Fed Demands Santander Clean Up Risk Management

The Federal Reserve is mandating that Banco Santander SA make sweeping changes in its risk management practices at its U.S. unit, The Wall Street Journal reported Tuesday (July 7).

The Fed’s actions come in the wake of the bank’s consistent failure to address the Fed’s concerns about repeated deficiencies tied to Santander’s capital controls, daily funding needs, internal policing and risk management policies, WSJ reported.

The Fed thus issued an enforcement action on Tuesday, which stated that it had uncovered the aforementioned issues in its “most recent inspection” of Santander. WSJ noted that the Fed does not usually pursue what is termed a “public action” unless the organization being cited has failed inspection several times. There is no fine being levied, though the Fed does have the right to impose a fine at a later date. In the meantime Santander is being told to write a series of plans aimed at redress.

As part of an agreement struck between the Fed and Santander, WSJ reported that the latter must describe “the duties and responsibilities” of its executives and also disclose “actions that the board of directors will take to maintain effective control over, and supervision of, the consolidated organization’s risk management, capital planning, and liquidity risk management, including, but not limited to, SCUSA’s operations and activities.”

“This written agreement underlines how much work we have to do to meet our standards of excellence and our regulators’ expectations,” a Santander spokesman said in a written statement. The U.S. holding company has begun “a comprehensive, multiyear transformation project within our organization,” the spokesman added, and the company is “confident this project will address the concerns the Federal Reserve has cited.”

WSJ also noted that Santander’s holdings company has failed balance sheet exams administered by the Fed for the past two years, and unnamed sources also told WSJ that the unit will likely fail the 2016 exam.

[vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_separator color=”grey” align=”align_center” style=”” border_width=”” el_width=””][vc_single_image image=”148412″ alignment=”center” style=”vc_box_shadow_3d” border_color=”grey” img_link_large=”” img_link_target=”_blank” css_animation=”left-to-right” img_size=”full” link=”http://www.pymnts.com/whats-hot-today/”][vc_column_text css_animation=””]

To check out what else is HOT in the world of payments, click here.

[/vc_column_text][vc_separator color=”grey” align=”align_center” style=”” border_width=”” el_width=””][/vc_column][/vc_row]