Today\u2019s need-to-know storiesUBS chair warns of systemic risks in insurance sector<\/p>\n
UBS<\/a> chair Colm Kelleher has warned that insurance companies pursuing favourable ratings for their private credit assets poses a \u201clooming systemic risk\u201d to global finance.<\/p>\n Speaking at the Hong Kong Monetary Authority\u2019s Global Financial Leaders\u2019 Investment Summit, Kelleher accused insurers, particularly in the US, of engaging in \u201cratings arbitrage\u201d reminiscent of practices that contributed to the 2008 financial crisis, the Financial Times reported.\u00a0\u00a0<\/p>\n Kelleher criticised the rise of \u201csmall rating agencies ticking the box for compliance of investment\u201d and said regulators were failing to rein in risk while encouraging growth.\u00a0<\/p>\n \u201cIf you look at the insurance business there is a looming systemic risk coming through because of lack of effective regulation,\u201d he said.<\/p>\n His remarks follow a Bank for International Settlements report warning that ratings on private credit assets held by US insurers may be inflated, raising concerns about potential market disruption during periods of stress.<\/p>\n Kelleher also struck a pessimistic note on his home country, claiming \u201cSwitzerland is losing its lustre\u201d amid competition from Asia, the economic strain of US tariffs and tougher banking oversight.<\/p>\n European banks\u2019 dollar exposure increasing, warns EBA<\/p>\n European banks have grown more reliant on US dollar funding, the European Banking Authority has warned.<\/p>\n Dollar-denominated funding accounted for 13.1 per cent of European banks\u2019 total financing at the end of 2024, up from 12.4 per cent a year earlier, according to the EBA\u2019s latest report<\/a>. <\/p>\n Their total share of assets held in dollars also increased to 23 per cent from 19.3 per cent.\u00a0<\/p>\n The regulator said banks\u2019 subsidiaries were \u201cincreasing their reliance on US dollar funding at a faster pace compared to the parent entity\u201d, creating \u201ca rather meaningful currency mismatch\u201d on balance sheets.<\/p>\n Fears in Europe over dollar funding have grown this year as President Donald Trump introduced new tariffs and increased pressure on the Federal Reserve. <\/p>\n The developments have led some European regulators to question whether they can continue to rely on the Fed for dollar liquidity during times of market stress, according to a recent Reuters report.<\/p>\n Bank of England must strengthen climate risk approach, says WWF<\/p>\n The Bank of England is being urged by the World Wide Fund for Nature to strengthen its approach to environmental risks in order to help control inflation and safeguard the UK\u2019s long-term financial stability.<\/p>\n