After bruising EU model review, banks ask: ‘Why bother?’
Post-Trim changes erode capital savings from internal models while raising their running costs
In the film Groundhog day, TV weatherman Phil Connors gets stuck in a time loop, reliving the same day over and over again. For one bank executive, a five-year regulatory review of banks’ internal models felt just like the film. Risk managers had to provide a mountain of data and work through hundreds of calculations, with requests from the European Central Bank (ECB) seemingly going over old ground as the years went on.
“They could have put the [capital] add-ons in place with tenfold less
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