BBA https://www.bba.org.uk The voice of banking Thu, 02 Oct 2014 06:45:33 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 BBA response to Bank of England / PRA CP12/14 – use of advanced internal ratings-based approach https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/credit-risk/bba-response-to-bank-of-england-pra-cp1214-use-of-advanced-internal-ratings-based-approach/ https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/credit-risk/bba-response-to-bank-of-england-pra-cp1214-use-of-advanced-internal-ratings-based-approach/#comments Wed, 01 Oct 2014 13:25:55 +0000 https://www.bba.org.uk/?post_type=policy&p=30783 Read More]]> The Bank will be aware that both competent authorities within and outside the EU are working with the Bank for International Settlements to produce changes to the Approaches for calculating credit risk regulatory capital. UK firms are heavily involved in this process which aims to ensure improved harmonisation of both interpretation and implementation of the Standardised and IRB approaches, as well as a more robust framework for IRB modelling.

Please read the full response via the link below.

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https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/credit-risk/bba-response-to-bank-of-england-pra-cp1214-use-of-advanced-internal-ratings-based-approach/feed/ 0
BBA Brief – 1 October 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-1-october-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-1-october-2014/#comments Wed, 01 Oct 2014 09:03:15 +0000 https://www.bba.org.uk/?post_type=news&p=30762 Read More]]> FCA gives more details of “portability” review

The Financial Conduct Authority (FCA) plans to conclude its look at the way customers move their accounts to other banks by the first quarter of next year, Reuters reported yesterday.  The study will examine the success of the Current Account Switching Service launched last year and whether customers should be able to take their account number with them to a new provider – just as they can with mobile phones.  The FCA said this innovation may “remove the need to change direct debits and standing order instructions, with is a key area where perceived or actual problems with switching such as missed mortgage payments can arise”. More information on the FCA’s review is available here.

M&A activity at its strongest for five years

The value of mergers and acquisitions in the first nine months of 2014 eclipsed those in the same period over the last five years, according to analysis by Thomson Reuters reported in the FT (£, p21).  Meanwhile, a poll by the law firm CMS and Mergermarket reported in the Times (p36) suggests that two thirds of European executives are more “bullish” about the outlook for M&A activity now than they were this time last year.

ECB eyes junk bonds purchases to power growth

The FT (£, p1) writes that Mario Draghi will encourage the ECB to buy billions of euros’ worth of Greek and Italian “junk” bonds as part of a plan to foster economic growth. However, the paper suggests the move will increase tensions between the ECB’s president and Jens Weidmann, the Bundesbank president. Elsewhere in the FT (£, p15) Christopher Thompson and Claire Jones look at why the ECB has become more interested in buying Asset Backed Securities

RBS wipes out more than £800 million of bad debt

The decision by RBS to erase more than £800 million of bad debt from its provisions due to stronger than expected performance of its Irish operations and other subsidiaries is reported widely across newspapers. The Telegraph (Bp3) describes the bank’s latest trading statement as “upbeat”, citing the improved economic environment for the better-than-expected outlook. The Mail’s City editor Alex Brummer (p67) writes of the irony that the “worst” parts of a bank can over time “become the best”.

Stat of the day

The UK economy was 2.7% larger at the end of the second quarter than its pre-recession peak, the ONS said yesterday.

Today’s diary

European Parliament: Lord Hill’s hearing in ECON

Conservative Party conference: Speech by Prime Minister David Cameron

Council Working Group meeting on Insurance Mediation Directive II

ONS: Index of services (July 2014)

Cips/Markit: UK manufacturing PMI

In Brief

David Miles, a member of the Bank of England’s Monetary Policy Committee, has defended the institution’s economic forecasting record, saying that “men plan and God laughs”. CityAM (p4).

The BBC reports that payday lender Wonga has blamed “remediation” payments to customers for a 53% fall in its profits.

Internet giant eBay has designed to spin off its digital payments business PayPal after significant pressure from investors. Telegraph (B1)

A YouGov poll featured in the Guardian suggests that six out of 10 small and medium-sized enterprises expect to export by 2016 – a 20% increase on current levels.

The Guardian (p28) reports that the ONS yesterday revised up its estimate of economic growth in the second quarter to 0.9% – the fastest rate seen since 2010.

What the commentators say

The BBC’s Kamal Ahmed looks at the challenge for Andy Haste, the new chairman of Wonga, in turning the payday lender from “unruly teenager” into “a more sober adult” business.

Sky Economics Editor Ed Conway writes in the Times (£, p39) that small businesses need more than money to survive and grow.

Also in the Times (£, p35), Alistair Osborne raises an eyebrow at the ONS’s penchant for revising growth estimates.

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BBA Brief – 30 September 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-30-september-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-30-september-2014/#comments Tue, 30 Sep 2014 09:10:31 +0000 https://www.bba.org.uk/?post_type=news&p=30637 Read More]]> FSB backs derivatives plan

The Financial Stability Board yesterday accepted proposals to give authorities more time to agree on a resolution plan if a bank fails. The plans – overseen by the International Swaps and Derivatives Association (ISDA) – involve the insertion of a “stay” on a bank’s derivatives if it gets into financial difficulty. The FT (£, p32) reports that regulators had become concerned over the “potential chaos” which could occur if a counterparty chose to close out swaps after a resolution authority’s decision. The FSB has now asked that these swaps contracts legally “stay alive” whilst resolution options are assessed. ISDA expects the largest banks to sign up to the agreement in the coming weeks and for institutional investors to be participating from next year.

