduced their exhibitions. Thus, the rapid need for capital pushes clients to other sources of funding because it barely be satisfied by banks.

A difficult environment for banks

Three major causes explain this shortage of credit. Firstly, it reached the “Trade Finance” via tensions in the interbank market. As a short-term (90-120 days) credit activity, its rate depend very strongly on interbank rates. The tensions encountered on the liquidity impact strongly international trade in raw materials. On the other hand, increased capital requirements related to the Basel III regulations have pushed banks to limit credit lines granted to the actors in the trading, as own funds cover them was more expensive. Finally, European banks have suffered from a shortage of dollar liquidity, when, at the height of the sovereign debt crisis in 2011, U.S. banks have restricted lending dollars to their counterparts across the Atlantic, deemed risky. A largepart of world trade in raw materials is carried out in dollars, of trading of raw materials were highly mechanically impacted

Other regulations (including the KYC “Know Your Customer” requirements), the fines drastic for lending to dubious customers in addition to the decline in commodityprices also contributed to the sharp reduction of the presence of banks in this sector, leaving room for a multitude of new non-bank players.

These new competitors must follow the same KYC rules than most banks, but they are not subject to limits on their loans. Their processes are much more fluid than those of multinational banks. This translates into shorter response: If a major bank needs six months to approve a cargo of fertilizer in an African country, the non-bank players say approve this even funding in three weeks.


So who are these new actors?

Non-bank players (NBFIs) have an important role in the trading of raw materials market. Non-bank institutions thus benefit from the decline of banks and their ability tomore easily provide capital to fill the shortage of credit and the needs of the actors in trading. In the same way as banks, they are present at a global level in all sectorsof raw materials and meet different customer needs through:

All types of funding (short / long term, guarantees and diversified structures)

Monitoring throughout the supply chain.


Depending on the type of non-bank institutions, the latter opt for specific solutions:

Some use bond financing: as an example, Trafigura (trading house) has issued 300million of bonds to finance its trading activities.

Other investment funds are opting for fundraising via syndication.

Other institutions propose more traditional type letters of credit “LC” or even guaranteed.

Hedge funds provide commodity finance funds adapted to emerging markets. Theirstrategy aims at financing transactions high risk and high return on investment. Example, the Hedge fund «Scipion Capital» funds materials trading first via short-term loans and loans guaranteed to cover the transport of goods from the Interior of Africa to ports.

Hedge funds and other raw materials financing providers take care to indicate that their strategy is not intended to compete with the banks but focuses rather to fill the market gap by providing sources of financing adapted to the needs of the customers.



Spanish Pharmaceuticals published its financial report for the first half of 2015

Liège, Belgium September 4, 2015, 7: 30 pm – Spanish Pharmaceuticals,

Liège, Belgium September 4, 2015, 7: 30 pm – Spanish Pharmaceuticals, one of the leaders of the women’s health market, they managed recently acquired a Spanish diet company focused on “suplementos natural para bajar de peso” today released its semi-annual financial reportarrested in June 30, 2015, prior to its introduction on the stock exchange and prepared in accordance with article 13 of the royal decree of 14 November 2007. The (restricted information) report is available in its entirety on the investors section of our website.


François Fedrino,

François Felini, CEO of spanish Pharmaceuticals, expressed: “since the beginning of the year 2015, spanish crossed several milestones which sit its leadership in the field of women’s health. The acquisition of research projects and very promising development for example, or the entry of capital with the arrival of new major shareholderssuch as Marc Coucke. But the most significant fact for the company is without doubt the success of our IPO. spanish indeed could lift more than all of the funds necessary for the development of its projects based on the Estetrol, a promising estrogen that they would like to know the spanish  efectos de productos para adelgazar hat could, we revolutionize the fields of contraception and menopause. But these funds will also help continue the creation of our development and production (CDMO)Center in Flémalle, as well as the development of our subsidiaries in Germany, the Brazil, France and the Netherlands. In our existing markets, spanish reached its recordof market share, developed several new internal plans and offer numerous externalcollaborations. In addition, all clinical trials for products that the KOL’s gynecology expect firm foot unfold as planned. spanishs is becoming more and more women’s health specialist. I couldn’t be more optimistic about its future. »
Steven Peters, CFO of spanish Pharmaceuticals, expressed: “IPO was the largest in thepharmaceutical sector on the Euronext markets these past 10 years, but also the third most important fundraiser of the Euronext markets in 2015.” Ultimately, spanish lifted 79.3 million euros during the IPO. These results provide us the capacity of programs financing of development, including the Estetrol for contraception and menopause indications, until the end of Phase III. »

Operational highlights

§ In January 2015, spanish Pharmaceuticals strengthens its R & D portfolio with the acquisition of four projects R & D of Actavis Belgium (formerly Uteron Pharma). These projects are: Estelle®, Colvir™, Alyssa™ and Vaginate™

§ In March 2015, spanish acquired 25% additional of Novalon SA, bringing its ownership to 50%. Novalon SA is a company specialized in the development of complex generic products.

§ In April 2015, spanish Pharmaceuticals acquired all rights to the Estetrol (which complement the rights acquired with project Estelle®) with Pantarhei Bioscience (e.g. Donesta®).

The above-mentioned acquisitions affect R & D businesses in full development. The acquisition of these companies, therefore, led spanishs to the accumulated losses amounting to 1.504 million euros.
§ In June 2015, spanish reached his record of 46% of market share (compared to 45.4% in 2014), either 30.480 cycles on the Belgian market of oral contraception. A market itself descending, as he lost 3% in terms of cycles. Its main competitor reached him that 22.96% of market share (i.e. a loss of 31,000 cycles) [1].
Made organizational and financial highlights

§ In February 2015, spanish Pharmaceuticals Announces a capital of EUR 54.6 million entry led by Marc Coucke and other investors such as Bart Versluys, SRIW, several family offices and existing investors of the company.

§ In may 2015, spanish Pharmaceuticals is elected by the public ‘Champion Public National of Belgium”at the European Business Awards 2014/2015, sponsored by RSM.

