BBA https://www.bba.org.uk The voice of banking Wed, 22 Oct 2014 21:35:47 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 BBA Brief – 22 October 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-22-october-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-22-october-2014/#comments Wed, 22 Oct 2014 08:48:58 +0000 https://www.bba.org.uk/?post_type=news&p=32411 Read More]]> European bank resolution fund plan unveiled

France’s banks will pay the biggest bill for Europe’s banking union, and expect to contribute up to €2 billion (£1.6 million) more than Germany’s lenders towards a new €55 billion bank resolution fund, the FT writes (£, p8). Yesterday the European Commission unveiled plans to set contributions to the fund handling bank failures, which favours the hundreds of small and medium-sized lenders in Germany and Spain. Documents seen by the FT suggest that France will contribute €17 billion over eight years, representing almost 30% of the fund, while Germany will pay in about €15 billion, or 27%.

Warning on impact of new regulations

Douglas Flint, HSBC’s chairman, has warned that excessive regulations risk squeezing growth out of the global economy, CityAM reports (p2). Mr Flint said that regulators are so focused on stability that they are stopping banks from taking the risks that they need to lend to firms, creating jobs and growth. Giving evidence to the Lords EU Subcommittee on Economic and Financial Affairs yesterday, Mr Flint also attacked the “retrograde” bonus cap enforced by the EU and said restrictions on banker pay made it difficult to compete with other industries (Telegraph, B4).

Poland “in no rush” to join banking union

The FT (£, p8) writes that Marek Belka, Poland’s central bank governor, has criticised the Eurozone’s new banking union and argues that it would centralise powers to curb boom and bust that are better left to individual member states. Mr Belka said Poland was in “no rush” to join the scheme and there was no need for regulators in Warsaw to be replaced by counterparts in Frankfurt.

Doubt cast on government tax cut pledge

The Chancellor’s promise of tax cuts in the next parliament was left in doubt yesterday after it was revealed that the Treasury borrowed £11.8 billion to plug the gap between spending and tax receipts in September, the FT (£, p1) reports. The paper says in spite of Britain’s vigorous economic recovery, lower than expected income tax caused George Osborne to borrow £1.6 billion more than in the same month last year. The Guardian (p25) adds that news has lessened the chances of a pre-election giveaway at the Autumn Statement on 3 December.

It quotes a Treasury spokesman, who said that the Government’s long-term economic plan was working, with the UK economy growing faster than that of its G7 peers.

Today’s diary

Bank of England: Minutes of the Monetary Policy Committee meeting held on 8 and 9 October 2014

Bank of England: Agents’ Summary of Business Conditions – October 2014

House of Commons: Treasury Select Committee – Prudential Regulation Authority: Annual Report and Accounts 2013-14

European Parliament: Final European Parliament vote on Commission College

Stat of the day

Crowdfunding appears to be doubling every 60 days – FT (£, p12).

Latest from the BBA

Did you know there are new ways to prepare your business for growth? The BBA’s Irene Graham looks at the increasing popularity of alternative finance for small and medium-sized enterprises.

In brief

The Daily Express (p36) warns about the dangers of cybercrime, and quotes figures from Get Safe Online who say that internet fraud costs the UK an estimated £670 million a year. Read more about the BBA’s “Know Fraud, No Fraud” campaign.

The Chancellor is considering allowing local authorities in the North to keep a greater proportion of the revenues raised from business rates in their area, according to the Telegraph (£, B1).

The FT (£, p30) says a rule requiring banks to retain some credit risk when selling mortgages and loans has been approved by US regulators.

Moya Greene, chief executive of Royal Mail, has called for tougher action to get talented women to the top of businesses, and demanded improved childcare to help them succeed, the Independent reports (p47).

The Times (£, p2) reports that Liberal Democrat manifesto pledges have been leaked, and documents show that the party will make clearing the deficit by 2018 and increasing the income tax threshold to £12,500 “red-line issues” in any Coalition negotiations.

What the commentators say

Writing in the FT (£, p12), entrepreneur Luke Johnson describes crowdfunding as a “revolution” taking place in the financing of small companies that solves the problem of lack of capital for businesses.

In the Telegraph (B2), Jeremy Warner claims that that the EU is “paralysed by political division, racked by high levels of unemployment and economically floored by dysfunctional monetary union”.

Also writing in the Telegraph, (B2), Allister Heath says in the main, the rebalancing of private and public sector has gone well for the Chancellor but warns that productivity remains stagnant, causing wages to fall in real terms.