Lord Hill promises to work to keep UK in a stronger EU   

David Cameron’s nominee to oversee financial markets for the new European commission has pledged in his written answers to the European Parliament to work to keep Britain in a stronger Europe, writes the Guardian. In his answers he wrote: ”This commission takes office at a crucial moment for the relationship between the EU and the UK … I am keen to play my part in making the argument that the UK is stronger as part of a stronger EU”. Although the issue of bankers’ bonuses does not fall within his portfolio, he has promised to clamp down on those who try to get around the EU cap. He wrote: “If a member state does not comply with EU rules, or tries to circumvent them, I will ensure that full use will be made of the various enforcement tools available. I will support, whenever necessary, investigations on alleged breaches of EU law.” Lord Hill’s hearing with MEPs takes place tomorrow.

BoE’s stats suggest cooling housing market

Statistics published by the Bank of England yesterday revealed a drop in mortgage approvals for the third successive month. The Guardian (p21) suggested this provided “fresh evidence of a slowdown in the housing market”. The number of mortgages fell from 66,100 in July to 64,212 in August, although analysts had expected 65,000. The Telegraph (B3) quotes Capital Economics’ Matthew Pointon who argues that the slowdown in demand for homes is due to “higher prices for already very expensive homes. However, the Nationwide House Price Index released this morning reveals a 0.2% drop in national prices in September.

Stat of the day

Net lending to businesses rose by £817 million in August (Bank of England)

Today’s diary

BBA panel at Conservative Party conference – Banking on change in 2015

ONS: UK GDP – Q2 2014 (final figures) and Business Investment – Q2 2014 (revised results)

Nationwide: House price index

Council Working Party meeting on Securities Financing Transactions

In brief

A number of papers including the FT (£, p17) report on the dismissal of eight Lloyds employees over the rigging of Libor.

In a speech in the City yesterday, Michel Barnier said that the European Commission has “no interest in threatening London’s place as the largest European financial centre”, writes CityAM (p2).

Evidence of alleged mis-selling of the Government’s Enterprise Finance Guarantee scheme has been reported to the FCA, following an investigation by the Times (£, p47).

Wiener Zeitung reports that the EU’s Trade Commissioner nominee Cecilia Malmström told MEPs that investor protection rules allowing companies to sue governments could ultimately be left out of the Transatlantic Trade and Investment Partnership deal with the United States.

The US is due to strengthen its position as the preferred destination for initial public offerings, with companies raising $77 billion (£47 billion) on the New York Stock Exchange and the Nasdaq in 2014, more than double the amount raised in London and Hong King combined. (FT, £, p18)

The European  sentiment index – published by the Commission – fell to 99.9 in September, down from 100.6 the previous month, “adding to the growing body of evidence that the currency union is edging towards recession”, reports CityAM (p4).

The FT (£, p18) reports that the Chinese regulator has approved licences for two privately owned banks in order to increase competition in the state-dominated banking sector.

Santander has promoted Nathan Bostock to replace Ana Botín as chief executive of its UK operations. (FT, £, p25)

What the commentators say

In the FT (£, p24) Jonathan Guthrie argues that bonus clawback will reinforce responsibilities of bank staff, and that better conduct would make the City more competitive. The Guardian’s Nils Pratley (p21) agrees, stating that ”wrongdoing in banking can take ages to be exposed and the rules should reflect the fact”.

David Brierly writes in the Independent (p52) that Italian banks must restore their balance sheets as this is “critical to Italy, the Eurozone and the project of banking union.” He adds that there is a potential capital hole of between €25 billion (£19 billion) and €70 billion at those Italian banks which are subject to the ECB’s asset quality review test.

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BBA Brief – 29 September 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-29-september-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-29-september-2014/#comments Mon, 29 Sep 2014 09:30:46 +0000 https://www.bba.org.uk/?post_type=news&p=30474 Read More]]> Jourová takes over on City pay

Saturday’s FT (£, p2) reports that Věra Jourová of the Czech Republic could be confirmed as EU justice commissioner next month, making her responsible for remuneration rules in the City of London. According to the article, Ms Jourová’s party is on the centre left but sits within the Liberal bloc of the European Parliament and her views on pay and the City are, as yet, unknown. Overseeing pay in financial services originally belonged within the financial services portfolio of Britain’s Lord Hill but was carved out last week by Commission President Jean-Claude Juncker.

Global economists warn on interest rates

A report to be published today is to warn that the global economy could be heading for another crisis (FT, £, p6). In the 16th Annual Geneva Report, commissioned by the International Centre for Monetary and Banking Studies, senior economists warn that interest rates will have to stay low for a “very very long time” in order to give companies, households and governments time to service their debts and avoid another crash.  Though there is an acknowledgement that financial sector debt is falling and household debt has stopped rising, the report highlights the rapid rise of public sector debt in places like China. The authors warn of: “…[the] poisonous combination of high and rising global debt and slowing nominal GDP, driven by both slowing real growth and falling inflation.” They continue: “Contrary to widely-held beliefs, the world has not yet begun to delever and the global debt-to-GDP ratio is still growing, breaking new highs.”

