Insights

Financial Services

Industries

Deloitte financial services industry specialists provide comprehensive, integrated solutions to the banking and securities, insurance and investment management sectors. Our breadth of services and industry knowledge allow us to understand each client’s unique business needs.

How can we help?

Our key objective is to advise financial services related companies to take advantage of the global financial markets opportunities. We are constantly monitoring the core issues, alterations and trends in this sector. Thus, we are eager for proposing the latest and best solutions to meet our clients’ needs.

Since risk management, operational compliance with the highest standards and efficiency of processes are the key factors for banks, asset management, leasing, factoring, brokerage and insurance companies, we are offering a wide range of services, included but not limited to:

  • MiFID;
  • Basel II;
  • Solvency II;
  • Financial Crime related advice;
  • Asset Management;
  • VAT.
     

MiFID

Launching in November 2007, MiFID (the EU commissioners’ markets in financial instruments directive) is a key measure with wide-ranging implications, leading to the creation of a single European market in financial services.

MiFID is applicable to:

  • Investment firms;
  • Investment advisors;
  • Banks that conduct investment services;
  • Alternative trading systems;
  • Recognised exchanges.

MiFID replaces and extends the coverage of the investment services directive but also makes significant changes to the regulatory framework to reflect changes in the financial services industry. It introduces new and more extensive requirements in particular concerning conduct of business and internal organisation.

There's no doubt that meeting MiFID’s resulting regulatory requirements will be a challenge, but we believe the difficulties shouldn’t prove insurmountable, and companies that implement the MiFID rules early will reap significant rewards.

Beyond making the necessary changes, we think CEOs and CFOs should also be focusing on the potential opportunities after MiFID takes hold.
 

Basel II

Basel II represents the most fundamental change seen in financial services capital regulation in the past 15 years and is a top level business issue that has far reaching strategic implications for:

  • Market structure;
  • Product design;
  • Customer selection;
  • Pricing.

Focusing on the changes needed to optimise Basel II's business impact could turn Basel II into a competitive boon, rather than a regulatory burden.

Timely Rewards for Integrated Approach

Successful organisations are likely to include some or all of the following:

  • Organisations which invest wisely in risk management;
  • Banks with large retail portfolios, especially secured;
  • Larger lenders with sophisticated treasury operations;
  • Banks able to micro-segment markets to identify capital efficient lending opportunities;
  • Banks with high grade corporate credits;
  • Collateral-efficient institutions;
  • Institutions able to demonstrate that they are good at managing operational risk;
  • Smarter banks will also have managed the cross-over with IAS/IFRS and are driving for a transformation in the finance and risk management functions as part of their Basel II implementation.

Unsuccessful organisations could be those with all or some of the following, unless they take remedial action:

  • Low retail exposures;
  • Significant specialised lending;
  • Large equity holdings or smaller banks with comparatively unsophisticated risk management systems;
  • Poor operational risk experience – those who securitise need to tread carefully.

Deloitte is an experienced adviser on Basel II.

Basel II is a multi-faceted challenge requiring multi-disciplinary solution. We are the only adviser able to provide the required breadth of service. In addition, the wealth of experience that our team has built-up, combined with our developed software and tools, will enable you to take months off implementation timelines and so get ahead of the game.

 

Solvency II

The Solvency II project was initiated by the European Commission in 2001. The commission relies on advice from the CEIOPS (Committee of European Insurance and Occupational Pension Schemes).

Work on the project was initially divided into two phases. The first phase was completed in early 2003 with the aim of delivering a high level design of the new regime. During the second phase, now in progress, the details of the system are to be finalised.

Solvency II will change the European insurance industry:

  • Risk management will be in the focus of regulators and companies;
  • Particularly the investment risk and ALM risk will be crucial for life companies;
  • Capital requirements for the different product lines will change;
  • Product development and pricing will have to react;
  • Value based management will become an important tool;
  • Reinsurance will be able to support the risk management process significantly;
  • Companies will increasingly seek to transfer or hedge the their risks in order to reduce capital requirements.

    Process of change will be a challenge for the industry, but there will be an award:
  • Companies will increase profitability over the time;
  • Companies will be better managed;
  • Insurance industry will become more attractive for investors and customers.

 

Financial Crime

Financial institutions are on the front lines of financial crime and are made vulnerable by the range of client relationships they manage and their wide array of products, services and transaction types – some complex and cross border.

Global financial institutions also face multiple legal and regulatory requirements and must navigate challenges posed by operating in multiple languages, business cultures, and managing complex IT systems.

So what is your organisation doing to protect itself, management and all employees?

Before, During And After

We can help to put in place preventative measures, investigate suspected incidents and identify as well as implement lessons to be learned. We also help institutions to take remedial steps following action by the regulator. Our regulatory expertise and experience mean that we can provide an informed interpretation of what is required of regulated firms and how best to proceed.

A Global Force

Our ability to work at both global and local levels is a prerequisite for dealing with the sophisticated international networks used by criminals, terrorists and fraudsters. What’s more, our financial crime specialists come from a variety of backgrounds, including industry, law enforcement, and regulatory.

Monitoring Transactions

A growing area of interest to the financial services sector is software that monitors transactions in real time for unusual activity. Our experienced team advises on selecting a vendor, negotiating terms and implementing these specialist packages.
 

Asset Management

Today’s asset management market is bigger, more dynamic and more competitive than ever.

Market leaders:

  • Achieve superior fund performance;
  • Control operating costs;
  • Manage the risks of new markets, products and services;
  • Leverage the benefits of new technologies;
  • Manage complex, cross-border distribution channels;
  • Build and extend profitable customer relationships.

Our financial services industry (FSI) practice provides asset management companies with solutions to these challenges. We track the pressing trends and issues, and assess the implications for our clients. We combine in-depth industry knowledge with technical expertise to provide services that respond to our clients’ needs. Our FSI practice provides services to seventeen of the top twenty global asset managers.
 

Value Added Tax

Many financial service institutions think that value added tax (VAT) is not an issue because they are partly or fully exempt – they are wrong. As a result of the VAT exemption on financial services and insurance, VAT on purchases is a significant cost to the sector. With nearly 70 indirect tax professionals in our firm across Central Europe, including a specialist FSI team, we are well positioned to help you realise savings and focus on the task of successfully running your business.

Ask yourself:

  • Do you know how much non-deductible VAT you incur every year on purchases?
  • Are you aware of all the opportunities for reducing VAT costs?
  • Do you have an in-house VAT specialist responsible for minimising VAT costs?
  • Do you receive and read updates on new VAT opportunities and developments?

If the answer to any of the above is “no”, you should consider contacting our VAT experts.
 

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