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Basel III advantages unlikely to ease battle for risk and compliance talent

Nordic banks may be better placed than many of their European contemporaries to implement the new Basel III capital and liquidity reforms thrashed out this week, according to analysts, but in the long run this is unlikely to make a huge amount of difference when it comes to attracting the best risk and compliance talent, suggest recruiters.

Meetings this week by key officials in Switzerland reached a broad consensus on the reform package, which is aimed at preventing a repeat of the 2007-08 crisis, including a longer implementation timeframe (until 2018) for some of its liquidity rules.

The agreement also proposed a more lenient risk weighting of various assets, something that, along with the longer timeframe, would benefit French and Nordic banks, European analysts have suggested, with Nordea in particular rising on the markets as a result.

Nevertheless, Nordic banks should not be complacent about their ability to hire and retain the best risk and compliance talent as a result, because being ahead of the curve on regulatory reform is unlikely in itself to make much odds when it comes to attracting the best, recruiters have cautioned.

“When discussing opportunities with risk professionals, particularly at the senior level, their key questions focus on risk culture. Namely, to what extent is risk embedded into the decision making process and is it empowered to make tough calls that may impact on revenue. Also, its organisational change agenda and how that is going to be managed and taken forward,” points out Adrian Marples, director at specialist risk recruiter Kinsey Allen.

“Those sorts of challenges, as well as compensation, are what normally attract senior risk professionals, rather than what stage a bank is at in terms of the regulatory environment,” he adds.

If anything, the continuing financial jitters over the eurozone could yet lead to a slowdown in hiring generally, he predicts.

“Having said that, the increasing regulatory burden and what is going on in the US will, I expect, mean that demand for compliance and governance expertise will stay high so, while there may be some curtailment in recruitment, it will only be short-term,” he adds.

In a separate development, the financial health of the Swedish banking sector was assessed earlier this month by the International Monetary Fund.

Sweden’s easing of monetary policy, support measures for the financial sector and “significant fiscal loosening” had by and large been successful, it argued, cushioning the country from the downturn in output and employment.

Nevertheless, there remained some uncertainty over the banking sector, with some banks still facing heightened credit risk, particularly in the wake of the Baltic crisis and because of eurozone volatility.

It suggested banks could need a new ‘Special Resolution Framework’ to help cope with future crises and, more generally, argued the weaker European economic picture could start to reverse declining unemployment in the country, with younger workers likely to be particularly affected if that happened.

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