Appeals Process has led to fewer mistakes

CityAM (p10) writes that external reviewer Professor Russel Griggs’ latest report on lending to small businesses shows that the UK’s main high street banks have “slashed” the number of errors they make. This is due to a drop in the number of successful appeals made by businesses who have their finance applications declined. The external Appeals Process reviewer said: “I am hopeful that this is the start of us all beginning to see the positive outcome of the process changes. I and my team have been working with all the banks to make their decision-making process better both for the SME and importantly themselves”. In the Independent (p51) though David Prosser argues that Professor Griggs’ view is an optimistic one and says that the number of successful appeals should be declining at a faster rate as the Professor’s report still shows that some businesses are being unfairly turned down for finance.

Card fees to cost shoppers £785 million each year

The Mail on Sunday (p93) looks at the EU’s proposed cap on the “interchange” fees charged by credit card companies and the potential impact on customers. The article warns that banks would be looking to make up costs as they are hit with a £785 million bill from card issuers. Speaking with the paper, the BBA said that banks are wary of threatening higher banking fees, but: “Inevitably somebody has to pay for increases in costs caused by regulation and that can mean consumers”. The piece goes on to say that the BBA are in talks with Brussels about the plan.

Stat of the day

Median pay in real-terms is forecast to fall from £18,852 in 2008 to £17,827 by 2017 (EY Item Club).

Today’s diary

Conservative Party Conference: BBA CEO Anthony Browne speaks at a Money Advice Service panel

Conservative Party Conference: Speech by Chancellor George Osborne MP

Bank of England: Bankstats (Monetary & Financial Statistics) – August 2014

Bank of England: Money and Credit – August 2014

Council Working Group meeting on Payment Services Directive II

In brief

A report by EY Item club says that the positive impact of interest rate rises on savers could more than offset the aggregate impact of rising rates. (Telegraph)

The European Parliament’s new rapporteur charged with overseeing money market fund reform, Neeva Gill MEP, has said she does not want to “destroy” the industry. (FT)

The FT (£, p19) reports that the London Stock Exchange is launching an “aggressive bid” to bolster the number of African companies listed.

Campaigners and MPs are calling for an inquiry into the FCA’s handling of the redress process for interest rate hedging products, particularly in light of more “swap-for-swap” settlements being offered. The FCA has maintained that “the offers on the table are fair”.  (Times, £, p43)

Google has commissioned a financial services research company to review how it could enter the asset management industry causing nervousness amongst existing fund houses. (FTfm, £, p1)

Fintech start-ups hoping to operate in the UK have approached the FCA to ask for an approval system to “badge” each company according to how far along the route to regulatory authorisation they are. They hope that these will help in relation to conversations with potential investors. (Financial News, p4)

Saturday’s Telegraph (p14) reported that a major high street lender will soon be using personality tests to help them make lending decisions.

An article in Saturday’s Guardian (p49) looks at how things are changing for both banks and customers when it comes to “misdirected” payments sent to the wrong account in error.

Barclays, RBS and HSBC are set to be hit with an “avalanche of fines” totalling £14 billion following a range of investigations internationally into their pre-crisis activities. (Sunday Times, £, p2)

The Sunday Times (£, p3) reported that Virgin Money is preparing to go public, with Sir Richard Branson to unveil plans to list this week.

An article in the Sunday Telegraph (p3) claims that the UK Government should start to receive dividends from nationalised lenders Northern Rock and Bradford & Bingley as the EU rules that “dividend blocking” bondholders can be bought out.

What the commentators say

In the FT (£, p2) Sam Fleming writes about how US sanctions have caused banks to hike their spending on compliance for fear of being hit by large penalties for breaching the rules.

In the Mail (p60) Jenny Jones questions the value banks and financial services bring to the UK economy and claims that there is a tendency to exaggerate it.

If you get 5 minutes…

In an interview with the FT (£, p8) outgoing EU commissioner for financial regulation, Michel Barnier says he always wished to build a compromise. The article includes Mr Barnier’s thoughts on his potential successor Lord Hill, saying: “Don’t judge him because he is British; judge him on what he says. I trust him to be objective and competent.”

In Saturday’s Times (£, p69) Holly Thomas reviews the range of credit cards on offer and cites the BBA stat that 42% of all borrowing on credit cards is now interest free.

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Lending Appeals Process working for small businesses https://www.bba.org.uk/news/press-releases/lending-appeals-process-working-for-small-businesses/ https://www.bba.org.uk/news/press-releases/lending-appeals-process-working-for-small-businesses/#comments Mon, 29 Sep 2014 08:38:54 +0000 https://www.bba.org.uk/?post_type=news&p=30468 Read More]]> Responding to the  Q1 2014 Appeals Process report by the Independent External Reviewer, Professor Russel Griggs, BBA Executive Director of Business Finance, Irene Graham, said:

“Thousands of businesses have successfully used the Appeals Process to unlock the finance they need to grow, innovate and take on new staff.

“Professor Griggs believes that opening business lending up to independent scrutiny has been a force for good – we completely agree.

“Nearly seven out of 10 applications for loans and overdraft are approved  and we hope that schemes like this give even more businesses the confidence to approach their bank for finance.”

ENDS

For more information please contact the BBA press office on 020 7216 8989.

Notes to editors:

New lending is increasing

  • Bank of England data shows that gross lending to SMEs began to rise in April last year and has risen every month since year on year.
  • Gross borrowing by SMEs in the last three months for which figures are available (May – July 2014) rose 27% on the same three months a year earlier to £13.7 billion.
  • See BBA graph showing gross lending to SMEs here.

