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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Featured Pathways

More pathways

Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

Book a demo

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Book a demo

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The Need for Global Insurance Regulation

The Need for Global Insurance Regulation

Sukhy Kaur

15 years: Debt capital markets

In the first video of this series, Sukhy emphasises the importance of regulating insurance companies with reference to the infamous collapse of AIG during the financial crisis. Sukhy discusses the international role of the Financial Stability Board (FSB) in insurance regulation post-financial crisis.

In the first video of this series, Sukhy emphasises the importance of regulating insurance companies with reference to the infamous collapse of AIG during the financial crisis. Sukhy discusses the international role of the Financial Stability Board (FSB) in insurance regulation post-financial crisis.

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The Need for Global Insurance Regulation

9 mins 19 secs

Overview

The 2008 Global Financial Crisis was a watershed moment in the financial sector that exposed weaknesses in the banking system and insurance industry, it demonstrated the interconnectedness between banks and insurers and the danger of systemic issues across the two sectors, ultimately proving the need for insurance regulation.

Key learning objectives:

  • Understand how American Insurance Group or AIG collapsed

  • Define Collateralised Debt Obligations

  • Define Credit Default Swaps

  • Understand why Aegon needed a bailout

  • Describe the Financial Stability Board and its key objectives

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Summary

What are Collateralised Debt Obligations?

These are the structured finance vehicles whose collateral is traditionally made up of a number of individual loans, such as:

  • Mortgage
  • Credit card loans
  • Corporate debt

In the run-up to the global financial crisis, banks released several hundred billion dollars of CDOs.

What are Credit Default Swaps?

A form of credit insurance which transfers the default risk of a financial instrument from the buyer to the seller.

How did the American Insurance Group (AIG) collapse?

AIG became a major seller of credit protection in the value of more than $500bn. Nearly $60bn of the CDOs on which AIG had sold credit protection contained mortgage-backed securities, many of which referenced subprime mortgages, which significantly declined in value as the US housing market turned in 2007. The collapse in CDO values and CDO rating downgrades required AIG to post additional cash collateral with its CDS counterparties. This collateral requirement created a liquidity crunch, which was compounded by AIG’s inability to access capital markets. The results of these events eventually led to AIG’s bankruptcy.

Why did Aegon require a bailout?

Aegon is one of the largest providers of life insurance, pensions and asset management operating across the world. In the US they are known as Transamerica. 

  • They incurred a direct 350 million euro loss due to its exposure to Lehman Brothers and Washington Mutual
  • It was forced to mark losses against other financial portfolios
  • Aegon became subject to a significant increase in its own CDS spread. From 140 bps at the beginning of September 2008 to more than 500 bps by mid-October

What is a Financial Stability Board and its key objectives?

The Financial Stability Board or FSB established in April 2009 in response to the Global Financial Crisis is one of the key international bodies that monitors and makes recommendations about the global financial system by coordinating national financial authorities and international standard-setting bodies.

The FSBs objectives can be broken down into the following areas:

  • Assess the vulnerabilities affecting the global financial system
  • Promote coordination among authorities responsible for financial stability
  • Monitor and advise on market developments and their implications as well as meeting regulatory standards
  • Undertake joint strategic reviews of the international standard-setting bodies, such as the IAIS and coordinate their respective work on policies

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Sukhy Kaur

Sukhy Kaur

Sukhy has spent over 11 years working in investment banking. She started her career at Barclays Capital and then went onto join the hybrid capital desk at Credit Agricole, focusing on structuring and the initial regulatory developments of Basel 3. Continuing in the structuring space, she moved to the Capital Solutions desk at UBS Investment Bank.

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