Preparing for a rainy day: Managing liquidity risk at non-bank financial institutions
Recent bank failures have demonstrated the importance of effective liquidity risk management to maintaining institutional viability.
On March 8th, Silvergate Bank and its primary regulator the California Department of Financial Protection and Innovation (DFPI) publicly announced the bank’s voluntary liquidation. Two days later, the DFPI publicly announced it had closed Silicon Valley Bank citing inadequate liquidity and insolvency and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.
PwC’s Bank stress reports are a direct response to recent market failures, and what regulators and financial risk managers can do to prepare for new changes and developments in the industry.
On April 28th, 2023, the Federal Reserve, FDIC, Government Accountability Office (GAO) and New York Department of Financial Services (NYDFS) released reports on the supervision and regulation of Silicon Valley Bank (SVB) and Signature Bank. The reports outline factors that the regulators and the GAO believe contributed to the failures, including the quality of bank supervision and the impact of the 2018 regulatory relief law and subsequent tailoring framework.
The reports send two clear messages: regulators will enhance regulations over the coming years and promptly intensify supervision for banks of all sizes. Changes across the following four themes will raise the regulatory bar for banks and increase costs as they make investments in people, processes and technology.
Recent bank failures have demonstrated the importance of effective liquidity risk management to maintaining institutional viability.
Banks have the opportunity to develop and execute a strategy for new long-term clients who align with their business strategy.
To be resilient during a period of bank stress and better-prepared for any future stress events, getting risk and crisis scenario modeling right is essential.
Internal Audit plays a critical role in helping evaluate an institution's processes for managing and monitoring risk, and testing resiliency and controls.
Conditions are ripe for cyber threat actors and fraudsters to exploit opportunities during this period of bank stress. We look at five areas of heightened risk.
Recent stress in the banking sector continues to affect the operations and financial positions of banks in the US. Here’s five actions corporate directors of banks can take to fulfill their role of looking out for the interests of the bank’s shareholders
In the wake of the FDIC being appointed the receiver of Silicon Valley Bank and Signature Bank, it’s important for banks and financial services firms to be prepared to move quickly if pursuing mergers and acquisitions (M&A) or asset purchase opportunities.
Fraud and financial crimes units can streamline responsiveness to customers while expanding operational capacity and defenses against malicious actors.
Bank stress raises important questions for corporate treasurers
Following the March 2023 bank collapse, firms should be prepared to understand how customer growth aligns to strategy and impacts balance sheet risk.
Clients and Markets Leader, Cyber, Risk & Regulatory, PwC US
Vikas Agarwal
Principal, Financial Services, Cyber, Risk & Regulatory Leader, PwC US
Adam Gilbert
Global Senior Regulatory Advisor, PwC US