In a recent "Dear CEO" letter, the UK Financial Conduct Authority (FCA) warned wholesale bank leaders against reducing risk controls amidst challenging economic conditions and other external pressures.
The FCA stressed that regulatory obligations should not be compromised for short-term revenue gains, despite the difficulties posed by inflation, weak growth, rising interest rates, and geopolitical tensions. The FCA expects banks to enhance their risk management practices in response to these challenges, stressing the importance of improved oversight in light of recent bank failures. "Our concern is that the external environment may impact the management of these risks through cuts in the control framework," the FCA wrote.
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