As new lending rises, businesses continue to repay loans

Cash held by businesses continues to rise

  • At the end of Q2 SMEs were holding £143.1 billion in cash in bank accounts. This is a rise of 9% on the same quarter in 2013. (BBA SME statistics – Q2 2014)

The cost of finance is falling

  • Interest rates are at historic lows, as can be seen by table 2.4 in the Bank of England’s Trends in Lending data for July 2014.
  • The table shows that credit conditions have eased in recent months and we are now seeing lower borrowing rates feed through into cheaper lending rates.
  • The table also shows indicative lending rates for SMEs which have fallen slightly in recent months. This is consistent with some of the Bank’s recent Agents’ reports and the Credit Conditions Survey.
  • The FSB Small Business Index for Q3 2014 reveals that 45% of successful applicants were offered a loan with interest of 4% or less, well up on the share a year ago.
  • The latest FSB Small Business Index shows that fewer than half of small firms (47%) now rate credit as being unaffordable for the first time since the results began. Just one in four firms (24.8%) find that the availability of credit is ‘very poor’ now, well down from 44.6% two years ago.

Credit Conditions Survey

The Bank of England’s Credit Conditions Survey 2014 Q2 can be downloaded here. Key quotes from the survey:

  • “Demand for credit was reported to have increased significantly across all company sizes, and “both the availability and the demand for credit was expected to increase in Q3.”
  • “Spreads on lending to small businesses were unchanged in Q2, while spreads for medium-sized companies and for large corporates narrowed significantly. These trends were expected to continue over the next three months.”
  • “Corporate lending demand was reported to have increased significantly across all company sizes in 2014 Q2.”
  • “Credit conditions for non-bank financial corporations continued to ease in 2014 Q2, with lenders reporting a further significant narrowing in lending spreads, significant falls in fees and commissions, and a significant increase in maximum credit lines. These were the highest reported balances since the survey began, and a significant further improvement in these lending terms was expected in Q3.”
  • “The proportion of household loan applications approved in Q2 was also reported to have been unchanged, despite lenders’ expectations of a significant decrease. Lenders again expected the approval rate to fall significantly in Q3.”

Over recent years the difficult economic climate has suppressed demand for finance:

  • Banks are committed to increasing demand for finance through initiatives such as Better Business Finance as well as providing help and support through Mentorsme.co.uk. However, 78% of SMEs interviewed in the latest SME Finance Monitor said they did not seek external finance, nor did anything stop them from doing so.
  • FSB figures for the Voice of Small Business Index show that 15% of firms applied for credit during Q3 2014, down from 22% a year ago.

Better Business Finance’s lending and appeals process campaign

  • The BBA and Britain’s major largest retail banks launched the Better Business Finance (BBF) programme in 2010 to build confidence and provide support to businesses seeking bank finance.
  • In January 2014, the BBF launched a year-long campaign that aims to raise awareness among businesses and entrepreneurs that they are a lot more likely to secure bank finance than they think. The latest SME Finance Monitor shows that only 38% of SMEs believe that they will be approved for finance by their bank, but actual approval rates are a lot higher at almost 66%.
  • The campaign also seeks to provide supportive tools and information for businesses, and highlight the Appeals Process for businesses to challenge a bank’s decision to turn down a loan or other type of finance.

Banks are working to increase access to alternative finance providers

  • The industry is working with alternative finance providers to ensure businesses can get the right finance at the right time. Partnerships with institutions like the UK Business Angels Association and Community Development Finance Institutions give businesses that are inappropriate for finance from banks the option to be referred elsewhere.
  • The BBA and some of the major banks have launched a pilot referral program for Start Up Loans. As part of this pilot, business start-ups that are inappropriate for bank finance will be given the option of being referred to The Start Up Loans Company. This builds on the referral scheme for CDFIs.
  • A new “Finance Finder” – betterbusinessfinance.co.uk – offers businesses access to 500 finance providers across Britain.
  • The Business Growth Fund gives fast growing businesses a capital boost of up to £10 million. To date, the bank-financed fund has invested over £300 million in British businesses across a broad range of sectors including energy, retail and hospitality.

Levels of alternative finance are growing

  • UK businesses have a traditional overreliance on bank finance with banks providing nearly 80% of all credit. For example, only 3% of SMEs use equity finance in the UK compared to an EU-wide average of 7% and 41% in Denmark.
  • Invoice discounting is growing at 20% and peer-to-peer lending is growing at 100%, according to the Asset Based Finance Association. A record £18.9 billion was borrowed from asset-based lenders in the three months to the end of June 2014 according to the trade body.
  • Loan and overdraft borrowing from the main 5 banks by SMEs in Great Britain accounts for around 60% of all SME borrowing from banks (BBA statistics).

Supporting Britain’s entrepreneurs:

Under the industry-funded Better Business Finance programme, banks have introduced a broad range of initiatives to help support SMEs:

  • Business Growth Fund - improved access to finance through initiatives like the Business Growth Fund which gives fast growing businesses a capital boost of up to £10 million. The bank-financed Fund has invested over £150 million in British businesses across a broad range of sectors including energy, retail and hospitality.
  • Appeals Process – ensured fairer treatment for customers by establishing an independently monitored appeals process so that those who are turned down for loans can challenge the original decision.
  • Finance Finder – created a new “Finance Finder” – betterbusinessfinance.co.uk – with access to 500 finance providers across Britain.
  • CDFI referrals – worked with the alternative finance providers like the UK Business Angels Association and CDFI. To offer SMEs other avenues of finance, banks are developing a programme to give businesses that are inappropriate for finance from banks the option to be referred to Community Development Finance Institutions.
  • Mentoring – as part of the industry-funded Better Business Finance programme, banks have come together to support a network of business mentors across Britain in the form of MentorsMe.co.uk providing businesses with access to over 27,000 business mentors.
  • Supporting exporters – to support SMEs accessing overseas markets, regional Export Mentoring Clubs have been established to improve the dialogue between businesses, the banks and UKTI.

