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29Oct2024

DEVLHON Consulting Deciphers: Banking Crisis Resolution

Posted By: DEVLHON Consulting

DEVLHON Consulting Deciphers: Banking Crisis Resolution – Assessment and Outlook Based on Banque de France Analysis

Since the 2008 financial crisis, the management of banking crises has significantly evolved, with banking resolution now central to strategies that secure the financial sector without systematically relying on public funds. In this article, DEVLHON Consulting presents an analysis from Banque de France, offering an assessment of the banking resolution framework in Europe and insights from recent financial crises.

Foundations of Banking Resolution: Protecting Public Finances

The 2008 crisis left financial systems with complex challenges. At the time, governments had no choice but to bail out struggling banks at the taxpayers’ expense or let them fail, risking prolonged economic instability. Since then, banking resolution mechanisms have been implemented, allowing authorities to restructure or even liquidate failing banks in a controlled manner, minimizing public impact.

The Banque de France’s analysis highlights the central role of banking resolution within the European Union, which rests on three pillars: the resolution mechanism itself, centralized banking supervision, and harmonized deposit insurance. These tools allow authorities to secure banks while ensuring that shareholders and creditors are the primary contributors in case of bank failures.

Banking Resolution Instruments in Europe

European banks can be placed in resolution through two main avenues:

Bail-in: This internal recapitalization mechanism requires shareholders and creditors to absorb the losses of a struggling bank before public funds are mobilized. This preferred approach limits the impact of banking crises on public finances.

Transfer Operations: In certain cases, it is possible to transfer healthy assets and activities to an acquirer or a “bad bank,” thereby isolating compromised assets and stabilizing the remaining institution.

Funding Banking Resolution Through Mutualization

Funding resolution efforts is essential to limiting the impact of banking crises. The Single Resolution Fund (SRF), funded by bank contributions, is used in Europe to limit direct state intervention. In its analysis, Banque de France points out a significant difference with the American model, where authorities have access to a more flexible federal fund, enabling quicker interventions.

In Europe, authorities favor an approach that breaks the link between banks and states, requiring national banking sectors to pool their efforts within the SRF, which may limit intervention speed. Thus, before public funds can be used, banks must demonstrate their loss-absorbing capacity, in accordance with MREL (Minimum Requirement for Own Funds and Eligible Liabilities) standards, which are more stringent than the American TLAC (Total Loss Absorbing Capacity) standards.

Lessons from the 2023 Banking Turmoil

The recent bank failures in Europe and the United States in 2023 provide valuable lessons for the European resolution framework, according to Banque de France. While European mechanisms have proven effective, certain aspects require adjustment. Recent crises, such as the acquisition of Credit Suisse, demonstrated that interventions must be able to proceed swiftly, especially when facing massive deposit withdrawals driven by digital tools.

In this context, the United States was able to intervene quickly using federal liquidity facilities. In Europe, however, banks lack access to such liquidity facilities in times of crisis, which could jeopardize the stability of the European financial sector.

Banque de France Recommendations to Strengthen Banking Resolution

To address current challenges, the Banque de France’s analysis recommends improvements to the European resolution framework:

Strengthening Capital Requirements: Imposing higher loss-absorption capacity on small and medium-sized banks, in addition to large institutions, to reduce contagion risks.

Diversifying Resolution Tools: Using a combination of resolution instruments (bail-in, asset transfers) to adapt to new forms of crises, including geopolitical, climate, and digital risks.

Establishing a European Emergency Liquidity Facility: Creating a dedicated European liquidity facility would support banks without threatening market stability during periods of massive deposit withdrawals.

Conclusion

In just over a decade, banking resolution has solidified its place in the architecture of the European Banking Union. However, as Banque de France points out, the current framework must evolve to adapt to new vulnerabilities in the banking sector. Reinforcing loss-absorption standards, adopting a more flexible approach, and providing emergency liquidity would ensure the financial sector’s resilience in the face of future crises.

22Oct2024

ECB: A Monetary Policy Adapted to a Changing Context

Posted By: DEVLHON Consulting

ECB: A Monetary Policy Adapted to a Changing Context

On October 17, 2024, following a meeting in Ljubljana, the European Central Bank (ECB) Governing Council made a significant decision: a 25 basis point reduction in the three key interest rates. Christine Lagarde, President of the ECB, accompanied by Luis de Guindos, announced this decision, which reflects the assessment of inflation prospects and the current economic conditions in the euro area.