In the Times (£, p43) Ed Conway says with gross domestic product running at an annual rate of 3.2%, Britain is set to grow faster than any other leading advanced economy this year, and total private sector indebtedness has fallen.

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BBA responds to EBA O-SII paper https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/bank-supervision/bba-responds-to-eba-o-sii-paper/ https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/bank-supervision/bba-responds-to-eba-o-sii-paper/#comments Tue, 21 Oct 2014 16:00:42 +0000 https://www.bba.org.uk/?post_type=policy&p=32400 Read More]]> The BBA is pleased to respond to the EBA consultation paper on guidelines on the criteria to determine assessment of other systemically important institutions. Please read the full response via the link below

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BBA responds to EBA SREP paper https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/bank-supervision/bba-responds-to-eba-srep-paper/ https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/bank-supervision/bba-responds-to-eba-srep-paper/#comments Tue, 21 Oct 2014 15:54:51 +0000 https://www.bba.org.uk/?post_type=policy&p=32397 Read More]]> The BBA is pleased to respond to the EBA consultation paper on guidelines for common procedures and methodologies for the supervisory review and evaluation process (SREP). Please read the full response via the download below.

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BBA response to ESMA’s MAR CP on delegated acts https://www.bba.org.uk/policy/capital-markets-infrastructure/market-abuse/bba-response-to-esmas-mar-cp-on-delegated-acts/ https://www.bba.org.uk/policy/capital-markets-infrastructure/market-abuse/bba-response-to-esmas-mar-cp-on-delegated-acts/#comments Tue, 21 Oct 2014 15:26:53 +0000 https://www.bba.org.uk/?post_type=policy&p=32384 Read More]]> The BBA welcomes the opportunity to respond to ESMA’s consultation on draft technical advice on possible delegated acts concerning the Market Abuse Regulation (MAR).

You can find the original consultation paper and other responses here.

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BBA response to ESMA MAR technical advice consultation https://www.bba.org.uk/policy/capital-markets-infrastructure/market-abuse/bba-response-to-esma-mar-technical-advice-consultation/ https://www.bba.org.uk/policy/capital-markets-infrastructure/market-abuse/bba-response-to-esma-mar-technical-advice-consultation/#comments Tue, 21 Oct 2014 15:00:46 +0000 https://www.bba.org.uk/?post_type=policy&p=32360 Read More]]> The BBA welcomes the opportunity to respond to ESMA’s consultation on draft technical standards on the Market Abuse Regulation (MAR).

You can find the original consultation paper and other responses here.

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Firing small and medium-sized businesses https://www.bba.org.uk/news/bba-voice/firing-small-and-medium-sized-businesses/ https://www.bba.org.uk/news/bba-voice/firing-small-and-medium-sized-businesses/#comments Tue, 21 Oct 2014 14:17:22 +0000 https://www.bba.org.uk/?post_type=news&p=32366 Read More]]> Not even the most hapless of candidates in the BBC’s Apprentice would actively direct potential customers to their rivals.

If any such rookie dared to do so Lord Sugar would surely erupt with his rather tired tirade of “You’re fired”.

But banks have actually been doing something very similar for quite some time.

One of our priorities at the BBA is to devise policies that help power economic growth. Doing more to ensure that small and medium-sized enterprises (SMEs) get the right type of finance for their planned growth is a vital part of that.

New lending to these firms – rightly considered the engine room of the economy – is 27% higher than a year ago, according to yesterday’s Bank of England Trends in Lending data.

But a bank loan or overdraft is not always the best option for a business.

And while this tactic might concern a certain peer of the realm, the BBA has persistently promoted the many other options SMEs have when it comes to looking for extra funds to, say, pay for a valuable new piece of kit or warehouse.

An intriguing four-page section of yesterday’s Trends of Lending data shows some impressive rates of growth for these types of lending.

In just six months peer-to-peer business lending has grown by 50% to £280million. Invoice trading, whereby SMEs “auction” future invoices to gain earlier access to funds, has more than doubled since 2013 and  is provided through a range of both bank and non-bank funders.

Equity-based and reward-based crowd funding are also on the charge.

Why is this happening? Well, there are a number of reasons. There is now a mentoring scheme, whereby SMEs are given free support on how to run their business by current and former members of bank staff. Many banks now offer a referral scheme whereby if a SME is turned down for a loan or overdraft the bank points the applicant in the way of other organisations – including alternative finance providers – who may be willing to help.