SME Finance Monitor:

  • The SME Finance Monitor investigates the availability of external finance for the UK’s SMEs. The largest and most frequent study of its kind in the UK, the research is commissioned by the Business Finance Taskforce and is produced independently under the governance of an external Chairman and a steering group.
  • A full copy of the SME Finance Monitor is available at: www.sme-finance-monitor.co.uk.
  • Key findings of the SME Finance Monitor: Q2 2014 include:
    • Businesses are much more likely to get funding than they think – Confidence that the bank would lend remained below the actual levels of success reported to date. 54% were confident that their renewal would be successful, compared to current success rates of 96%, while 33% were confident about a new facility, compared to a 46% success rate.
    • Approval rates – 7 out of 10 loan and overdraft applications to date have resulted in finance over the lifespan of the Monitor.
    • Most discouragement indirect – 5% of SMEs met the definition of a ‘would-be seeker’ of external finance, who had wanted to apply for a loan or overdraft but felt that something had stopped them. This proportion has slightly fallen over recent quarters. The main reason cited for not seeking borrowing was discouragement – an indirect assumption they would be turned down.
    • Risk profile of businesses – the proportion of SMEs rated a worse than average risk currently stands at 47%, a return to 2011 levels.
    • Three quarters of all SMEs don’t want finance – 78% of SMEs interviewed said they did not seek external finance, nor did anything stop them from doing so. 39% of SMEs met the more specific definition of a ‘permanent non-borrower’ – those SMEs that had not used, nor wanted to use, external finance, nor have any plans to apply for any in the near future – down 9% from last quarter.
    • Access to finance not seen as a barrier to growth – amongst all SMEs 8% rated access to finance as a major obstacle to their business, down from 10% in Q2 2013.
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BBA response to Government plans for the implementation of rules to address the failure of financial institutions https://www.bba.org.uk/policy/financial-and-risk-policy/bank-reform/resolution-planning/bba-response-to-government-plans-for-the-implementation-of-rules-to-address-the-failure-of-financial-institutions/ https://www.bba.org.uk/policy/financial-and-risk-policy/bank-reform/resolution-planning/bba-response-to-government-plans-for-the-implementation-of-rules-to-address-the-failure-of-financial-institutions/#comments Fri, 26 Sep 2014 15:08:42 +0000 https://www.bba.org.uk/?post_type=policy&p=30424 Read More]]> Key points:

  • We strongly support the BRRD and welcome the Government’s intention to transpose the requirements in a timely fashion.
  • We caution against the proposal to grant the Bank of England information gathering and direct enforcement powers as this could confuse the UK supervisory architecture and result in de facto triple peaks regulation.
  • We recommend that the early intervention power to remove senior management should be interpreted as relating to members of the board of directors. The removal of other senior management figures could be detrimental to the successful implementation of actions that need to be taken in resolution.
  • We welcome the decision to implement the BRRD bail-in tool from 1st January 2015 and support the proposal to separate the commencement of the bail-in power from the application of the MREL regime.
  • Wherever possible, the resolution of third-country branches should form part of the resolution undertaken by the home country authority, or otherwise be coordinated through the home resolution authority. If, in exceptional circumstances, this is not possible then we believe the Bank of England should have access to the appropriate resolution powers in the circumstances as a backstop.
  • We welcome confirmation that the resolution financing requirements will be introduced without any additional upfront cost for institutions. We consider that it is extremely unlikely that the UK resolution fund will be called upon to support loss absorbency. It is too early to assess the proposed options for ex post financing but any model must be constructed to minimise the risks of pro-cyclicality and maximise affordability.
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https://www.bba.org.uk/policy/financial-and-risk-policy/bank-reform/resolution-planning/bba-response-to-government-plans-for-the-implementation-of-rules-to-address-the-failure-of-financial-institutions/feed/ 0
Push Technology https://www.bba.org.uk/about-us/associates/push-technology/ https://www.bba.org.uk/about-us/associates/push-technology/#comments Fri, 26 Sep 2014 14:43:51 +0000 https://www.bba.org.uk/?post_type=associate&p=30418 Read More]]> Capital markets, wealth management, retail banking and e-commerce transactions need to be done in real-time, from anywhere in the world and on any mobile device. With mobility displacing traditional methods of working, knowing where customers will trade, bank or shop is a long gone luxury. One leading financial services firm taking mobility seriously, markets its ability to keep customers connected anywhere, anytime.

However, in a bid to support customers and employees as they access services on-the-move, financial service organizations are challenged with delivering critical and intelligent data at speed to mobile customers and employees. There’s an important balance to strike between moving truly vast volumes of data across your network and meeting user expectations for speed and reliability.

These days, the difference between failure and customer satisfaction can be measured in milliseconds. To ensure competitiveness, quality of service, successful customer acquisition and revenue retention, you need to achieve this cost-effectively and without interrupting the line of business.