 A Rate Adjustment to Support Disinflation

In her remarks, Christine Lagarde emphasized that the reduction in the deposit facility rate was motivated by economic indicators showing a slowdown in activity and a moderation in inflation. While inflation fell to 1.7% in September, domestic price pressures, particularly due to rising wages, remain significant. Inflation is expected to accelerate in the short term before stabilizing around the 2% target in 2025.

Despite signs of a slowdown in sectors such as industry and residential real estate, the labor market remains strong, with unemployment stable at 6.4%. Christine Lagarde highlighted that the economy should gradually recover, supported by rising real incomes and global demand, while fiscal and structural policies must focus on competitiveness and productivity to sustain growth.

 The Impact of Geopolitical Risks

The Governing Council also considered growing geopolitical risks, including the war in Ukraine and tensions in the Middle East, which could impact energy prices and disrupt global trade. Additionally, the possibility of higher inflation exists if wages or profits rise more than expected. Nevertheless, the ECB remains vigilant and ready to adjust its tools to maintain price stability and ensure the proper transmission of monetary policy.

 François Villeroy de Galhau: A French Perspective

François Villeroy de Galhau, Governor of the Banque de France, welcomed the unanimous ECB decision, calling it consistent with the analysis of current economic data. He noted that the drop in inflation to 1.7% in September was sharper than anticipated, reinforcing the outlook of reaching the 2% target earlier than expected in 2025.

 A More Flexible Monetary Policy Ahead?

Villeroy de Galhau also addressed the issue of European growth, affirming that while the European economy is experiencing a “soft landing” without recession, a clear rebound is not yet in sight. The persistent rise in household savings and weak private investment contribute to this situation. He believes that the recent rate cut is justified and anticipates further cuts to support the economy, while maintaining a pragmatic approach based on available data.

Regarding the specific situation in France, the ECB’s monetary policy is part of a context of moderate activity. However, the French economy benefits from a strong labor market and a favorable consumption environment, provided that wage and inflation pressures are kept in check. François Villeroy de Galhau concluded by emphasizing that France, like the rest of the eurozone, must remain agile in the face of global economic uncertainty and maintain flexibility in adjusting monetary policy.

 General Conclusion

The ECB Governing Council’s meeting marks an important step in adjusting the eurozone’s monetary policy, with an interest rate cut aimed at supporting disinflation while assisting an economic recovery that remains fragile. Christine Lagarde and François Villeroy de Galhau reaffirmed their commitment to act pragmatically, considering economic data and geopolitical risks that continue to affect the economy. France, like the rest of the eurozone, must remain vigilant to global economic developments and continue efforts to ensure long-term stability.

18Oct2024

DEVLHON Consulting deciphers: Summary of SPOT Controls- October 2024

Posted By: DEVLHON Consulting

DEVLHON Consulting deciphers: Summary of SPOT Controls on AIFM, MMF, and ROSA Regulatory Reporting – October 2024

The Autorité des Marchés Financiers (AMF) has conducted a series of SPOT controls, as announced in its 2023 supervision priorities, to assess the quality of data transmitted by portfolio management companies (SGP) through AIFM, MMF, and ROSA regulatory reports. These controls take place in a context where reporting is an essential tool for overseeing systemic risks and monitoring the financial sector, particularly regarding alternative investment funds.

 Context and Objectives

The AIFM directive, implemented after the 2008 financial crisis, imposes reporting obligations on alternative investment fund managers. In 2023, this reporting covered 9337 funds, managing a total of €1219 billion. Additionally, money market funds (MMF) play a crucial role, with 2171 reports filed between 2021 and 2023. The ROSA platform, introduced in 2021, enables SGPs to submit various regulatory information to the AMF.

The controls focused on four key areas:

  1. Organization and governance of the reporting systems.
  2. Procedural framework related to report production.
  3. Analysis of the operational processes of AIFM and MMF report production.
  4. Internal control mechanisms in place.

 Key Findings and Observations

 Organization and Governance

The audited SGPs have largely outsourced part of their reporting production process to external providers. However, there is an increased risk of error when processes are not fully integrated, as manual steps are often combined with automated processing. Most SGPs have implemented independent control systems to validate reports before submission to the AMF, though some gaps remain, particularly in staff training and project governance.