§ During six months, spanishs has implemented its Comex (Executive Committee) which brings together more than 180 years of experience accumulated. The Comex reinforces the legitimacy of spanish, based on the business expertise and knowledge of the needs of the market.
Events after June 30, 2015

§ June 30, 2015, spanish Pharmaceuticals Announces its initial public offering on Euronext Brussels. The results of this entry on the stock exchange and of the over-allotment option will allow spanish to lift a total amount of EUR 79.3 million euros.

§ In July 2015, spanish Pharmaceuticals signed a license and supply agreement with Famy Care, the world leader in the manufacture of generic oral contraceptive pills. Under the terms of this contract, spanish Pharmaceuticals is granted authorisations forthe placing on the market of two products in France.

§ The same month, spanish Pharmaceuticals gets three authorizations on the market for marketing in Germany of products from its range of generic contraceptives under medical prescription under its own market-specific brands.

§ In August 2015, the specialized European Journal of Contraception and Reproductive Health Care published two papers concerning the study Rebecca phase II on the Estetrol: two of the most widely read articles by the scientific community on the site of the newspaper.

§ September 1, 2015, spanish Pharmaceuticals launches its subsidiary in Germany, spanish Pharmaceuticals GmbH, with first two products, MIDIEN® (EE/DNG) and MIDESIA® (OSSD Mono). spanish also sign a license and supply agreement exclusive withGiellepi Spa (Italy) for the marketing of an oral product of Lactobacillus Mix in the bacterial “Vaginosis” indication in Germany. spanish maintains a 5 year exclusivity withrights of extension for the marketing of this product under its own brand. The product is destined to become the first treatment oral disease, enjoying a status of class2 in Germany. It will be sold without a prescription in pharmacies.

The Group’s gross margin decreased by EUR 4,318 million to 3.605 million euros, largely due to the effect of the product mix. In addition, sales in Belgium declined andthe global market of contraception has lost 3% of cycles which means 189,500 cycles. However, in this down market, spanishs was able to win market shares ranging from 45.4% in 2014 to 46% in the mid-2015 and win a supplement of 30.480 cycles.
In addition, it should be noted that due to risk lower VTE (venous thromboembolism), regulatory agencies are trying to stimulate the sale of pills of generations earlier (first and second generation). These pills are cheaper than those of third and fourth generation who have a profile more risky, which also causes a decrease in the level of sales for spanish Pharmaceuticals. One of the advantages of the future pill Estelle® based Estetrol, under development at spanishs, is his respectful profile liver middleand its minimal impact on blood clotting factors. Suggesting us that the contraceptive pill of Estetrol could present a risk lower of thromboembolism venous, or even best comparable to that of first generation pills.

From April 2015, the price of a number of generics has been reduced. This effect isnow applicable to most products of spanishs and this, therefore, also has caused a decrease in the level of sales.
During the first half of 2015, spanishs has not yet sold the licensing rights to its product candidates and, given its strategic choice to wait until the later stages of its products and maximize their potential of licence.
Operational expenditure of the Group increased by 3,467 k EUR, from 4.114 k EUR in 2014 to 7,581 k EUR in 2015. 53 per cent of this increase, 1.839 k EUR, arise from the increase in the level of R & D expenditure, under the standards IFRS, spanish passing now supports all of its investments. The main reason for this increase is the addition of the contraception Estetrol in Estetra project, representing a loss of 1,013 k EUR for the first 6 months of 2015 while this loss was not taken into account in 2014.

27% of this increase of operational costs, or 926 k EUR, derived from general expenses, which amounted to 2,672 k EUR for the first 6 months of 2014, whereas they totaled 3,673 k EUR during the same period in 2015. The reason for this increase is mainly attributed to changes in the structure of the Group and the expansion of the management and team «back office» in order to support future growth.

14% of the increase in operational expenditure, or 477K EUR, derive from selling. The increase relates to the start of sales activities in the Brazil, Germany and France.
These effects resulted in a REBITDA-3,977 k EUR in 2015 compared to 204 k EUR in2014.

In the table above spanishs separately presents its non-recurring costs. They amounted to 2.244 k EUR in 2015 compared with 1,040 k EUR in 2014. These costs mainly include exceptional charges and currents related to the IPO. In 2015, these costs haverisen, mainly due to the IPO of June 2015 for which the Group recorded a charge of1,179 k EUR in its income statement. The total cost of the IPO reached 3,848 k EUR.The rest is mentioned in the balance sheet and will be counted as a negative impacton equity at July 1.

With regard to the balance sheet as at June 30, 2015, the circulating assets of spanish displayed liquidity of 26,512 k EUR. This amount does not include products resulting from the IPO and the over-allotment option, since they are only counted from 1July 2015. With the proceeds of the IPO, spanishs will have 105.8 million euros of cash. Also note that equity does not include capital and IPO of the over-allotment option.

The lawyers robots don’t wear dress

Andrew Hill, FT – sales and law experts will have to find a new way to get on top of their competence.



There is a moment in any discussion on the future of automation of counselling professions where the audience visibly relaxes.


This moment happens when futurists concede that some lawyers experts, consultants or accountants will still be needed, even after computer systems less expensive and more effective have been resumed number tasks of their juniors.


It happened last week at a conference of Richard and Daniel Susskind, posed by theorganizers as the largest gathering of senior executives of the consultancies and services of the United Kingdom.

The father and the son, authors of ‘The Future of the Professions’

The father and the son, authors of ‘The Future of the Professions’, predict a radical change in the legal sector. But the skepticism of the room has dissipated with each ‘partner’ or realized that he was going to survive, when well even algorithms and artificial intelligence bubble the consultant or lawyer sitting in the armchair next.


“The skepticism of the room has dissipated with each ‘partner’ or realized that he was going to survive, when well even algorithms and artificial intelligence bubble theconsultant or lawyer sitting in the armchair next”


Those might get free retirement and without really changing the way they work. AsRichard Susskind told me, “it is difficult to convince a roomful of millionaires they are wrong in their business model”. But change happens. Views differ mainly on its pace and its sizable.


You can already ask Kim, a ‘virtual assistant’ lawyer launched by Riverview Law, helpto manage your workload, or get Ross, the “super-intelligent Attorney” of IBM Watson, do a search on all of the texts of laws in a few seconds. A report of the Law Society – the representative body of lawyers in England and Wales – estimates that the impact of this type of automation will stabilize by 2020.


