AI on PRA’s Radar Screen

AI on PRA’s Radar Screen

Deputy Governor of the Bank of England, Sarah Breeden, yesterday gave a fascinating speech to a Hong Kong conference on the PRA’s thinking on AI. She revealed that banks’ use of generative AI could be included in future stress tests. The regulator is concerned that trading could be disrupted through the use of these models. She also indicated that, whilst no new rules are envisaged, some changes could be made to the Senior Managers’ Regime to clarify responsibility in this arena. Seventy-five per cent of banks are using AI compared to 52 per cent two years ago. Forty-one per cent are using it for process optimization, 25 per cent for customer support, a third for fraud management and 16 per cent for credit risk assessment. Look out for Risk Audit’s Regulatory Update webinar which will include an analysis of regulatory involvement on this subject.

New Hong Kong Block Trade Guidelines

Hong Kong’s Securities and Futures Commission has just issued new guidelines on block trades. The document refers to the practice of market soundings where participants gauge hedge funds’ interest in buying a large chunk of shares. Going forward these conversations will need to be “broad, limited, vague and anonymized”. They will also need to be recorded in an authorized system.

Soc Gen Reshuffle

Slawomir Krupa, Soc Gen’s CEO, has conducted another management reshuffle. He has exited the bank’s deputy CEO, its CFO and its head of French retail banking. Krupa will take on the role of retail bank head. This news follows the announcement of an increase in profits to Euro 1.37 billion from Euro 295 million.

Shocking PwC Revelation

It has emerged that PwC Global threatened PWC’s Australia business with expulsion from the network if it cooperated with government and regulators without permission. The threat relates to an investigation into the firm’s use of confidential government information to help it win government business.