 Operational Processes and Internal Control

Internal control is generally well-structured, but anomalies were noted in some SGPs, especially in the monitoring of management delegations. Issues were also identified in the formalization of contracts with external providers, which do not always include the necessary quality control measures.

 Recommendations and Best Practices

The AMF recommends:

– Separating the reporting production and control functions.

– Integrating the monitoring of reports into risk management committees to enhance coordination.

– Using key performance indicators (KPIs) to monitor the efficiency of external providers.

 Conclusion

The reliability of data submitted to the AMF remains a priority to ensure effective oversight of financial risks. The AMF will continue to monitor the quality of reports while encouraging the adoption of best practices within the sector.

17Oct2024

The Development of Big Techs in the Financial Sector

Posted By: DEVLHON Consulting

The Development of Big Techs in the Financial Sector: What Risks? What Regulatory Responses?

In recent years, major tech players, known as “big techs,” have gradually expanded into the financial services sector. Although their presence in Europe remains limited, their potential for growth raises critical questions about the risks posed to financial stability and the appropriate regulatory responses.

 Big Techs in Finance: A Gradual but Concerning Expansion

Technology giants like Google, Amazon, Meta, and Apple, traditionally focused on digital activities (social networks, e-commerce, search engines), are increasingly diversifying into financial services. This move is fueled by several comparative advantages: a global user base, unmatched data management capabilities, and remarkable financial strength. These dynamics allow them to compete with well-established financial institutions, particularly in segments like payments, non-bank credit, and digital asset management.

Driven by technological innovations and new consumer expectations, especially the post-pandemic shift toward digitalization, big techs have become key players in the digital economy. Their dominant position in cloud services and potential in areas like mobile payments and cryptocurrencies further strengthen their growing influence over traditional financial systems.

 Risks to Financial Stability

The entry of big techs into finance brings many innovations. However, it also raises new risks, particularly regarding financial stability. The main issue lies in the fragmentation of financial services they cause. By leveraging digital technologies, big techs externalize and unbundle financial value chains, creating increasing interconnections between the financial and commercial sectors. This interdependence can heighten the vulnerability of traditional financial institutions.

Operational Resilience: Many financial institutions depend on services provided by a small number of tech players, particularly for cloud services. This concentration raises the risk of systemic failure in case of an outage or interruption of these critical services. Today, giants like Amazon Web Services and Microsoft Azure dominate this sector.

Credit Distribution and Non-Bank Activities: The growth of big techs in non-bank lending (such as “Buy Now, Pay Later” services) also poses challenges. While these activities provide alternative solutions for consumers, they often escape the strict regulations imposed on banks, thus creating risks of financial contagion.

Competition and Consumer Protection: With their massive user base and data processing capabilities, big techs can easily lock down markets and push competitors out, creating de facto monopolies. These situations raise questions about fair competition and the protection of user data.

 Regulatory Responses in Europe: What Are the Shortcomings?

The European Union has quickly responded to these developments by introducing several regulatory frameworks. The Digital Operational Resilience Act (DORA) and the Digital Markets Act (DMA) were implemented to strengthen the operational resilience of financial systems and regulate the major digital players. However, these initiatives are primarily focused on technical resilience and competition, leaving out key aspects of financial stability.

DORA, for instance, imposes requirements on financial institutions using IT service providers but does not fully address the risks posed by big techs as financial service distributors or non-bank lending operators. Furthermore, there is a lack of consolidated supervision of big tech activities across Europe. Current prudential frameworks are often bypassed by these groups, complicating regulators’ efforts to gain a comprehensive view of their operations.

 Proposals for a Strengthened Regulatory Framework

To address these challenges, several regulatory proposals have been put forward. On one hand, it is crucial to strengthen and harmonize rules governing the activities in which big techs are expanding, especially in payment services and non-bank lending. This could include introducing new prudential requirements to monitor and regulate their activities at a consolidated level.

On the other hand, it is recommended that big techs be required to consolidate their significant financial activities within a dedicated structure, allowing for more comprehensive supervision. This restructuring would enable the application of the same prudential rules as traditional banks if needed, ensuring fair treatment and limiting the risk of regulatory evasion.

