Global financial services firms draw up an industry response to the credit crisis that will urge stronger risk management and accounting standards, Deutsche Bank Chairman Ackermann announced.
“We are witnessing a long overdue correction in asset prices that is reflecting more realistic differentiation by investors”, Chairman, President & CEO of Citibank and Senior Vice Chairman of Citigroup William Rhodes said.
“We are now seeing a similar correction in other segments of financial markets”, Rhodes added. “These corrections, in my opinion, are still far from complete.”
Last October the IIF announced to launch a special initiative to analyze the critical issues resulting from the sub-prime crisis, and to promote recommendations that can secure the support of the financial services industry to enhance best practices.
“Many financial services firms are individually strengthening risk management approaches and addressing other pressing matters that have come to the fore in recent months”, Ackermann said. “There is broad agreement, however, that these individual actions need to be complemented by industry-wide standards in order to facilitate the rebuilding of confidence.”
Work of the IIF addresses issues that relate to the key areas of risk management, liquidity, valuations, ratings, and transparency and disclosure to develop recommendations that can contribute to the restoration of confidence.
The IIF also looks at the approaches of rating agencies and at the ways in which their contributions can be enhanced.
“This initiative might be combined with public sector efforts to identify systemic risks as they emerge and avoid the kinds of pitfalls that have been so costly for the industry and the world economy”, Ackermann said.
An interim report containing the reform proposals will likely be issued within the next weeks.
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