How extreme losses will affect op risk capital models
Cluster of huge fines calls for changes in models and regulation
This year has seen a number of massive fines against large banks, including one of $2.6 billion by the US authorities on Credit Suisse for assisting tax avoidance and another of $8.9 billion against BNP Paribas for sanctions busting.
A report by the London School of Economics (LSE) has identified some $160 billion of 'conduct-related' regulatory fines and litigation settlements from 2008–2012. At the same time, UK banks report that even more reserves are needed to cover the cost of remediation
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