 Conclusion: Balancing Innovation and Regulation

While the rise of big techs in finance brings major innovations and efficiency gains, it is essential to establish an adequate regulatory framework to manage the risks associated with this rapid transformation. European regulations must evolve to ensure that big techs can innovate while safeguarding financial stability and protecting consumers. Only a harmonized framework, accounting for both the specificities of big techs’ financial activities and the risks they pose, will allow for a balance between innovation and security in the financial sector.h

15Oct2024

Speech by François Villeroy de Galhau (Banque de France) – Fintech Forum

Posted By: DEVLHON Consulting

DEVLHON Consulting Decodes: François Villeroy de Galhau’s Speech at the Fintech Forum – Paris, October 14, 2024

The speech by François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Prudential Supervision and Resolution Authority (ACPR), at the Fintech Forum on October 14, 2024, addresses several key issues surrounding the intersection of technological innovation and regulation in the French financial sector. Structured around three main themes – continuity, disruption, and challenge – this speech highlights the priorities of the Bank of France and the ACPR in supporting the fintech ecosystem while ensuring effective regulation.

 A Continuity: The Commitment of the Bank of France and the ACPR

The first point raised by François Villeroy de Galhau concerns the stabilization of funding for French fintechs after a period of contraction in 2023. Indeed, fundraising reached €560 million in the first half of 2024, compared to €568 million in the same period in 2023, showing relative resilience in the sector despite economic uncertainties and rising interest rates. France continues to lead the fintech market in the European Union, although it lags behind the United Kingdom.

This continuity reflects the ACPR’s commitment to maintaining active communication with fintech players through initiatives such as the “Mon Parcours Fintech” platform, as well as supporting specific innovations, such as the issuance of the first stablecoins in France. The speech also highlights the need for regulatory harmonization in Europe, in response to the challenges faced by fintechs in their international expansion.

Disruption: The Impact of Artificial Intelligence

The second part of the speech emphasizes artificial intelligence (AI) as one of the major drivers of innovation for fintechs. François Villeroy de Galhau acknowledges that despite the exponential progress of generative AI, the financial sector has yet to fully grasp the transformations ahead. He advocates for a proactive approach, affirming that the Bank of France and the ACPR must stay aligned with these technological developments.

The ACPR is ready to take on the role of market supervisor for AI in the financial sector, in line with European legislation adopted in June 2024. This legislation identifies several “high-risk” uses, particularly in credit scoring and insurance pricing. To this end, the ACPR will draw on years of expertise in algorithm auditing and collaboration with various financial sector stakeholders.

A Challenge: Balancing Openness and Trust

Finally, François Villeroy de Galhau highlights the challenge of ensuring increased trust in a rapidly opening digital environment. He mentions several European initiatives, such as the Payment Services Directive (PSD2) and the proposed Financial Data Access (FIDA) framework, which encourage data openness for the benefit of consumers while managing risks.

The Digital Operational Resilience Act (DORA), which will come into force in January 2025, is also emphasized as a key pillar for operational resilience in the financial sector in the face of rising risks, particularly cyber risks. DORA mandates compulsory penetration testing, strengthens third-party risk management, and promotes information sharing among financial entities to better address cyber threats.

Conclusion

François Villeroy de Galhau’s speech illustrates the Bank of France and ACPR’s commitment to balancing innovation with regulation. While fintechs are key players in the digital transformation of the financial sector, they cannot thrive without a regulatory framework adapted to new technological realities, such as artificial intelligence and cybersecurity. The Governor concludes by underscoring the importance of the alliance between innovators and regulators to ensure a modern, resilient, and secure financial system.

 

Source : file:///C:/Users/devlh/Downloads/2024-10-14_Discours-Forum-Fintech.pdf

3Oct2024

EBA publishes its programme for 2025

Posted By: DEVLHON Consulting

DEVLHON Consulting deciphers: The priorities of the European Banking Authority’s (EBA) 2025 work program

The European Banking Authority (EBA) recently released its 2025 work program, part of a long-term strategy covering the period 2025-2027. This program reflects the EBA’s ambitions to adapt European Union (EU) banking regulations while ensuring financial stability in an evolving economic environment. Here are the key priorities of the EBA for the coming years, deciphered by DEVLHON Consulting.

 Strengthening the EU regulatory framework

One of the EBA’s main priorities for 2025 will be implementing the “EU banking package,” which includes Basel III reforms aimed at enhancing the resilience of banks in the face of crises. This framework introduces more risk-sensitive approaches to determining capital requirements, especially for credit, market, and operational risks. The EBA will develop regulatory standards to finalize this framework and ensure consistent application across the EU.