There is still more work to be done in to ensure businesses are aware of the range of options open to them, but it is good to see that businesses are increasingly using and seeking a mix of finance options.

Alternative finance remains a modest part of lending to SMEs, but it’s good to see the momentum - and that the Bank of England to monitoring this important part of business lending.

ENDS

To find our more about alternative sources of finance visit: www.betterbusinessfinance.co.uk/

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BBA Brief – 21 October 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-21-october-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-21-october-2014/#comments Tue, 21 Oct 2014 09:01:16 +0000 https://www.bba.org.uk/?post_type=news&p=32320 Read More]]> Regulator to begin work on capital rule early

The Basel Committee on Banking Supervision will start work on the calibration of the leverage ratio next year, sooner than expected, writes the FT (£, p22). The regulator’s secretary-general William Coen said: “We are publically committed to finalising it by 2017. I think there is an appetite on the committee to start that work sooner rather than later.” The paper suggests that the finished rule could be unveiled as early as 2015, but would not be formally enforced on a global level until 2018.

BoE payments system disrupted

The Bank of England’s CHAPS (Clearing House Automated Payment System) – which underpins large transfers between bank accounts – was down for more than nine hours yesterday following maintenance work over the weekend. The system, which last year processed £277 billion of transactions per day (FT, £, p1), had its opening hours extended to 8pm in order to complete delayed payments. The Times (£, p11) reports on the impact on house purchases, stating that “thousands of buyers were unable to get into their homes until today because of the disruption to their chains.”

Treasury Select Committee Chair Andrew Tyrie MP said: “The whole economy depends on a reliable payments system. We need to have confidence that the cause has been found and addressed” (Guardian, p3). Bank of England Deputy Governor Nemat Shafik will lead a review into the cause of the breakdown and the effectiveness of the Bank’s response.

Cunliffe warns on bankers’ pay

Sir Jon Cunliffe, Deputy Governor for Financial Stability at the Bank of England, said yesterday that bankers’ wages have failed to reflect a decrease in returns for shareholders since the financial crash, writes the FT (£, p2). He told a Chatham House conference that returns on equity seen before 2007 are unlikely to return, and that “in the new world, pay bills may well have further to adjust”. Sir Jon noted that since the crisis “employees have received a larger share of a smaller pie relative to shareholders” (Guardian, p19). He also stated that banks’ business models will change due to “lower levels of leverage, higher liquidity and the removal of the implicit taxpayer subsidy” (Times, £, p41).

Stat of the day

Gross mortgage lending totalled £17.8bn in September (CML)

Today’s diary

House of Commons: Small Business, Enterprise and Employment Bill – Committee Stage

House of Commons: Treasury Select Committee – UK Financial Investment Ltd

House of Lords: Lords EU Sub Committee (Financial and Economic Affairs) – Review of the EU Financial Regulatory Framework

Council Working Group meeting on Insurance Mediation Directive II

OBR: Public sector finances (September 2014)

In brief

The FT (£, p6) writes that the European Central Bank has started to buy covered bonds, as part of its latest programme to avoid economic stagnation.

Lloyds Banking Group will today launch a £50 million Housing Growth Fund to help small and medium-sized house builders. (Mail, p69)

The Council of Mortgage Lenders (CML) states that the housing market is “sitting on a plateau” as gross mortgage lending fell by 1% in September compared with the previous month, reports the BBC.

CityAM (p1) reports that the Banking Standards Review Council “risks flopping before it even launches” as a number of investment banks consider not taking part.

Nigel Farage’s EFFD group says that Polish MEP Robert Iwaszkiewicz has joined its ranks, restoring the EFDD’s status. (BBC)

The FT (£, p6) reports that Federal Reserve governor Dan Tarullo has claimed that banks are not doing enough to curb malpractice and warned that they face harsher punishment if they do not improve.

Business Minister Matthew Hancock MP told a CBI event yesterday that a referendum on the UK’s membership of the EU “does not create an uncertainty, it resolves an uncertainty” for businesses. (Telegraph, B5)

US derivatives exchange IntercontinentalExchange has proposed that banks submitting rates to Libor include transactions they conduct with central banks, according to the FT (£, p34).