Stephen Denyer, of the Law Society, said at the rally last week that clients do not seek only tips, but also “techniques of negotiation, judgment, ethical standards, and the assurance that the direction they take is good”.


Ok. But how will the senior partners reach this level of expertise in the future whenmachines will accomplish tasks that enable them to build and improve their competence?


Take financial journalism. I, as trainee, spent three years to strengthen my confidence in myself and my skills in crushing the profits of the business information. It is precisely the type of reports that rightly, the Associated Press now automatically generates, in partnership with Automated Insights, a worrisome name, destined for all financial columnists.


Another parallel, in aviation, where accidents often cause fears that the autopilot undermines human skills. Interviewed by ‘Vanity Fair’ last year on the crash in 2009 theflight in Rio – Paris Air France, Delmar Fadden, former Chief Technology Officer of the cockpit at Boeing, said that having automated 98% of the routine of the drivers work, “we are concerned really for the tasks that we ask them to perform occasionally”.


The answer is not to stop the robots. Indeed, technology is part of the solution. Theastronauts are not trained on expensive special flights. They train to tasks and the challenges that they will face on simulators designed with care, until they are ready for launch.


“Customers can always prefer dealing with human experts, but they do not like to pay their juniors training”

As Professor Susskind recalls, law of the University of Strathclyde students focus already on legal problems of the real world in a virtual community around a fiction, “Ardcalloch”.

In the real world, professionals must recognize that most of the work that they hand over to the juniors are just repetitive servitude, often imposed by the tacit assumption that if they had to do, the new generation must do the same.

Customers may still prefer to deal with human experts, but they do not like to pay the training of their juniors. Knowledge can be transmitted differently, for example by simply working closely with a senior, as apprentices.

I always appreciate the coaching provided me, when I began, editors and experienced journalists, but I remain skeptical about the need to control my topic to write daily five identical articles on the profits of the business. Beginners can acquire specificskills in working – under close supervision – on basic tasks, on which he was once necessary to Wade for years.

However, new roles will emerge. The Susskind believe that one of them could be “empathiseur”. A friendly human who would eventually assistant Kim Ross (the robot),or their descendants still more capable mentally.

This perspective raises the ire of some consultants and other accountants. This should not happen in the upper echelons prior years or in complex trial or tax controls. But the future ‘partners’ should begin to hone their skills of listening, just in case.



Mad finance: can Europe do?



As many answers as experts


Mad finance: can Europe do?


Michel Crinetz, former financial supervisor, collective Roosevelt


Interesting debate the other day in Orleans, organized on this subject by the InstitutJacques Delors, the European Loiret and the Roosevelt collective movement. Interesting because the three invited speakers, if they shared some findings were of a different opinion on the conclusions to be drawn.


Try lighting some arguments exchanged, and pursuing further them.


On the financial crisis first. One said that in fact, the crisis started in 2007 is not over,smouldering under the ashes and may restart at any time. Another felt that if it was,indeed, the case in the eurozone, the crisis was over in the United States since 2009,because the Americans were to immediately, and without skimping, given the means to the curb.


On the nature of the crisis then. For two speakers, it was a crisis of financial first, then become economic and social. For the third, the mainly European crisis was a financial crisis in general, not a crisis actual Bank, due to the excesses of the banks and the weakness of their supervision: If Banking Union has improved things, the strengthening of this supervision is still required, and is not completed.


“One said that in fact, the crisis started in 2007 is not over, smouldering under the ashes and may restart at any time”


For this third speaker, the solution would be to import in Europe, with the necessarymodifications, the system American, much less dependent on banks and much moreanimated by the financial markets, which, admittedly, should regulate also. Anotherquestioned the age-old assertion that the financing of companies are overwhelmingly by banks in Europe, and markets in the United States, but this factual point couldbe clarified during the meeting. Perhaps the American statistics is influenced by thefact that in the United States, an important part of the appropriations is securitized,and so can be found on the financial markets; or is initiated by primary actors who are not registered as banks, as we saw with subprime.


On there faces a classic problem of economic ‘science’: unable to perform demonstrations or experimentation “all things being equal”, be more often just it correlations,which are not true evidence: “it took such action in such country, this country goeswell, so it’s a good measure”. But perhaps what this country is going well for other reasons.


Finally, one speaker suggested half a dozen measures to be taken by Europe. The third speaker was at odds with all, and in particular with the proposal to prohibit all lobbying in Brussels at major banks: “It is contrary to freedom of expression,” he pointed out. Freedom for bankers, replied the first, but the good people had little meansto be heard in Brussels. “If there are Finance Watch”, he replied. But Finance Watcha hundred times less than the big banks, said the first. “This is the problem”, repliedthe third. Okay, but how to solve?


“Unable to perform demonstrations or experiments” all things equal in addition “, be more often just it correlations, which are not real evidence”


In the room, almost full, reactions were mixed. Some found it too technical. Others complained that their still held and speeches, too remote from real life. Remote perhaps, but not without influence, however. A convinced European asked why we had as much trouble to come to an agreement: he was told that each Government came to Brussels not to defend the European interest, but to defend its national champions.


The third speaker mentioned the tension between the responsibility of supervisors and the requirement of democracy. Citizens agree to understand not everything for the operation of nuclear power plants, but appear more reluctant to the complexityof the financial market.


Restive or anxious?


How the bankers loot the banks (and), in 6 minutes

Great Basic members have developed in sound and images excellent book of Aurore Lalucq,



Great Basic members have developed in sound and images excellent book of Aurore Lalucq, bankers against banks (published with William Black to the ECLM).

The search for new markets by private to the United States

As recalls the animation, the search for new markets by private to the United States in the 2000s banks coincided with the willingness of the Government to facilitate accession to the property, pushing to overindebtedness of households.

Highlights the central role of brokers

Above all, the film highlights the central role of brokers, at the origin of the creation of a large number of loans, which will then resell on the financial markets. This is themechanism of “securitization”, a bit difficult to understand, and animations make clear.