 Promoting sustainable financial stability

Sustainability is becoming a central issue for the banking sector. In a context of geopolitical risks and economic tensions, the EBA is focusing on forward-looking risk assessments, notably through stress tests. In 2025, the authority will launch a data portal to improve risk analysis infrastructure. This will also include initiatives to better monitor risks related to environmental, social, and governance (ESG) factors.

 Launching supervisory activities for DORA and MiCAR

The Digital Operational Resilience Act (DORA) and the Markets in Crypto-Assets Regulation (MiCAR) will come into effect in 2025. The EBA will begin overseeing critical IT service providers and supervising crypto-asset issuers, in collaboration with other European authorities. The introduction of these new responsibilities highlights the growing importance of digital technologies and decentralized finance in the European financial landscape.

 Transitioning to a new anti-money laundering framework

In 2025, the EBA will support the transition to the new EU Anti-Money Laundering Authority (AMLA). During this transition phase, the EBA will continue to carry out its mandate in this field while preparing to transfer its responsibilities to AMLA by the end of 2025. The focus will be on smooth regulation and integrating innovations in this domain.

 Conclusion

The EBA is pursuing an ambitious roadmap for 2025, marked by the rapid evolution of banking regulations and the increasing prominence of digital and ESG-related risks. At DEVLHON Consulting, we closely monitor these developments to provide you with insightful analyses and strategic support in your compliance and financial innovation initiatives.

The EBA’s 2025 program clearly demonstrates that resilience, sustainability, and innovation will be at the heart of European financial regulation in the coming years.

 

Source : https://www.eba.europa.eu/sites/default/files/2024-09/a5bce431-7793-4b75-bd07-d5741c961fbe/EBA%20Work%20programme%202025.pdf

2Oct2024

Application of the European Sustainability Reporting Standards (ESRS)

Posted By: DEVLHON Consulting

DEVLHON Consulting Explains: The First Application of the European Sustainability Reporting Standards (ESRS)

Following our previous article on the CSRD regulations, we continue with an in-depth analysis of the initial steps for implementing the European Sustainability Reporting Standards (ESRS), through the recent publication from ESMA.

In 2025, the first group of large public-interest entities will be required to publish their initial sustainability reports in accordance with the ESRS, as mandated by the CSRD directive. This obligation represents a profound shift in sustainability reporting practices, aiming to improve corporate transparency on sustainability matters. Through a public statement, ESMA highlights key elements companies must consider when preparing their sustainability reports.

 Governance and Internal Controls

ESMA emphasizes the importance of companies establishing robust governance structures and appropriate internal controls to ensure high-quality reporting. Management bodies, including the audit committee, must ensure the overall consistency and quality of sustainability disclosures.

 The Importance of Double Materiality

The concept of double materiality is central to the ESRS. Companies must identify and assess both the environmental, social, and governance (ESG) impacts on their business, as well as the impact their business has on these areas. This requires a thorough evaluation to determine which material topics should be included in the reports.

 Use of Transitional Measures

To aid in the transition to this new framework, companies can benefit from transitional measures, particularly regarding data collection within their value chain. However, ESMA insists on the importance of being transparent about the use of these measures and the plans in place to address any gaps.

 Structuring and Digitizing Reports

ESMA recommends that companies adopt a structured approach to preparing their sustainability statements, anticipating the future digitization of reports. This will facilitate their conversion into digital formats in an evolving regulatory landscape.

 Connecting Financial and Sustainability Information

Finally, ESMA stresses the importance of establishing a clear connection between financial and sustainability information. This interconnection is crucial for ensuring the consistency of reports and understanding the current and future financial impacts of corporate sustainability strategies.

Conclusion

This first wave of ESRS applications, scheduled for 2025, represents a decisive step toward more rigorous and transparent sustainability reporting. DEVLHON Consulting continues to closely monitor these developments to help companies transition to full compliance with the new regulatory requirements on sustainability.

 

How will these new obligations impact your reporting strategy? Contact DEVLHON Consulting to learn more about the best practices for high-quality sustainability reporting.

