30 global companies put system at risk

Paul Davies
Patrick Jenkins

Thirty global financial institutions have been identified by regulators as objects of cross-border surveillance test, learn the Financial Times. The list includes 6 insurer (Axa, Aegon, Allianz, Aviva, Zurich and Swiss Re) and 24 banks from Britain, continental Europe, North America and Japan. He was drafted by the regulators under the auspices of the Board for Financial Stability (BFU) and is the result of attempts to stop the global spread of risk in future crises. Insurers are significant for the system for several reasons. Often have great credit unit, like Aviva, or business in the field of complex financial engineering, such as Swiss Re. With its collapse last year the U.S. AIG has shown that systemic risk is huge, largely because of the diversification of its business beyond insurance to financial engineering. „Interconnection in the insurance industry is not detectable as a combination of catalysts to reach a large earthquake in the system,“ says Raj Singh of Swiss Re.
The contents of the list is not public, many of the usual suspects – Goldman Sachs, JPMorgan Chase, Morgan Stanley, Bank of America Merrill Lynch and Citigroup of the United States; Royal Bank of Canada; British HSBC, Barclays, RBS and Standard Chartered; UBS and Credit Suisse of Switzerland, the French Société Générale and BNP Paribas; Spanish Santander, BBVA; Japanese Mizuho, Sumitomo Mitsui, Nomura, Mitsubishi UFJ; Italian UniCredit and Banca Intesa; Germany’s Deutsche Bank and the Dutch ING.
The exercise is a logical consequence of the creation of the BFU and the main purpose is to treat the problem systemically important cross-border financial institutions through the formation of supervisory boards. They will enter the main regulators of countries that operate the bank or insurer, and will coordinate cross-border supervision of financial companies.
Companies will be asked to produce so-called. wills – an outline of how to be crushed concrete bank in case of crisis. Regulators want as soon as possible to see these documents ready for all systemically important financial companies, but the concept of dividing the banking world, more complex institutions say it is almost impossible plans to be drawn without knowing the reason for the estimated future crisis.
Paul Tucker, Deputy Governor of the Bank of England and Chairman of the Working Group on Transboundary BFU crisis management, said that „wills“ should be completed in the next 6-9 months. National regulators, led by Britain began testing some of the public banks in recent weeks.