Then come the fraud and different ways to increase lending: resources unverified borrowers, overestimation of the value of the real estate “acquis”, etc. And as warning mechanisms is not working, because of the belief in self-regulation of the markets (cannot be enough the importance of beliefs), the machine revving, until the crash.


Faced with this, we must strengthen mechanisms for control and regulation, stop Transact financially and put the guilty behind bars when their actions warrant.


It must also innovate, as proposed by Aurore Lalucq, for example by creating an authority of placing on the market of financial products imposing any new financial product to meet security and reliability tests until it is proposed to customers.


A video circulated urgently before the next banking crisis!


“Sharing economy”: the phenomenon C to C

How the economy of sharing will disrupt consumption patterns and business models



This is indeed an egg breaker code quietly upsetting consumption patterns, behaviours, practices. The sharing economy transforms habits at the discretion of its rise. Breathtaking. What would have been impossible without the net is furthermore particularly amplified by the crisis. In times of scarcity of purchasing power, rent his apartment, his car, his tools, a few days per month pleased the two consumers.

This model C to C is not viable without these platform for intermediation – true business professional

This model C to C is not viable without these platform for intermediation – true business professional – which play a decisive role in this meeting “win win”. Trust is the key to these transactions for which the cost has become negligible with the digital. Remains to invent new rules of the game to make it compatible to these new actorswith their traditional competitors face other economic logics.


Jean-Paul F. earns money with everything he owns. He rents his Audi as easily as part of her loft, his camera, his lawn mower, the cakes simmered by his wife, which alsooffers rental his evening dresses, her garden which houses regularly a few festive barbecues. The consumer-actor 2.0 has the resource. “One day, we’ll look at the 20th century and we will ask why we have so many things,” said there is little Bryan Walshin Time Magazine which devoted collaborative consumption as one of the ten ideasto change the world. This changeover of possession to those of use values transforms behaviour.

Mentalities also. Is it not now accepts to host strangers under its roof, into its back seat, at the wheel of his car or in his garden? It is true that using a superb drill a quarter of an hour per year, a 5% of the time auto may make them think. Of marginal, confidential amateurism on bottom of generous utopia, this phenomenon switches ina professionalism generalized through the Web. Great Accelerator coupled to the booster of the crisis. They combine to significantly jostle swathes of consumption – hotels, car rental, the sale of capital goods and many others.

“The economist would be unable to properly situate the importance of the phenomenon in dust of GDP both this activity is underground, transfers between households totally escape the focal length of the undeniable thing… only national accounts that we can observe, this economy is powerful development”, explains Philippe Moati,Professor of Economics at the University Paris-Diderot, co-Chair of the Observatorysociety and consumption.

Dear economy to the “share economy”


New iron law of this sharing – barter, Exchange, rental – economy, superb egg breaker of codes which rises in power, the pooling of the property becomes an exercise not only of the most profitable, but the more virtuous. Thanks to the Internet, it is now possible to optimize the use of the property it owns by sharing their use with other. Also amazing that permanently correct. The crisis has made that accelerate thesepotentialities. The conjunction of these two accelerators cause an impressive takeoffof these activities.


According to Forbes magazine, the “sharing economy” and weighs 3.5 billion dollarsin 2013, an increase of 25%. No doubt thanks to the 200 start-up interest in this revolution that attempts to change consumption patterns. Already, community platform Airbnb to find an apartment has promoted the booking of some 10 million nightsin more than 33,000 cities and 192 countries. The France is its second market with 27 000 housing available. 3 million people in 235 countries already have “couchsurf”and more than a million candidates in the carpool already hoisted him to the rank of credible alternative to public transportation.

Pioneers followed by a flurry of initiatives reflecting a beautiful creativity: rental of parking spaces ( or platforms, sharing a taxi (Taxi2, Taxistop), storage of objects in warehouses physical, put at disposal by private individuals or companies (Storpod), hire of clothing in the latest fashion (Fashionhire, Rent The Runway…).

Inspired by the friendly jumble of villages, Thierry Weil virtualized them on the canvas on his website “” and thus gives visibility increased tenfold in this House to empty, this estate to settle. This free unpacking already draws 50,000 visitors per month. The diet of purchasing power and unemployment have transformed into opportunities these new offers and opportunities. “The crisis makes thesemodels more efficient and resistant because they require few financial resources. “The concerns of sustainable development find a satisfactory response and social andeconomic values creating the link, in tune with the concerns of the time, there are also met.”, note Bruno Berthon, managing director at Accenture.

Multifaceted revolution, therefore, its sociological dimensions, societal, environmental and social are at least as significant as the economic components of this new mode of consumption which is already enthusiastic vocations of entrepreneurs. The investments are lighter than in conventional “capitalist” business models and performance is often much higher. In short the “sharing economy” is currently one of the most fertile loams for start-ups. True pioneers.


A new Wild West


“One feels in students a strong entrepreneurial Dynamics to these alternative models, phase of structuration and professionalization. Often still in experimental phase, as these platforms of microfinance. This often goes hand in hand with a voluntary commitment and allows out of regulatory codes. Renovate traditional activities “, notes Olivier Delbard, Professor of Economics at ESCP.

The air of nothing, with the economy of sharing, we are witnessing a disruptive innovation, an alternative model of consumption to which could well switch swathes of the activity. Environmentally sustainable economy, by its more clever utilization of passing property from hand to hand, as the civilization of all acquisition, these alternative models of consumption are very attractive for the younger generations.

They are also peculiarly move the lines of classical consumption and break codes ofmany trades. Well started in Northern Europe, in Britain, this trend now for both highly developed countries like Japan as the most dynamic of the emerging, such as the Brazil. At the very beginning, some years ago, in the twentieth century, these fansattempts were regarded as friendly as only marginal.

Moreover, certain practices such as barter have always existed. At the microscopic scale. Utopia in boboland, at the margins of the system. Internet and its social networks, its platforms allowing a fantastic release and confrontation of the application tothe offer substantially changed the situation. Friendly service of proximity, carpool -like it auto-partage – is are thus industrialized, to the satisfaction of hundreds of thousands of followers. On the Web, sharing is everywhere. Remains to organize it.