 

 

Source : file:///C:/Users/devlh/OneDrive/Bureau/AA%20BKE/ESMA32-992851010-1597_-_ESRS_Statement.pdf

1Oct2024

The Resolution of Banking Crises in Europe

Posted By: DEVLHON Consulting

DEVLHON Consulting Decodes: The Resolution of Banking Crises in Europe: A Unified Framework Facing Financial Challenges

The European Union (EU) narrowly avoided the wave of banking failures that struck Switzerland and the United States in the spring of 2023, demonstrating the resilience of its banking sector. Since the 2008 financial crisis, the EU has implemented a resolution framework, a cornerstone of the Banking Union, to efficiently manage banking crises and prevent taxpayers from having to bail out failing banks. This regulatory framework has proven effective, but it still faces several challenges, particularly the fragmentation of the European banking sector and the diversity of national bankruptcy regimes.

The Foundations of the European Resolution Framework

Created in 2014, the European resolution framework aims to manage banking crises by minimizing negative impacts on the economy and avoiding the use of public funds to save struggling banks. One of the major innovations of this framework is the bail-in mechanism, where losses are primarily borne by investors and creditors rather than taxpayers.

The framework also provides alternative solutions, such as the sale of activities to another institution or the creation of a bridge bank to temporarily manage the critical functions of the failing bank.

Achievements and Challenges After a Decade of Implementation

Over the past ten years, the resolution framework has been tested several times. Banks like Banco Popular in Spain or Sberbank in Slovenia and Croatia have been successfully resolved, often through the sale of activities to a new owner. However, challenges remain. One of the main difficulties is finding a balance between the need to protect depositors and ensuring that losses are borne by creditors.

Another issue is the harmonization of national bankruptcy regimes. In the absence of a fully integrated Banking Union, banks continue to operate within fragmented legal frameworks, complicating cross-border resolution operations. Additionally, the establishment of a European deposit guarantee, which would constitute the third pillar of the Banking Union, remains pending, limiting the potential for banking consolidation across the continent.

Emerging Risks

The management of banking crises is evolving with the emergence of new risks, such as climate change or cyberattacks. For example, assets linked to fossil fuels could quickly lose value due to a disorderly ecological transition, leading to bank failures. The resolution framework must therefore be adapted to address these new threats, particularly by strengthening the authorities’ ability to combine different resolution tools to effectively manage complex crises.

Conclusion

While the European resolution framework has proven its worth, there are still obstacles to overcome to ensure truly European banking crisis management. Completing the Banking Union, notably through the creation of a European deposit guarantee, as well as strengthening the Capital Markets Union, would enable better management of future crises and ensure long-term financial stability.

 

 

Source : file:///C:/Users/devlh/Downloads/BDF254_3_Res_crise.pdf

26Sep2024

DEVLHON Consulting deciphers the DORA regulation

Posted By: DEVLHON Consulting

DEVLHON Consulting deciphers the DORA regulation: Strengthening the digital resilience of financial companies in Europe

The Digital Operational Resilience Act (DORA), the new legislative framework of the European Union, aims to improve the digital operational resilience of companies in the financial sector. By early 2025, companies operating within the EU, along with their Information and Communication Technology (ICT) providers, will need to comply with these new requirements. This regulation goes beyond mere compliance, imposing a complete overhaul of digital risk management within organizations.

 The Five Pillars of DORA Compliance

DORA is built on five pillars of resilience, essential to ensuring the security and continuity of services in the face of growing digital threats:

  1. ICT risk management
  2. ICT incident management and reporting
  3. Digital operational resilience testing
  4. ICT third-party risk management
  5. Information sharing

These pillars require companies to establish robust mechanisms to anticipate, prevent, and respond to digital disruptions, particularly through proactive risk management and continuous monitoring of critical systems, such as Active Directory (AD), which often sits at the heart of IT systems.

 The Importance of Active Directory in DORA Compliance

Active Directory is crucial for identity and access management within financial companies. Any failure of this critical component could paralyze all services. Therefore, the security of this environment must meet DORA’s five pillars requirements.

ICT Risk Management: Companies must prove they have complete control over AD configuration and are able to quickly restore access in case of a failure. Continuous monitoring and tools like Semperis Directory Services Protector (DSP) play a key role by automating assessments and proactively detecting threats.

ICT Incident Management: DORA mandates standardized processes for reporting ICT-related incidents at different stages (initial, intermediate, final). Given AD’s importance for business continuity, incidents must be properly classified, with clear roles assigned for response.