While most financial services organizations have a mobile messaging offering in place, it is no longer enough for them to remain competitive; networks are becoming clogged, bandwidth is insufficient and bottlenecks with infrastructure exist because there is too much data. The costs associated with solving these issues are unfortunately passed to the customer. And in the meantime, these organizations are losing the speed and functionality required to support customers across web and mobile applications on any device and with dynamic and real-time content. Push Technology’s Diffusion™ technology can help financial services organizations act now to address these challenges.

Diffusion is able to intelligently reduce the amount of data distributed across networks helping to ensure fast, efficient and scalable web and mobile applications.

Website: http://www.pushtechnology.com/

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Avaloq UK Ltd https://www.bba.org.uk/about-us/associates/avaloq-uk-ltd/ https://www.bba.org.uk/about-us/associates/avaloq-uk-ltd/#comments Fri, 26 Sep 2014 14:40:16 +0000 https://www.bba.org.uk/?post_type=associate&p=30416 Website: www.avaloq.com

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This week in Westminster https://www.bba.org.uk/news/banking-matters/this-week-in-westminster-13/ https://www.bba.org.uk/news/banking-matters/this-week-in-westminster-13/#comments Fri, 26 Sep 2014 13:57:56 +0000 https://www.bba.org.uk/?post_type=news&p=30390 Read More]]> Ed Miliband’s speech to Labour Party conference

Leader of the Opposition Ed Miliband MP delivered his speech to the Labour Party conference this afternoon. He focussed on Labour’s ‘plan for 2025’, which centred around six national goals.

Core message:“Together we can restore faith in the future. Together we can build a future for everyday working people. Together we can rebuild Britain. Together we can.”

Key points:

State of the nation

  • The question for the General Election will be: “Is anyone going to build a better life for the working people of this country”.
  • We can reform this country not by breaking it up but by breaking from the past.
  • The Conservatives have left people on their own, apart from the people they care about. “If you’re a banker who’s worried about your bonus, its good news as George Osborne will go all the way to Europe to fight tooth and nail to protect your bonus – you certainly aren’t on your own”.
  • We must reward hard work.

National goals

  1. Halve the number of people in low pay by 2025
  • “Transform the lives of 2 million people”.
  • Raise the National Minimum Wage by £1.50 by 2020 to over £8/hour – meaning an extra £3,000 per year for a fulltime worker.
  1. All working people to fairly share the UK’s growing wealth
  • Create good jobs at decent wages.
  • Mr Miliband confirmed his position of breaking up the big banks “so that we have the competition we need in our banking system“.
  • Labour will fight for equal rights for the self-employed in Britain.
  1. Become a world leader in the green economy
  • Create 1 million jobs in the green economy by 2025.
  • Take all carbon out of electricity by 2030.
  • A Green Investment Bank with real powers to borrow and attract investment.
  • Devolve powers to communities to insulate 5 million homes over the next 10 years.
  1. Get as many young people on apprenticeships as are currently at university
  • Companies which bring workers in from outside of the EU will have to offer apprenticeships to the next generation.
  • If businesses want a government contract they must provide apprenticeships to young people.
  1. UK to build “as many homes as we need”
  • Double the number of first time buyers who get on the housing ladder each year
  • Won’t let large developers sit on land.
  • Back thousands of small developers and construction companies with access to new loans.
  • Will build a new generation of towns, garden cities and suburbs with 500,000 new homes.
  • Labour will make housing the top priority for our capital investment programme in the next parliament.
  1. Create a “truly world class” healthcare service
  • Expand workforce with 3,000 more midwives, 5,000 more care workers, 8,000 more GPs and 20,000 more nurses.
  • To pay for this, Labour will clamp down on tax avoidance by closing the tax loop-holes for the hedge funds, raising £1.1billion. Further funding will be sourced through the Mansion House tax announced by Ed Balls yesterday and through a levy on the tobacco industry.
  • Labour will set aside £2.5 billion in an “NHS “time-to-care” fund, creating a “truly 21st century National Health Service”.

Further policy announcements

  • Give the vote to 16 and 17 year olds.
  • Further reform of the House of Lords , aiming to make it a “Senate of the regions and nations”.
  • Devolve power in England.
  • Reform of the constitution – led by the people, not a “Westminster stitch-up”.
  • Labour position on EU .
    • “Our future lies inside not outside the EU”
    • Must reform EU on economy, benefits and immigration, but must do this by “building alliances, not burning bridges”.
  • Will fight for a two-state solution in the Middle East.
  • Will appoint Lord Cashman to lead the government’s work on LGBT rights across the world.

Conclusion

  • The Labour leader said that he cared about big ideas, the principle of together, hearing the voices of people across the land, and using the power of government to stand up against powerful forces when it’s needed, adding “that’s why I stood up to the banks over bonuses”.
  • Mr Miliband accentuated the need for togetherness, appealing to the business world: “I say to every business – you can be part of this, and we can’t do this without you”.
  • “Labour plans for the future – let’s make it happen together”.

The full speech can be read here.

Ed Balls’ speech to Labour Party conference

Mr Balls spoke on how a Labour government would work to deliver a fair economy. He was keen to point out that a Labour government would balance the books during the next parliament, and that any spending commitments in their manifesto would include details of how they would be funded.

