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 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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