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The University of Southampton
Centre for Risk Research

CRR member explores whether UK banks are transparent in reporting risks

Published: 14 June 2017
Oluwaseun Osituyo

Oluwaseun Osituyo, a PhD student in the Centre for Risk Research (CRR), recently presented a CRR seminar on the transparency of risk reporting practices in UK banks and explained the possibility of adumbration (partial or vague disclosure) in the bank’s annual reports.

Oluwaseun explained how her research has examined the differences in risk reporting practices of two carefully chosen UK banks (HBOS and HSBC) that had each performed extremely differently during the global financial crisis of 2007. She described how HBOS failed during the crisis as a result of a sharp decline in its assets and sought Emergency Liquidity Assistance from the Bank of England, while HSBC was much more financially stable during the same period.

In her research, Oluwaseun found that boilerplate risk reporting was practiced by both banks, but was more prominent in the annual reports of HBOS. She found that risk information provided by HSBC tended to me more informative and was consistently reviewed over the observed period, while the risk policy statement of HBOS was not consistent with its actual practices. Furthermore, adumbrative practices were found in both banks, yet evidence of “transparency” was only found in HSBC. She also found that the executive directors charged with risk management responsibilities at HSBC had much more extensive experience in banking and in other financial services sector than the executive directors at HBOS.

The seminar was well attended by students and staff from across the university, and Oluwaseun’s stimulating research findings led to a flurry of incisive and topical questions.

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