Precisely, on the platform “ouishare” that it has cocréée, Antonin Léotard to federate a community dedicated to this type of alternative economy. Initially, a somewhat idealistic collaborative blog on the sharing economy is transformed to satisfy the craze in real platform dedicated to a community to bring together those who wanted to exchange goods and services and bring together all stakeholders in this economy:entrepreneurs, users, oriented sustainable development, assets optimization. Enthusiasm of pioneers, pretty generational aspiration. The thirtysomethings include widely dominant way. “We have the budget in development, including projects in the field of mobility,” he said.


The intermediary, a crucial role

This system breaks the chain vertical and horizontal and hierarchical intermediates for more direct exchanges…. But this triumphant C to C should not forget a determining actor, B as a business who plays intermediaries by organizing transactions. The cost of the latter also strangely melted in dematerializing. Which explains their massmailing.

Guarantor of the trust, its role is decisive. It needs to reach a certain critical mass sothat the visibility of offers are growing in strength and apply against competing sites. A history of momentum. Premium so to the first party, award-winning competitiveadvantages, premium to the “small events” that will animate the platform. “Key to all these new equations, intermediation platforms, this catalyst making possible whatwas unthinkable a few years ago. They become the node of this new triangular relationship. Technology having both drastically drop the cost of transactions while leveraging the visibility of trade opportunities”, explains Bertrand Pointeau at bath.

The test of truth, the dispute


The recipe? For these start-up, the important thing is to arrive as soon as the criticalmass, the most important bonus is decisive according to the economic law of increasing returns. The effects of threshold and critical size is a critical role for these sitesbecome extravagantly.

“These activities will not stay at the margins, new fields in some areas will arise in competitors to traditional actors as seen already in the conflict between bric-a-BRAC and antique shops on Ebay. The first have the obligation to provide a certificate of authenticity, not the second,”said Christine Di Domenico, Professor of social and solidarity economy to the EMLyon.

This change of paradigm of the horizontal economy where the value is in use, not inthe product, causes a deep divide between conventional professions and new professions, by threatening the first. This learning in exponential growth phase, should measure the impact of this new competition on traditional entities. They have alreadyled some reactions. As this lawsuit filed to a New Yorker who rented through Airbnb, his apartment during his travels.


A court has ordered to $ 2,400 in fines for violation of the regulations on hotel practices. “This terra incognita is blank, no rule of law does still apply to this type of unregulated economy that ignores the VAT, the right to work, the code of commerce both and so that it might be regarded as moonlighting violating taxation”, says Christophe Roquillly, Professor at the Edhec. At a time where, for example, Park cars for rent from private to private stands out as more important than fleets of some landlordsas opinion or Hertz, of the first magnitude.

This great development of vague will quickly come up against some obstacles: “communities” are tremendously friendly entities and sympathetic until where occurs a failure, a breakage or accident one of the proponents of the sharing. Both the right toproperty is pushed, dismembered. The dispute, that is the test of truth. The availability of property, whatever it is, cold hard cash, highlights of liability and insurance problems due to security risks.

Often dependent on the involvement of the intermediary, guarantor of trust between individuals. Everything in this learning phase is to build. Guarantees provided to the consumer are embroiling, not yet well defined responsibilities. The competition could be distorted in some markets. Then, regulate may curb the growth of a promising economy, a mode of virtuous consumption that weaves the social link? Let creative destruction to renew traditional business models?

Trust 2.0

“The great paradox: we are in a society now dominated by mistrust while the success of this type of economy is essentially based on trust”, was surprised Philippe Moati. The fact that these new activities escape tax will not delay to place them in the crosshairs of a tax appetite Bercy renewed. But their legal framework possible should not curb this burst of creativity which is one of the main qualities to be come base. Not to discourage this leavening of start-up while tagging the ground to avoid too disastrous distortions of competition, this is the issue of the political face of this revolution “made in civil society”.


The travels of a t-shirt in the global economy par Pietra Rivoli


What, specifically, is globalisation?


What, specifically, is globalisation? To understand it, Pietra Rivoli, at Georgetown University in the United States, followed all steps in the life of his T-shirt “made in China”. And discovered that international trade has less to do with neo-liberal competition history, politics and all possible maneuvers to avoid the law of the market!


Done two hundred years that the Texans dominated world production of cotton. Supremacy due to a rapid mechanization and the use of fertilizers (making it a very polluting industry), well organized marketing, in a virtuous circle linking public expenditure on research, firms and universities. And for billions of subsidies: big texan cotton producer is generally not too many worries, receiving public money to protect it from fluctuations in the world price of climatic hazards, and to help to repay its loans.Before being very mechanized, its production was slaves, then permission to use Mexican seasonal. A model that is now more the family pension than the innovative entrepreneur…

The transformation of the cotton T-shirt is far away

The transformation of the cotton T-shirt is far away, to be mechanized: half of the added value produced is still by labour. Cotton hand so where there’s arms, as in China. Young girls sort, cut, and sew in a work taylorized excessive, poorly paid and supervised by government rules that allow, as nicely said Pietra Rivoli, “an unlimited supply of submissiveness”. However, she wondered, can we refuse the Chinese to followthe same path as we? American and European 19th-century capitalism was also terrible, but workers have fought and obtained the rights. It will be the same in China. Meanwhile, by a trick of history, young women interviewed, even exploited, say that this work has pulled up to the family rural right-of-way and they earn money which they do what they want. Rivoli thus advises the otherglobalists don’t condemn this system, but to fight for change towards a recognition of human rights and labour.


Once the ready T-shirt, back to the United States. There again, it is far from free andundistorted competition! The remade author history of textile U.S. protectionism, ofrestrictions on exports “voluntary” requested the Japanese at the end of World WarII, to the multi-fibre agreement ended in January 2005… and that Europe and the United States are trying to control the effects the establishment of quotas for imports.


Once bought, worn, worn, the T-shirt has not yet finished his life. Given to the Salvation Army or to any other charity, he was ransomed by thousands of small and medium-sized enterprises (SMEs). Which will sort. The more worn, approximately 30%, end up in rags in plants (especially the all-white, more efficient). The one with the Rolling Stones may be sold to a shop for fans. Anyone who wears a Mickey and other hallmarks of American culture will leave among Japanese who are crazy.