What the commentators say

Martin Arnold argues in the FT (£, p20) that although banks must invest in digital services, they should remember what customers want. He uses BBA figures which show that footfall in branches fell by 10% last year whilst the number of transactions through mobiles doubled. However, he warns banks should not force customers online against their will.

The FT’s (£, p25) Patrick Jenkins warns that peer-to-peer lending has only been subject to low interest rates, and that “when rates rise, so will defaults”.

Robert Peston writes in the Times (£, p27) that last week’s rise in demand for government bonds may mean that investors are more pessimistic about a long stretch of prosperity and are “fearing that the new age may be altogether flatter”.

Nils Pratley agrees with Sir Jon Cunliffe that “the adjustment in pay to an era of lower returns in banking has been sluggish”. (Guardian, p20)

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BBA Brief – 20 October 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-20-october-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-20-october-2014/#comments Mon, 20 Oct 2014 09:12:48 +0000 https://www.bba.org.uk/?post_type=news&p=32253 Read More]]> Need for greater cooperation to fight cyber crime

The rising threat of cyber crime for banks is featured in a spread in the Sunday Telegraph (B6).  It notes that banks have to fend off such threats every day and that increasingly they are being targeted by organised criminals and foreign intelligence services who want to disrupt financial systems. “It’s considered retaliation, many of these attacks are at such a level that they can only be done by nation states,” says Dr Alastair MacWillson, a cyber-security expert.  The article cites a recent BBA report which calls for greater cooperation to fight the threat. Find out more about the BBA’s Financial Crime Alert Service.

Large regulatory fines continue to change bank behaviour

The FT (£, p17) looks at how many big banks are “retreating” and scaling down their global reach.  It quotes Noor Menai, chief executive of CTBC Bank USA, warning that the rise of global fines means that many banks are simply exiting from more risky markets.  “Given the almost biblical vengeance the regulators can extract from you – you have a risk heat map – it almost makes no sense to stay in those countries,” he said.  The article notes that in their place large regional banks such as Saudi Arabia’s National Commercial Bank are expanding.

In Saturday’s Telegraph (p18) Richard Dyson looked at how members of the House of Lords have complained that anti-money laundering regulations are making it more difficult for them to get banking services due to them being classified as politically exposed persons.  He accuses banks of over-zealous application of the rules, but notes that huge fines from regulators are in part responsible for driving this behaviour.

EBA threatens legal action over bank allowances

The Sunday Telegraph (B1) and the Mail on Sunday (p89) both reported on the ongoing row between UK regulators and the EU over bank bonuses.  European Banking Authority Executive Director Adam Farkas told the MoS that his organisation would be prepared to take legal action if its new guidance on allowances is ignored.  He warned: “If there is a breach of law then we have the legal power to initiate a breach of law action.” Simon Watkins argued “if genuinely tied to performance and subject to deferral and clawback, actually put the banker’s own money at risk. It means they can be held to account and, if found to have failed, to be hurt where it matters to them most… in the wallet.” (Mail on Sunday, p88). Ruth Sunderland described the EBA’s approach as “increasingly ham-fisted” in her column in Saturday’s Mail (p95).

Lynam: more change needed for challenger banks

In an interview with the Telegraph (B5), Paul Lynam, Chief Executive of Secure Trust, sets out three changes that smaller banks need to be able to grow.  He says that the Government must deal with three barriers: access to the payment systems, the higher levels of capital smaller banks must put against their loans, and the cheaper cost of borrowing that larger banks enjoy as a result of implicit government support.  The paper describes Secure Trust as “one to watch”.

Download the BBA’s Competition in Banking report.

Today’s diary

Bank of England: Trends in Lending – October 2014

Rightmove: Monthly house price figures

European Parliament in plenary session in Strasbourg

Stat of the day

703,900 – according to latest figures from TheCityUK, employment in financial and professional services in the capital reached a record high in June 2014 of 703,900.  Accounting and management consulting firms were the biggest contributors to employment growth. (CityAM, p1)

Latest from the BBA

Did you know that your credit card is protected against fraudulent transactions? The BBA’s Ian Fiddeman explains important updates to new lending code that extend this protection.

In brief

The front page of the Weekend FT reported that investors are now not expecting an interest rate rise until summer next year as Bank of England Chief Economist Andy Haldane said he was minded to keep them “lower for longer”.

The front page of the WSJE reports that Goldman Sachs may not sign up to the Banking Standards Review Council.

