The Industry Compliance and Risk Management in Banking Part. III

Small companies portfolio management, often without record keeping function or UCITS depositary, are less likely than large private banks in the image of SG Private Banking and BNP Paribas Private Banking in France. The second, also known as reputation risk, is the potential risk of impairment of the company following the completion of an operational risk and is currently a major concern of private banks. Indeed, rather than retail banking, private banking built its success on its relationship with its customers and their perception of the bank whose image can be up to 80% of the value.

However, as evidenced by the reputational risk, difficult to materialize, quantify the value added of industry compliance is complex. As new operational risks ahead, the error would be to relegate to second place on the grounds that the instances of existing controls (risk, legal, internal control) are enough to support them. Most private banks have assimilated with seven out of ten organizations consider that the function is used to reduce or eliminate the costs of non-compliance [2]. The integration at the heart of the relationship with third party may even allow them to be a strategic advantage. On the one hand, customers are demanding their private bank integrity and accountability increased, the values defended by the industry compliance. Moreover, by making visible the intervention of the department compliance, managers can strengthen their relationship of trust with the customer and demonstrate that it has confidence of stakeholders in case of dispute. Of course, this procedure will remain balanced in order not to go against the productivity of managers.

Who says balanced does not mean limited. On the contrary, it is perfectly conceivable that in the future, the scope of intervention of the function widens, in private banking as in other areas of banking (investment banking, retail banking, and asset management). This could exceed the regulatory and ethics to include ethical and social values, thus meeting the new requirements of customers and shareholders, among others...

The Industry Compliance and Risk Management in Banking Part. II

By its nature, the private banking business is subject to strong ethical obligations in a restrictive regulatory environment. Private Banks were able to adapt their organizations accordingly by developing a "sector compliance" deployed across their different levels and geographic features. Compliance is also declines in their information system. The tools available to the front office are now configured so as to detect transactions revealed a risk of non-compliance. Still, the legislation varies from one country to another, even within Europe, and in fact complicates the adaptation of the SI in a pooling system.

In this way, private banks have managed to build a culture committed to compliance throughout their organization, regardless of the level of responsibility and activity of its players, with supporting concrete ways (eg dissemination of "best practices "developed in-house or in collaboration with other banks to better support the fight against money laundering, etc.). in addition to the rules dictated by the ethics implicit in the strict sense. Daily collaboration between asset managers and compliance officers or the training focused on the regulation is widely involved in the dissemination of such a culture. All this should help avoid service failures often related to communication problems on compliance.



Thus, the various stakeholders of a private bank involved in the efficiency of the public and particularly to locking the risks of business and reputation. The first stems from the use of instruments with increasingly complex and specific risks (hedge funds, credit derivatives, etc.)..

The Industry Compliance and Risk Management in Banking Part.I

In 2004, the Parmalat scandal has revealed a huge hole in the accounts of the group of food while a considerable amount of money was diverted to tax havens, splashing in passing several private banks. A

Like Enron in 2001, these scandals have led to a stricter financial regulation, arguing in particular for greater transparency and increased customer knowledge, like the last part of the Directive for the anti-money laundering entry into force in 2005.

Against a background of risk management, the recent regulations (Basel II ...) were, in general, translated contextually in the legal departments of banks declined by their directions operationally risk, internal control, checking the correct application. Beyond these functions, the consideration of operational risk under Basel regulation and more generally the risk of non-compliance requires a related but separate governance, namely the "compliance". Commonly translated by the term "compliance", it transcends and includes the current notion of "ethics", focusing on compliance with the rules of conduct within the organization and vis-à-vis third bank, and especially under legal limits. Specifically, the compliance ensures that the bank acts in accordance with its rules, the law, the Code of Conduct, as well as best practices to avoid irregularities in the functioning of the Institution, its organs and its staff [1]. Therefore, in an environment where ethics is rooted in the everyday life of private banks for decades, compliance developed in parallel or even supplants to occupy an ever more important.