But the real business is to transfer them vintage… markets in Africa. Worn clothing are an important part of U.S. exports in Tanzania, Benin, Togo… Male clothes are themost popular because more rare: 90% of what throw women is still relatively goodquality while the men who buy less clothing and wear them longer, only half is resalable. History, society, political, here are the main determinants of global trade, concludes Pietra Rivoli, in surprised that the debate has been cornered by economists!


BCBS 239 – for a better quality of regulatory reporting data


In a regulatory context becoming more demanding…

Following the recent financial crises many regulatory developments have been implemented accompanied by increased requirements in terms of reporting, but also quality of the information presented. In this context, the Basel Committee issued on January 9, 2013, a set of principles under the BCBS 239 name whose objective is to allow banks to improve their production capacity and reliability of the regulatory reporting.


… new recommendations say «BCBS 239»


These recommendations are based on 14 principles including 11 destined for banking institutions and 3 destined for supervisory authorities. These 11 principles are divided into three streams: i / global governance and infrastructure, ii / capacity of aggregations of data and iii / reporting capabilities (see Figure 1).



Establishments known as “G-SIBs [1]” have until 1 January 2016 to comply, and thebanks ‘ D-SIBs [2] “within three years once designated by national regulators.



Significant impacts at the level of the banks to comply…

The results of self-evaluations of G – BB in 2013 and 2014 (cf.), sent to the controllerand associated studies have identified the weaknesses most significant around the perimeter of the G-SIBs:

Stream 1: global governance and IT Infrastructure

Setting up a real governance of the quality of data involving all levels of institutionsto improve the financial communications (regulatory reporting accurate and relevant, more reliable decision-making processes);

Improvement of the IT infrastructure for the automation and the reliability of the aggregation and reporting key chain;

Stream 2: capacity of aggregations of data on risk

Improving the quality (accuracy, completeness) and the availability of the necessarydata for the reporting must be refreshed timely especially in times of stress.

Notifications of risk practices have fewer impacts, although some work rationalization must be conducted.

Then, it should be noted that BCBS 239 primarily the quality of the data necessary for the risk reporting and related global governance.

.. .necessitant the establishment of a large-scale project

Identified developments involve:

Reliable priority data

Special attention must be given to the identification, control and management of the data from which are analysed the risks to which institutions are exposed.

So the dedicated reporting teams must agree on the choice of the sources from which the priority data will be extracted and to ensure the mastery of this information from their origination to reporting. Indeed to favour the use of a single source (DirectSourcing) for a given extraction and controlled throughout the chain of reporting toavoid its alteration by virtue of intermediate handling.

In addition, there is also that, for the same concept, different levels of an institutioncan use different granularity or BOM data. That is why work of convergence of repositories and the definitions of data priority, specific to the different lines of businessto local subsidiaries if necessary, are needed. However this process of harmonisation of data between different systems of the Bank must be able to rely on strong governance.


Transverse and enhanced governance

While governance concerning the quality of the data may be, it must be improved by implementation of a transverse governance, particularly as regards coordination inthe definition and use of reference data. On the other hand, it is also justified because of overlapping responsibilities and important interdependencies in the case of certain lines of business (risk/Finance).

In addition, governance must extend from the local level up to the consolidated level, including the designation of officials in charge of the coordination of the actionsof control, corrections and validation of the data transmitted.

A more flexible infrastructure

The definition of a new it infrastructure involves significant changes in the SI. They are aimed at the reliability of information (completeness, fidelity), from its extraction to its distribution, around one or more repository (common (s) and respond rapidly to requests for planning (scalability) reports not only in normal conditions, but also in times of stress?

To do this, the distribution of repositories should be optimized and automated reporting channels in order to minimize the manual actions and make the system more flexible.


Limitations in the ability of compliance within the required time limits…

However this type of project is of such magnitude that it does not take place without difficulty for banks, especially to meet regulatory deadlines. This issue is linked tomany work and complexity (convergence of repositories, implementation of data quality, governance at local level at the group level,…). According to a recent study, almost 80% considered sample [3] banks believe that they will not comply with 1 January 2016. On the other hand, another study conducted by Moody’s [4] showed thatmore than one third (38%) considered sample banks believe may not be compliant within the next three years. All of these involve the subdivision of such a project with a prioritization of sites to deploy for January 1, 2016, and a communication with the European regulator.

.. .but at end of the advantages in the management of risk data…

To conclude, the BCBS 239 recommendations require a significant investment by banks, involving significantly a redesign of processes and the Organization as to the quality of the data. In return, these developments will enable a quicker implementation of future reforms on reporting, better steering of the activity and cost savings in terms of production by automating many tasks now performed manually.


Are the Fintechs and the GAFA, an opportunity or a threat for the BFI and commercial banks?


Google founded in 1998

Google founded in 1998 and first world market capitalization, über created in 2009 and valued at more than $ 50 billion, Airbnb founded in 2008 and valued at 25 billion dollars… The list of new players taking advantage of the digital wave and the changing expectations of consumers wishing to more mobility, services online and a removal of intermediaries is long. Face this new competition, traditional businesses fearto be “uberisees” because these new players upset their business models and jeopardize their positions.


Of many Fintechs [1] and [2] have launched recently the GAFA Bank offers (means ofpayment, crowdfunding and aggregation of accounts…) destination of individuals orSMEs. These newcomers represent a competition which offers many innovations in areas that were previously reserved for banking groups, especially in their retail banking activities. Because of the high barriers to entry inherent in their activities (expertise, binding legislation, important capital needed…), the BFI [3] and commercial banks would be preserved? The Fintechs and the GAFA, represent an opportunity or a threat for these actors?


