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Dear Chief Executive, | Release Date: 8th February 2024

To read a longer summary of this Dear Chief Executive, letter, click here.

To access the original FCA document, click here.

Short Summary

The Financial Conduct Authority (FCA) addresses the chief executives of UK wholesale banks, outlining key priorities within its new regulatory structure. This is part of the FCA’s strategic focus for the wholesale banking sector.

Challenging External Environment

The FCA highlights that wholesale banks faced significant challenges in 2022, such as market volatility, economic downturns, rising interest rates, inflation, and geopolitical tensions. These conditions have tested business models and heightened various risks.

Supervisory Focus

The supervisory work programme for the next two years will shape engagement with the sector, focusing on areas of risk management and operational resilience. Banks are expected to adapt to changes and prioritise customer protection and market integrity.

Key Areas of Focus

FCA’s Actions

The FCA will conduct reviews focusing on risk management, operational resilience, and the effectiveness of control functions. It intends to use data-driven approaches for supervision and engage with banks on emerging market risks.

Key Takeaways for Banks

  1. Wholesale banks must actively manage risks, maintain operational resilience, and ensure high standards of control. 
  2. The FCA expects proactive engagement from banks, particularly in times of market stress or operational challenges.

Conclusion

The FCA’s communication underscores the importance of wholesale banks’ role in market integrity and consumer protection, emphasising compliance and adaptability in a challenging financial environment.

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