Digital Resilience Testing: Conducting resilience tests is mandatory under DORA, but testing Active Directory can be complex. Simulating attack or failure scenarios in an isolated test environment can help identify weaknesses while minimizing risks to the main system.

Third-Party Risk Management: ICT service providers, often integrated via Active Directory, increase risks for companies. Managing these risks requires continuous monitoring and regular audits of third-party access and activities.

Information Sharing: DORA encourages companies to collaborate with peers to share information on threats and incidents, thus helping to strengthen the overall security of the financial sector.

 A Strategic Challenge for Leaders

Under DORA, boards of directors and executive management play a crucial role. They must ensure that their company is prepared to face digital threats and make the necessary investment decisions to strengthen the resilience of critical systems. For example, by investing in proactive monitoring technologies, companies will be better equipped to meet the regulation’s requirements while enhancing their overall security.

 Conclusion

DORA represents a major transformation for financial companies within the EU. Beyond complying with a strict regulatory framework, they must adopt a proactive approach to strengthen their digital resilience. Active Directory, at the core of digital infrastructure, is a key element of this strategy. Through effective risk management, rigorous resilience testing, and collaboration with external providers, companies will be better prepared to face digital disruptions and threats in an increasingly complex

24Sep2024

DP World and Nedbank Join Forces to Support SMEs in Sub-Saharan Africa 

Posted By: DEVLHON Consulting

DP World and Nedbank Join Forces to Support SMEs in Sub-Saharan Africa

The commercial landscape in Sub-Saharan Africa faces significant financial challenges, particularly for small and medium-sized enterprises (SMEs). In response to these constraints, DP World Trade Finance has partnered with Nedbank Corporate and Investment Bank (Nedbank CIB) to offer innovative financing solutions aimed at improving access to credit and supporting business growth in the region. This strategic partnership focuses on the implementation of a supply chain finance program, which will allow DP World’s suppliers to access early payments on their approved receivables.

 A Response to Financing Challenges in Sub-Saharan Africa

Sub-Saharan Africa suffers from a trade finance deficit estimated between $80 billion and $120 billion, a gap exacerbated by the development of intra-regional trade under the African Continental Free Trade Area (AfCFTA). SMEs, which represent around 80% of Africa’s trading businesses, struggle to access the necessary financing for their growth. This lack of working capital limits their ability to fully participate in global trade opportunities.

DP World, in partnership with Nedbank, has taken the initiative to address this issue by offering more affordable financing solutions than those traditionally available on the market. Businesses in the region will be able to transport their goods faster, improve their cash flow, and access financing to meet their operational needs.

 The Impact of the Financing Program

Launched via DP World’s platform, this supply chain finance program allows its suppliers to access early payments, a critical solution to alleviate working capital challenges. This system aims to improve trade flows while reducing perceived risks within supply chains. It directly addresses the needs of businesses that face limited access to financing solutions, enabling them to actively participate in global trade.

Mohammed Akoojee, CEO for Sub-Saharan Africa at DP World, explained that “this partnership represents a significant step forward in addressing the trade finance challenges in Africa. By combining DP World’s logistics capabilities with innovative financial solutions, we are enabling our suppliers to thrive and fostering a more transparent and efficient trade ecosystem.”

 A Collaboration for Sustainable Growth

In parallel, Nedbank and DP World have also established a risk-sharing agreement, allowing both companies to share risks in mutually beneficial transactions. Anél Bosman, Group Managing Executive at Nedbank CIB, emphasized that “this collaboration demonstrates our commitment to supporting economic recovery and sustainable growth in Sub-Saharan Africa. By combining our structured finance expertise with DP World’s logistics network, we are improving trade flows and helping businesses overcome financial constraints.”

The impact of this collaboration goes beyond trade finance. A program like “Virtual Farmer,” developed in partnership with Specialized Agri Solutions, illustrates the importance of such initiatives. Through this program, DP World and Nedbank support farmers by providing the necessary financing to purchase agricultural inputs such as seeds and fertilizers.

 Conclusion

The partnership between DP World and Nedbank marks a key step in transforming trade finance in Sub-Saharan Africa. With innovative financing solutions, this program not only helps SMEs overcome working capital challenges but also contributes to the sustainable growth of trade in the region.

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