The FT (£, p4) reports that RBS is set to enter the peer-to-peer lending market, with a pilot expected before the end of the year.  The article also quotes RBS Chief Executive Ross McEwan speaking at last week’s BBA conference announcing that the bank will “be launching a network of eight new business accelerator hubs around the country to provide thousands of SMEs with the offer of free workspace, hands-on mentoring and a free programme of advice and support”.

The Sunday Times (£, B2) looked ahead to the release of Eurozone stress test results on Thursday, predicting that a number of European banks will be told to raise more capital.

The FCA is on track to issue a record number of “private warnings” this year according to the FT (£, p15).

Fintech companies have told the FT (£, p4) that they are struggling to get bank finance.

State Bank of India has pledged to remain in the UK market despite having to comply with ring-fencing legislation. (Times, £, p45)

What the commentators say

In the Independent (p55), David Prosser writes that “far too few small businesses currently move account provider. Much more now needs to be done to reassure these firms that moving is far easier today than it once was.”

In the FT (£, p11) TSB Non-Executive Director Philip Augar welcomes the broad thrust of banking reform in the UK but warns that the EU bonus cap could undermine the City’s competitive position.

In the Mail (p61) Professor Moorad Choudhry warns against Quantitative Easing becoming a permanent tool for central banks.

In Saturday’s Telegraph (p38) Allister Heath warned that “If Greece is the canary in the coal mine, then we are all in trouble. Interest rates on Greek debt have jumped in recent days, rocketing to around 9% on 10-year bonds, an unsustainable financing cost for such a troubled government.”

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Update to Lending Code further strengthens consumer protection https://www.bba.org.uk/news/bba-voice/update-to-lending-code-further-strengthens-consumer-protection/ https://www.bba.org.uk/news/bba-voice/update-to-lending-code-further-strengthens-consumer-protection/#comments Fri, 17 Oct 2014 15:31:33 +0000 https://www.bba.org.uk/?post_type=news&p=32240 Read More]]> The Lending Code, which sets out important protections for consumers, has undergone an important update.

From this month debt management agencies, debt collection agencies and debt purchase firms regulated by the Financial Conduct Authority will be able to subscribe to the code.

Changes have also been made to the Credit Assessment section of the code. Future changes in a customer’s circumstances or financial commitments should be considered in assessing if the customer will be able to afford and sustain credit payments.

Consumers’ liability for unauthorised credit card transactions continues to be limited to a maximum £50 (and in many circumstances there is no liability) unless customer fraud can be shown. The code has been updated to ensure greater alignment with the relevant regulatory requirements.

The Lending Code is self-regulated and sponsored by the BBA, the Building Societies Association and the UK Cards Association. It provides details of how firms are expected to deal with customers across all aspects of applying for a credit facility, and if they subsequently encounter financial difficulties.

The code applies to consumers, micro enterprises and charities with incomes of less than £1 million in the UK, and sets out minimum standards of good practice for its subscribers to adopt in their lending and debt management activities.

The Lending Code continues to support high standards and good practice, is monitored and enforced by the Lending Standards Board and helps foster a fair and competitive credit market.

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BBA response to HMRC’s consultation on Implementing the Global Standard on AEOI https://www.bba.org.uk/policy/financial-and-risk-policy/taxation/operational-tax-and-aeoi-issues/bba-response-to-hmrcs-consultation-on-implementing-the-global-standard-on-aeoi/ https://www.bba.org.uk/policy/financial-and-risk-policy/taxation/operational-tax-and-aeoi-issues/bba-response-to-hmrcs-consultation-on-implementing-the-global-standard-on-aeoi/#comments Fri, 17 Oct 2014 15:09:37 +0000 https://www.bba.org.uk/?post_type=policy&p=32231 Read More]]> The BBA has responded to the HM Revenue and Customs (HMRC) consultation ‘Implementing Agreements under the Global Standard on Automatic Exchange of Information to Improve International Tax Compliance’.

The BBA believes it is essential that there is a robust and effective global standard for automatic exchange of information. It is therefore a high priority that the UK’s implementation of the Common Reporting Standard (CRS) maintains consistency with the Standard developed at the Organisation for Economic Co-operation and Development (OECD). It is particularly important, given the UK’s leading role in the development and roll-out of the CRS globally that the UK’s approach is robust, consistent and comprehensive, as we know from the experience of the Foreign Account Tax Compliance Act (FATCA) implementation that the UK’s approach sets a precedent (or is even copied wholesale) for other jurisdictions’ implementation.

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