Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-09-26-Speech-1-095"
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"en.20050926.14.1-095"2
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".
Mr President, I should like to thank the rapporteur, Mr Radwan, for his timely report.
The financial services sector has become very sophisticated at risk management and so the regulatory framework has to respond to the times. I am very satisfied with the report on the table today. It acknowledges the fact that covered bonds are a global capital markets product and are no longer either a European or domestic product. I believe that any alternative to that would handicap the development of the sector, which has significant commercial potential.
According to a study conducted by JP Morgan, Basel II could increase the number of high-yield bonds – and especially covered bonds – being issued. That would be advantageous from an Irish perspective because Irish covered bond issues have the highest credit rating. Therefore it is important that Basel II upholds current market practice in the covered bond area.
Banks have a long history of lending money and we sometimes take it for granted that they are fully prepared for the traditional risks such as credit and market risks. However, nowadays banks are facing increasingly unpredictable operational risks, which are difficult to manage. Under Basel II it would become essential that risks analytics are timely assigned to financial services operations. It would be interesting to know what the expenditure of financial services institutions will be on analytics in the EU after the introduction of Basel II. Therefore I welcome the proposed review of this regulation after four years.
At the same time, however, it would be unwise to underestimate the importance of risk management in the traditional areas of credit and market risks. In today's economic climate there is a growing need for detailed analysis of the effects of recession and other financial shocks on national economies and the EU. Under the standards set by Basel II the banking sector will have to invest in the development of IT systems capable of modelling in-depth credit risk analysis. The way in which financial services are conducted has changed and will continue to change. However successful risk management cannot be solely based on a compulsory reply to regulations. It requires a sound understanding of what is good for business and the standard of best practice."@en1
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