Core message:“Labour’s plan for the future: Our common endeavour to build an economy which works for the many, not the few”

Key points:

  • “Most working people are still not seeing any benefit from the recovery…wages are rising slower than prices”.
  • “Slowest recovery for 100 years, business investment still lagging behind, gender pay gap widening, over 1 million zero hours contracts”.
  • Labour will balance the books in the next parliament with tough fiscal rules, which will be monitored by the OBR. Get the current budget into surplus and the national debt falling as soon as possible.
  • In the Labour manifesto there will be “no proposals for any new spending paid for by additional borrowing”.
  • Mr Balls called for “fiscal responsibility in the national interest”.
  • Policy proposals:
    • On day one of a Labour government, ministerial pay will be cut by 5% and frozen until the books have been balanced – must focus on getting the deficit down.
    • Cap rise in child benefits to 1% for the first two years of the next parliament.
    • Keep the benefits cap.
    • Reinstate the 50p tax rate for the highest earners.
    • Tax on properties for those over worth over £2 million, rising every year in line with the increase in average house prices. Those who are asset rich but cash poor will be protected, whilst those with multi-million pound properties will pay more than those who are just over the limit.
    • Reverse tax cut for hedge funds.
    • Tax breaks for those firms which pay the living wage.
    • Increase the National Minimum Wage to £8 an hour by the end of the next parliament.
    • Scrap the tax break for married couples and use this to fund the introduction of the 10p tax rate.
    • Keep Corporation Tax the lowest in the G7, but freeze any reduction in order to allow for a lowering of business rates.
    • Build 200,000 houses per year by 2020.
    • Reverse the bedroom tax.
    • Repeal the NHS Bill.
  • Mr Balls announced that Labour has commissioned a review into what more can be done to back British exports. This will be led by Graham Cole, Chair of AgustaWestland UK.
  • He also highlighted that Labour want to see more power and resources devolved to regions and cities.
  • He pointed to Labour’s proposed independent National Infrastructure Commission which will make decisions on future projects.
  • He reaffirmed Labour’s pro-EU stance stating: “walking away from Europe would be a disaster for British jobs and investment”.

Bank-related comments:

  • “While it was the banks which caused the global recession…the truth is we should have regulated the banks in a tougher way – it was a mistake and I apologise for it. So we get the deficit down, we must reform our banks for the future so it doesn’t happen again”.
  • Labour will create a compulsory jobs guarantee paid for by repeating the tax on bankers’ bonuses.
  • Increase the bank levy to expand free childcare to 25 hours a week.
  • Labour want “proper competition in banking and energy markets”.
  • The creation of a British Investment Bank “so businesses can get the finance they need”.

The full speech can be read here.

Chuka Umunna’s speech to Labour Party conference

Mr Umunna focused on jobs and discussed how a Labour Government would ensure that working people are valued and have a higher standard of living.

Core message:“The next Labour Government driving purpose is this: jobs – better paid, more secure jobs in every part of our nation”

Key points:

  • Majority of people living in poverty in the UK actually have a job.
  • 1.3 million people working part-time as they can’t find a full-time job.
  • There are over 1.4 million zero hour contracts.
  • Employees, trade unionists and government need to work together to ensure that everyone has a stake in their future and has a decent job.
  • Labour will increase the value of the National Minimum Wage and incentivise employers to pay the living wage, whilst banning zero hour contracts.
  • Mr Umunna highlighted Labour’s Agenda 2030 which includes plans to support business, grow the economy and earn the way to a higher standard of living.
  • He reasserted Labour’s commitment to the EU stating that it was important to “work to reform our largest market and gateway to the rest of the world”.
  • Wants to build an “economy built on all our talents which means having a job means having a decent life”.

The full speech can be read here.

HMT launches consultation on benchmarks

HM Treasury has announced a consultation on extending the new legislation the government put in place to regulate LIBOR to cover further benchmarks.

The Government is consulting on extending the legislation to the following seven major benchmarks:

  • Sterling Overnight Index Average (SONIA) and the Repurchase Overnight Index Average (RONIA)
  • WM/Reuters 4pm London Fix
  • ISDAFix
  • London Gold Fixing and the LMBA Silver Price
  • ICE Brent futures contract, traded on the ICE Futures Europe (IFEU) exchange

The consultation will run from 25 September to 23 October 2014. As part of the consultation process, the Government will hold targeted industry roundtables with affected parties.

The Government intends to have the new regime for the designated benchmarks in place by the end of the year, and will continue to engage in ongoing international discussions on improving the integrity of all benchmarks.

The consultation paper can be read here.

The Chancellor asked the Review to recommend a list of additional major benchmarks across the FICC markets that should be brought into the regulatory framework originally implemented in the wake of the LIBOR misconduct scandal. The report on these recommendations can be read here.

The draft statutory instruments can be read here.

Vince Cable speech

At an event to promote the British Business Bank, the Business Secretary announced a Government scheme which aims to cut the amount of capital smaller lenders have to hold, thereby allowing them to lend more and grow their market share. The FT explained that from October the British Business Bank will guarantee some loans made to smaller businesses, aiming to focus on underpinning finance deals offered by challenger banks.

FCA letter to TSC

The Treasury Select Committee has published a letter dated 26 June 2014 from Sean Martin, General Counsel of the FCA. The letter outlines the reasons why certain loans which are similar to IRHPs fall outside of the FCA’s regulatory remit.

The full letter can be read here.

BIS Committee inquiry

The BIS Committee announcedan inquiry into the Government’s programmes of support for business.