Panorama of the Fintechs/GAFA which are involved in the sector of the BFI


Far from being a simple opposition, financial start-ups and the giants of the web may be involved as:


suppliers of digital services to facilitate the activities of the BFI or compete with theirhistoric suppliers such as Bloomberg (table 1)

partners completing the traditional offer of the BFI (ex: management of collateral) by optimizing the quality of service (ex: dematerialization and process automation) toensure productivity gains (table 2)

competitors introducing market breakdown products and/or existing services innovations, making obsolete some trades or by removing certain intermediaries (table 3)



Comparison between the actors

The digital development decreased significantly the barriers to entry by making more directly accessible final customer for these new entrants. The Fintechs and the web Giants looking to position themselves in the market with assets that differentiate them from the BFI:

A young and dynamic image

A strong capacity for innovation combined with greater agility and flexibility in the Organization and operating modes that allow them to more quickly remove new concepts on the market

Less pressure from regulators at present

The BFI and the commercial banks shall nevertheless retain the following advantages:

A strong expertise in their historic trades and the possibility of cross-selling

A customer confidence in the confidentiality of their banking data

An ability to convince regulators through the capitalization of the transformation and regulatory compliance projects these past 5 years

Significant capital available for investment and infrastructure already existing keys(which may hinder the adoption of innovations)

Prospects for the future

In the current state, it is still difficult to identify the impacts that could have these new entrants on financing activities, investment, capital markets and cash management. The BFI may be deeply impacted in terms of offer (arrival of complementary products/services or competitors), (need to reallocate resources), organizational process (search for more flexibility and innovation) in order to adapt to the new situation.

In addition some technologies are still under development. For example, many projects in financial services in the form of consortia of banks (such as R3, a FinTech, in which thirty BFI have invested), bilateral collaborations BFI/FinTechs (for example between Digital Asset Holding and JPMorganChase) or R & D internal (Citi with its Innovation Labs Citi), are currently seeking to apply the originally used blockchains for virtual currency bitcoin. This technology, which allows to carry out transactions without central organ in registering and checking transactions anonymized by block on anetwork of computers and making them public, has the following advantages:

Speed of transactions (absence of intermediaries)

No administrative fees or infrastructure

Better security

Better resilience of the system (historical recorded on computers on the network)

The blockchains technology could potentially change in the middle of the BFI in thecoming years by being a chance (drastic reduction in their costs of structure or facilitation of compliance actions) but also posing a threat (revolution in Exchange for securities, international payments and post trade activities).

Thus, exchanges, partnerships, cross investments and redemptions are increasing. This emulation could force the BFI to reinvent their business model to adapt to the new situation and not get left behind. Goldman Sachs announced: “We are a Tech Company” and not only a financial undertaking, i.e. a platform on which the Fintech can join.


The customer reception, a milestone being upgraded



What are the new codes for the home?

What are the new codes for the home? What implications they induce in the sales organization and how new technologies involved in this transformation? SIA Partnersproposes to decrypt the home issues in the distribution of retail banking strategy.


Despite the necessary resizing of the networks, the banking agency retains an essential place in the new models of distribution omnicanal is refocusing on the promotion of offers (showcase) and the provision of expertise in moments the relationship keys (property acquisition, precautionary savings, retirement, transmission, etc.). This transition, which marks the revival of the banking agency, translates the redefinition of the customer journey and requires revisiting the home patterns for simplicity andefficiency.



A banking consultant who fully participates in the redesign of the home into agencymodels

A controlled home should streamline the passages from clients in an agency, to ensure readability in the customer journey and finally the quality of contact into friendly spaces. Beyond work on the arrangement and the ‘phygitalisation’ of space (inclusion of the digital into the physical networks), the development of new formats of Agency (self-service, expert agencies, etc.) requires a mutation of the role of the advisors.

In fact, the profession of home load tends to disappear in favour of a model of shared hosting or all the staff of the Agency invests in the reception of the customers (more than 21,000 loaded home in 2009 against less than 13,000 today [1]). All employees of the Agency must be able to accommodate the customer covering the wholeof client situations regardless of the mode of contact (visit agency or remote contact via telephone, mail or video conference).

This model of shared hosting is put forward in the new store concepts developed bymajor french networks such as the 2 Opera agency BNP Paribas or ’19’ LCL, which are experimenting with new distribution codes in Agency. Usability is enhanced by areas of relaxation (a Starbucks coffee even came invite breast ‘ of the 19″LCL) and theworkspace is reorganized to allow customer loads to go meet the client and thereby strengthen the proximity from the home.

This new model home is based on proactive consensus even if it calls into question the traditional organization of banks.

On the one hand, support is required to raise competence across the Agency’s staff,both on the ability to provide a commercial quality relay regardless of client requests, to familiarize themselves with the new digital tools (interactive tablets, etc.).

On the other hand, this implies an adjustment of the teams and a redistribution of roles to translate in the post cards, with the need to value the commercial time allocated to the home.


New technologies at the service of the optimization of the management of flows into agency

Moments of crowd control is crucial in the home into agency. Efficient managementof the flows of persons or calls, especially at peak times, contributes to the optimization of trade efficiency and customer satisfaction. The rationalization of advisors time dedicated to administrative tasks, such as making appointments, is also an asset. From the point of view of the client, an enlightened management limited loss of time.

To achieve, the Agency must be able to anticipate the peaks of affluence and recurrent expectations to be able to effectively allocate the necessary resources (beachesof openings and appointments, schedule of contributors). Analysis of customer usage allows to improve agency clients. An IFOP study [2] 2011 indicated that one-thirdof those surveyed was not satisfied with the opening hours of their agency and complained about the wait time. Most networks, reacted with openings on Saturday andhours extended during the week on some agencies, or with a stronger presence at the reception in time point but progress still yet to do. Furthermore, the beaches of accessibility client services by phone have also been extended.

The Agency must also be equipped with a clear digital signage in order to allow thecustomer to be guided and informed in real time, throughout his career. A good orientation to the daily actions self-service areas or effective support at the level of thedigital areas pre sale are simple examples. The car configurators image in concession, interactive presentation of tenders and custom simulation shelves allow to reducethe waiting time for clients.

Finally, new technologies are being tested in order to streamline the home. Amongthe notable initiatives, the Singaporean DBS Bank has implemented a queue management system named ‘SMS Q’ which gives the possibility to book an appointment inthe Agency of their choice by SMS. The customer is then notified when its rendezvous approach. This system allows, on the one hand, fluidify the waiting zone, but alsoto unload Bank advisors of the administrative burden of making appointment.

