BTPG Annual Meeting Highlights Need for Stress-Testing Sustainability

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BTPG Annual Meeting Highlights Need for Stress-Testing Sustainability

We thank all members for their active contributions to the dicussions at the Bank Treasurers' Peer Group Annual Meeting last month at the Waldorf-Astoria in New York.

The dominate theme of this year’s10th Annual meeting was that supervisory stress-testing (and capital plan reviews) have become so all-encompassing that banks must harness them to manage the bank. This is especially true for bank treasurers, who can quickly find themselves spending the vast majority of their time both leading and back-filling the efforts of other functions assigned to the task. In response, treasurers must encourage senior management and the Board to provide them with help. Often this comes in the form of a centralized, value adding project management organization (PMO). This coordinating PMO must also ensure that the risk, credit and other functions integrate their normal responsibilities with the ever more stringent supervisory requirements.

The NeuGroup also thanks first-time BTPG sponsor Morgan Stanley for their support of the group and its Annual Meeting. Morgan Stanley Treasurer David Russo set the tone for the stress-testing "sustainabilty" theme with a presentation of his bank's approach and also stressed the need to integrate regulatory concepts and obligations into core bank treasury management. Fittingly, CCAR Sustainability was the title of EY Consultant Adam Girling's presentation in the same session.

Further dialouge with the bank treasurers chaired by Morgan Stanley Global Co-Head of FIG Capital Markets Kevin Ryan on regulatory capital vs. economic capital also confirmed that stress-tested capital is rapidly replacing economic capital models as a risk-based measure and constraining captial metric. Also, models, systems and the data that goes in them are being surrounded by common frameworks or common system platforms that must fulfill both stress-testing and bank management mandates, according to dicussion led by Charles Richard of QRM and Tom Day from Moody's Analytics. Member discussion throughout the two-day meeting reeinforced these main themes.

The Bank Treasurers' Peer Group (BTPG) was founded in 2005 for a select group of US regional banks. It meets annually and conducts periodic conference calls for members to share experiences with topical issues.