Risk Regulation and Compliance of Uk Banking

Topics: Capital requirement, Bank, Banking Pages: 12 (4409 words) Published: August 11, 2013
Content
I Introduction3
II Findings4
2.1 An overview of the UK Financial Regulatory Environment4
2.1.1 The HM Treasury4
2.1.2 The Bank of England4
2.1.3 Financial Service Authority4
2.1.4 The changes of Financial Services Authority5
2.1.5 Supervision structures of EU5
2.2 Date description6
2.2.1 Total equity-to-asset ratio6
2.2.2 Tier 1 capital ratio7
2.2.3 Total loans-to-deposits ratio8
2.2.4 Cash ratio9
2.2.5 The ratio of cash balances at the central bank to total deposits10
2.3 Correlation analysis10
2.3.1 Total equity-to-asset ratio11
2.3.2 Tier 1 capital ratio11
2.3.3 Total loans-to-deposits ratio11
2.3.4 Cash ratio12
2.3.5 The ratio of cash balances at the central bank to total deposits12
2.4 OLS Regression analysis12
2.4.1 Total equity-to-asset ratio12
2.4.2 Tier 1 capital ratio13
2.4.3 Total loans-to-deposits ratio13
2.4.4 Cash ratio14
2.4.5 The ratio of cash balances at the central bank to total deposits14
2.5 Regulatory concerns15
III Concluding remarks with policy recommendations17
Reference19
Appendix21

I Introduction
This report is aimed to explore the relationship between the performance of Barclays Bank and the risk regulation. By underlying trend analysis, correlation analysis, and regression analysis on five important ratios which could represent the performance of Barclays Bank, the report will show if there is any statistical evidence to confirm the hypothesis that a high compliance with regulation is essential for a stable banking system. This report also will provide an overview of the UK banking Regulation and Supervisory Practice and identify the concerns of Barclays Bank. The objective is to provide some useful recommendations for its management with the requirements of the regulatory.

II Findings
2.1 An overview of the UK Financial Regulatory Environment
Banking regulation is designed for the central goal of financial stability. In the UK, HM Treasury, the Bank of England and the Financial Services Authority are responsible for the financial stability as “tripartite authorities”, which show below: 2.1.1 The HM Treasury

The HM Treasury is United Kingdom government department which responsible for “the overall institutional structure of financial regulation and the legislation which governs it (Memorandum of Understanding, 2013).it is include developing and executing the British government's public finance policy and economic policy. The purpose is to enhance the financial and economic sustainable development and growth, and also to promote economic and create national employment opportunities. 2.1.2 The Bank of England

United Kingdom’s central bank is The Bank of England which executes all the functions of a central band and it is responsible for the stability of the monetary and financial system. On one hand is because monetary policy function of the Bank of England plays an important role in the process of maintaining stability, which means there have a stable price, low inflation and confidence in the currency in United Kingdom. Moreover, the range of its responsibilities also includes supervision the financial system infrastructure particularly payments systems at home and abroad; providing official supports to prevent problems occurring between individual institutions; and improving the efficiency and effectiveness of the financial sector. 2.1.3 Financial Service Authority

Financial Services Authority (FSA) is an independent non-governmental department, responsible for regulatory policy. The Financial Services Authority as micro-prudential that supervision of financial intermediary is responsible for supervision of financial markets, securities listing and clearing and settlements systems.FSA is also responsible for authorization and supervision of many financial institutions, including banks and building societies. 2.1.4 The changes of Financial Services Authority

After the 2007-2008 financial...
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