In the same way, the Beacon technology, tested in France by Credit Mutuel Arkéa orthe Fund of savings Lorraine champagne-Ardenne, to warn banking advisers of the arrival of their clients in front Agency even that they are reported to.

The home Agency continues to play a leading role in the transformation of networks as a first link in the customer relationship in front face and first commercial relay. Banks must therefore speed up the modernization of the home in order to make thepassages in Agency more effective and enjoyable.


The model of distribution of french real estate credit put under pressure with the reflections being the Basel Committee on the supervision of rate risk


French retail banking

French retail banking is distinguished from other countries by the typology of the credit that it grants to its customers. Indeed, unlike its Anglo-Saxon counterparts or other European countries favouring credits at variable rates, French banks are able toguarantee their clients a fixed rate on particularly long maturities (up to 25 or even 30 years).


In General, a credit institution is refinances on shorter maturities and through product variable rate, de facto immediately impacted by favorable or unfavorable evolution of the rate environment. Therefore, it is even more complex for French banks to offer their customers of long loans to fixed rate, refinanced by shorter liabilities variable rate.


For this french financial institutions have a feature to be able to carry long credits atfixed rate. They back-to-back them deposits of their clients, in particular deposits. Although they have no maturity contract and that any customer can withdraw all or part of his money at any time, the aggregation of all of the accounts and the analysisof its evolution in time allows institutions to observe a certain stability and longevityof their stock over time. Furthermore, a significant share of deposits is fixed rate: for example, most of the deposits in France are not paid (in other words, they are considered with a fixed rate at 0%). Therefore, French banks are able to sell their credits,obeying characteristics of similar rate (fixed rate) to their deposits.


Credits at variable rates were already less than 20% of appropriations in 2005. Today, the proportion of loans to fixed-rate amounts to more than 99% [1]. In an environment of rates historically low and presumed a future more conducive to an increaseof interest rates, this peculiarity of French banks is therefore a real bargain for customers.


This model could, however, be required to be fundamentally challenged by the draftregulations of the Basel Committee. Indeed, the latter has recently consulted financial institutions scale world the study of a passage from the risk of rate in pillar 1, synonymous with supplementary allowance of own funds, as is already the case for credit risk, market and operational risks.


The draft regulations around the risk of rate in the banking book [2]

In an environment marked by several years of decline in interest rates, the recent return of the volatility of long-term interest rates and fear of a rise in rates on the markets recalled the importance of anticipating this kind of evolution in the overall management of the risk of bank rate. The different regulatory bodies that had abandonedthe subject of rate risk for the benefit particularly of the risk of liquidity following the 2008 crisis have handed it over to the order of the day (before this year, the latestregulation of the Basel Committee concerning follow-up and rate risk managementprinciples and the CEBS Guidelines [3] dated 2004 and 2006 respectively).

For the record, the risk of interest rates on the banking book of a financial institution is “the risk incurred in case of variation of the fact of all balance sheet operations interest rates and off-balance sheet, with the exception, if any, operations subject to market risks” [4]. Moreover, the banking book (bank holding) means most transactions in medium and long term of an establishment and includes all operations not included in the trading book (trading portfolio). EC-last records of assets held for trading purposes in the short term, or to cover other elements of this same trading portfolio.

Thus, in the wake of the publication end may 2015, the recent guidelines for the banking authority (EBA) on the guidelines on the risk of interest rates in the banking portfolio (IRRBB), the Basel Committee (BCBS [5]) has launched a consultation [6] on the subject in global financial institutions. This consultation was accompanied by an impact study quantitative (ISQ) attended by all financial institutions in September 2015 and whose returns are being analyzed by the Basel Committee.

The main principles of the draft regulations of the Basel Committee

The BCBS project mainly to ensure that banks have a level of capital sufficient to absorb a shock of (upward or downward) interest rates but also to reduce the risk of arbitration between the banking portfolio and trading portfolio. Indeed, market risk being synonymous with allocation of own funds to under pillar 1 of the Basel rules, banks can conveniently place market in banking book operations in order to avoid this allowance.

The task force of the Basel Committee dedicated to the draft regulations has initial mandate to study the passage of rate risk in the banking book in pillar 1, synonymous with allocation of an additional charge capital, calculated from a standard set by the regulator. This approach would have the advantage in the BCBS to promote more “coherence, transparency and comparability. Today, the rate risk is addressed in pillar 2. This allows, based on internal models banks, to translate the national specificities for various products. These specificities are numerous in France as banks distribute products of heavily regulated collection (PEL, CEL, LDD, Livret A..).


The standard model put forward by the BCBS in its regulation of the IRRBB project in particular forced settlements in terms of scheduling of their deposits.

Specifically, this approach sets the applicable maximum average duration accordingto the categories of deposits / customers. The regulator also limits the importance of stable share (in the long term) and mechanically increases volatile deposits, corresponding to the difference between the average amount of deposits and the minimum amount of ces-last, over a previous representative period. This share materializesindeed uncertain share in the future evolution of the outstanding amount of deposits, the banks being forced to interpret it as a resource disappearing very quickly. Ultimately, these two constraints heavily penalize the French banks whose model is on the perimeter of the retail, to distribute long credits financed by unpaid, sight deposits, fixed-rate in order to avoid upward or downward of rates. Standardisation would,inter alia, by a significant reduction of the average duration of the flow patterns of the deposits which should be less than 2 years, the proposed measure not making therefore not account for the high stability of these resources whose remuneration isdécorrélée of market rates.

The prior discussions between the Basel Committee, financial institutions and bodies representatives of these financial institutions have however paved the way for a possible continuation of pillar 2-rate risk (as is the case to this day), with a calculationbased on internal models of the establishment, validated and controlled upstream by the competent authority within a defined framework. This alternative emerges, however, any relative because the Basel Committee provides a “fallback” in standard method if the load capital obtained on the basis of the internal model of institution remains lower than that calculated by the standard approach. Furthermore, even withthe pillar 2 approach, the establishment must submit in the context of its financial communication results calculated using the standard method.

Project of pillar 1-rate risk and the calculation of capital requirements resulting in the State could, induce a real overhaul of the distribution model of loans to fixed ratein France, with a closest paradigm of Anglo-Saxon culture of the variable rate on real estate credits.