The inquiry will concentrate on:

  • The Regional Growth Fund;
  • Funding for Lending; the Business Bank and the Green Investment Bank;
  • The Manufacturing Advisory Service; and
  • Government support for exports.

The Committee will also consider the funding and support provided to Local Enterprise Partnerships as part of the inquiry.

Written submissions are invited by close of business on Friday 17 October 2014.

Key dates for the week ahead:

28 September – 1 October

Conservative Party conference

28 September

BBA / European Commission fringe panel: The road to European Growth

Date: Sunday, 28 September
Time: 7.30pm – 9.00pm
Venue: The ICC Hall 8A (please note this is inside the secure zone)

Speakers:

  • Chair: Jacqueline Minor, Head of Representation, European Commission Representation in the UK
  • Paulina Dejmek Hack, Deputy Head of Cabinet of Vice-President Michel Barnier
  • Anthony Browne, Chief Executive, BBA
  • Simon Walker, Director General, IoD
  • Oliver Wall, HSBC Regional Head of Political Engagement, Europe

29 September

Chancellor George Osborne addresses the Conservative Party conference

30 September

BBA fringe panel: Challenges and change: banking over the next five years

Date: Tuesday, 30 September
Time: 8.00am – 9.45am (the debate will begin at 8.30am)
Venue: The ICC Hall 11A (please note this is inside the secure zone)

Speakers:

  • Chair: James Quinn, Executive Business Editor, The Daily Telegraph
  • Charlie Elphicke MP, PPS to Iain Duncan Smith
  • Victoria Raffé, Director of Authorisations, Financial Conduct Authority
  • Kay Swinburne MEP – Economic and Monetary Affairs Committee member
  • Dr Gerard Lyons, Chief Economic Advisor to Boris Johnson, Mayor of London
  • Anthony Browne – Chief Executive, BBA

1 October

Prime Minister David Cameron delivers his speech at Conservative Party conference

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This week in Brussels https://www.bba.org.uk/news/banking-matters/this-week-in-brussels-13/ https://www.bba.org.uk/news/banking-matters/this-week-in-brussels-13/#comments Fri, 26 Sep 2014 13:49:32 +0000 https://www.bba.org.uk/?post_type=news&p=30388 Read More]]> ECON exchange of views with Commissioner Barnier

On Monday, Commissioner Barnier made what most likely is his last appearance before the ECON Committee for an exchange of views with the MEPs. Looking back to the regulatory agenda of the last five years, Michel Barnier noted that there were still three remaining challenges.

The first challenge is proper implementation of the EU reforms for the financial sector. The Commission’s work on the level two measures is not only very voluminous but also crucial. He welcomed the MEPs’ commitment to get involved and scrutinise the implementing measures. On CRD IV and the Liquidity Coverage Ratio (to be expected in October) he noted that would suggest adjustments to the Basel rules to accommodate Europe’s idiosyncrasies, and to facilitate funding for the real economy. He promised to identify high quality securitisation and treat mortgage debts, loans for SMEs, and consumer debts positively. On banks’ contributions, he highlighted the need to minimise the burden on small banks albeit ensuring everyone’s contribution.

The second challenge is to continue the work on the ongoing reforms. In this regard, he mentioned that the Bank Structural Reform proposal was the “keystone of bank reform”.

Finally, he identified as the third and last challenge the need to keep regulations up to date with markets. He insisted on constant evaluation of legislation.

MEPs largely praised Commissioner Barnier’s work and especially raised questions on the banks’ contributions to the Single Resolution Fund. This discussion continued the following day with Deputy Director General Olivier Guersent. The debate focused on issues such as the treatment of institutional protection schemes and the netting of derivatives.

ESAs Chairmen in ECON

ECON MEPs held three simultaneous hearings on Tuesday with the Chairmen of the three European Supervision Authorities (ESAs): Andrea Enria, Chairman of the European Banking Authority (EBA) and chair of the Joint Committee of the three ESAs, Gabriel Bernardino, Chairman of the European Insurance and Occupational Pensions Authority (EIOPA) and Steven Maijoor, Chairman of the European Securities and Markets Authority (ESMA).

All three looked back at the actions conducted by the three authorities since they started their supervisory activities last year. Most notably, Enria detailed the progress made on the Single Rulebook. Steven Maijoor announced that ESMA had finalised 22 technical standards over the last 12 months and was engaged as much as possible with the relevant stakeholders. He highlighted his authority’s current work in assessing the 800 answers to the MIFiD consultation.

MEPs were mainly concerned about how the budget constraints on the ESAs would involve a prioritisation of tasks, and how this could affect the credibility of the European institutions.

EBA Guidelines and Consultations

EBA published this week the final Guidelines on recovery and resolution, specifying the type of tests, review or exercises that may lead to extraordinary public support measures for institutions in the banking sector. These Guidelines aim at promoting a consistent and coherent approach to bank resolution across the European Union and will be part of the Single Rulebook.

On recovery planning, resolution planning and resolvability assessments under BRRD, the EBA further launched this week two consultations on its draft Guidelines and Implementing Technical Standards.

Key dates for the week ahead:

29 September

Council Working Group meeting on Payment Services Directive II

30 September

Council Working Group meeting on Securities Financing Transactions

1 October

European Parliament: Lord Hill’s hearing in ECON

Council Working Group meeting on Insurance Mediation Directive II

2 October

European Parliament: Pierre Moscovici’s hearing in ECON

Council Working Group meeting on Anti-Money Laundering

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