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Big banks fall short in gathering risk data: report

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[January 16, 2014]  NEW YORK (Reuters)  Some of the world's biggest banks are falling short in collecting data on the risks they face doing business with one another and with other large institutions, according to a report released on Wednesday.

The lack of information about counterparty risks among big financial institutions during the global credit crunch more than five years ago was a factor that exacerbated the crisis, according to the annual report from the Senior Supervisors Group (SSG), which is made up of bank supervisory bodies from United States, France, Germany, United Kingdom, Canada, Italy, Spain and Switzerland.

To address this problem, SSG created a data reporting project during the crisis to inform them what levels and changes in the banks' derivatives holdings and other counterparty exposures.

"Despite this initiative, we note that five years after the crisis large firms have made only some progress achieving timely and accurate measures of counterparty risk. Importantly, progress has been uneven and remains, on the whole, unsatisfactory," according to the report.


SSG sets standards for the 19 participating banks including JPMorgan, Goldman Sachs, Barclays, Credit Suisse, Deutsche Bank and BNP Paribas so they make timely and accurate reporting of their counterparty risk exposures.

The SSG review does not identify the banks that meet or fall short of the group's performance benchmarks.

As of 2012, 13 banks met the group's standard on timely and timeliness on reporting their counterparty data. Moreover, 85 percent of firms had 80 percent or more automated data feeds in 2012, compared with 68 percent of firms in 2011 and 56 percent of firms in 2010.

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In the area of gathering the types of risk exposure data, all 19 firms self-reported that their submissions captured at least 95 percent of exposures to counterparties globally and by business line in 2012. This was up from 2010 and 2011, when only 75 percent and 90 percent of firms, respectively, met this standard, the report showed.

However, the quality of the data remains problematic.

"Recurring data errors indicate that many firms are below SSG benchmark standards for data quality and cannot measure and monitor the accuracy of the data they submit or rectify quality issues in a timely manner," the report said.

The report noted the supervisors need to work close with banks to help further improve their data reporting.

(Reporting by Richard Leong; editing by Andrew Hay)

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