Business book reviews: The Titleless Leader and Jugaad Innovation - Dallas Morning News Business book reviews: The Titleless Leader and Jugaad Innovation - Dallas Morning News

Saturday, June 9, 2012

Business book reviews: The Titleless Leader and Jugaad Innovation - Dallas Morning News

Business book reviews: The Titleless Leader and Jugaad Innovation - Dallas Morning News

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IMF Says Spain’s Core Financial System is Resilient, but Important Vulnerabilities Remain - International Monetary Fund
Press Release No.12/212
June 8, 2012

The core of Spain’s financial sector is well managed and appears resilient to further shocks, but important vulnerabilities remain in the system, the International Monetary Fund (IMF) said in its Financial Sector Assessment Program (FSAP) review of Spain, published today.

“The Spanish authorities have recently accelerated financial sector reforms to reduce vulnerabilities in the system. They have taken measures to address some of the most problematic banks and are currently undertaking an independent valuation of all portfolios, which is a welcome step and should help to determine further restructuring needs,” Ceyla Pazarbasioglu, Deputy Director of the IMF’s Monetary and Capital Markets Department of and head of the team that conducted the FSAP, said. “But the extent and persistence of the economic deterioration may imply further bank losses. Full implementation of reforms, as well as establishing a credible public backstop, are critical for preserving financial stability going forward.”

Risks and vulnerabilities

The Spanish financial sector has been hit by a succession of shocks. The resilience of banks to these shocks has been markedly different, largely due to their varying business models and their differences in management quality and risk management philosophies. “Our analysis of the Spanish banking sector clearly differentiates the characteristics underpinning the financial strength of different banks, which is essential in any analysis of a country’s financial sector,” said Pazarbasioglu.

The FSAP included stress tests of the banking sector, conducted to provide an assessment of vulnerabilities, including under a severe deterioration in economic conditions, and based on confidential and detailed bank-by-bank data. These stress tests are not intended to establish a definitive number for capital needs, but rather to identify critical weaknesses in some segments and particular institutions. The findings indicate that while the core of the system appears resilient, vulnerabilities remain in some segments. Under the adverse scenario, the largest banks would be sufficiently capitalized to withstand further deterioration, while several banks would need to increase capital buffers by about EUR 40 billion in aggregate to comply with the Basel III transition schedule (core tier 1 capital of 7 percent). Capital needs in these banks would be larger than this, as they would also include restructuring costs and reclassification of loans—for instance for lender forbearance— that may be identified in the recently launched independent valuations of assets. “Going forward, it will be critical to communicate clearly the strategy for providing a credible backstop for capital shortfalls—a backstop that experience shows it is better to overestimate than underestimate,” Ms. Pazarbasioglu said.

In addition, the FSAP assessed Spain’s financial sector oversight framework. It concluded that supervisory agencies have highly experienced and respected professional staff, and are supported by good information systems. However, in recent years a gradual approach to taking corrective action allowed weak banks to continue to operate to the detriment of financial stability. The processes and the accountability framework for effective enforcement and bank resolution powers therefore need to be improved.

About the FSAP

The Financial Sector Assessment Program (FSAP), established in 1999, is a comprehensive and in-depth assessment of a country’s financial sector. FSAPs are mandatory for the 25 jurisdictions with systemically important financial sectors, which include Spain, and are otherwise conducted upon request from member countries. To assess the stability of the financial sector, IMF teams examine the soundness of the banking and other financial sub-sectors; rate the quality of bank, insurance, payments, and capital market supervision against accepted international standards; and evaluate the ability of supervisors, policymakers, and financial safety nets to respond effectively to a systemic crisis. While FSAPs do not evaluate the health of individual financial institutions and cannot predict or prevent financial crises, they identify the main vulnerabilities that could trigger one.

Big three back in business - SkySports

And no wonder.

With Vettel storming to pole position and both Hamilton and Alonso exceeding the capabilities of their machinery to offer the only genuine threat to the World Champion's return to the front of the grid, it was like old times at Montreal on Saturday afternoon. In a season of such varying fortunes, the sight of Vettel, Hamilton and Alonso sitting alongside each other in the post-session press conference will perhaps serve in retrospect as the first sign that the 2012 season is ready to settle down.

There can certainly be no denying that Vettel's pole lap of 1:13.784 carried an unmistakable ominous feel, with Red Bull team-mate Mark Webber blitzed by over half a second. So much for the suggestion that the Aussie's win in Monaco signalled a shift in the balance of power at Red Bull; so much, too, for the suspicion that the FIA's outlawing of the hole in the floor of the RB8 would blunt the team's competiveness.

"I don't think a hole in the floor makes all the difference," declared Vettel. "I think we have a great car and the car works well as whole - and not just with a hole. We never feared a big impact on the car.

"I was happy throughout qualifying and was able to get a little bit quicker and it looked very tight at the beginning but in the end it seemed like we could make a bit more of [a] difference."

Ultimately, Vettel's advantage was measured at three-tenths of a second - or, as he himself saw it, "eight metres over Lewis" - but there was an unmistakable edge of confidence in Vettel's assessment of his chances of claiming Red Bull's first victory at a circuit which Technical Director Adrian Newey describes as the Milton Keynes team's "bogey ground".

"I think we have a great car and this time we got it right in qualifying," he added.

"Looking forward to the race tomorrow, it's going to be interesting.

"Making the tyres last around here is quite tricky. We've seen it, not so much last year because it was wet, but especially the year before. So it should be a good race and I'm looking forward to it."

And although he continued to insist he didn't have 'unfinished business' with the Circuit Gilles Villeneuve in wake of last year's race when a last-lap slip let in Jenson Button, he admitted he wants to add a race win here to his collection.

"Obviously at that moment [last year] it hurt a little bit because the victory was so close but in the end it was a tough race and easy to do mistakes which we didn't expect for me in the last half a lap which cost us the victory," he said.

"It's 2012 now and I think we had a quite decent 2011 so it's not too bad. But of course it would be nice [to win]."

Hamilton had almost as much reason for satisfaction given that McLaren team-mate Jenson Button only squeaked through to the Qualifying Three shoot-out courtesy of Pastor Maldonado, on course for a top-ten grid slot, crashed out on his final run in Q2. Yet while Button's struggles are now amounting to a slump, Hamilton seems revitalised and back to his best - even if, on this occasion, his best was not enough to trump Vettel.

"It was definitely a bit harder for us today and we had to push extremely hard to turn the tyres on. I'm very happy with the performance and very surprised to see ourselves on the front row. We'll take it."

Nor was Alonso to be outdone in the happy stakes as he reflected on Ferrari's continued revival, with the F2012, complete with brand-new exhaust format, now a very different beast to the dog of two months ago.

"We feel much happier with the car, both Felipe and me feels better with the grip and the balance. We'll never stop but at the moment we are happy extremely happy and extremely grateful to the guys in the factory," said the Spaniard.

Somehow, you suspect, for all 2012's vast unpredictability, it's a racing certainty that Sunday's grand prix will be a three-driver race.

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