BBA https://www.bba.org.uk The voice of banking Fri, 24 Oct 2014 19:33:00 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 Looking ahead to the European stress tests https://www.bba.org.uk/news/bba-voice/looking-ahead-to-the-european-stress-tests/ https://www.bba.org.uk/news/bba-voice/looking-ahead-to-the-european-stress-tests/#comments Fri, 24 Oct 2014 15:00:10 +0000 https://www.bba.org.uk/?post_type=news&p=32617 Read More]]> I am looking forward to the results of the comprehensive assessment on Sunday at 1100GMT (remember the clocks go back on Sunday) which will hopefully draw a line under concerns about the health of European banks and do a lot to reinforce trust and confidence in the sector, leaving them better placed to provide loans to the real economy.

The assessment has two parts; an asset quality review ahead of the European Central Bank (ECB) taking over responsibility for the supervision of the 128 largest eurozone banks next month and the European Banking Authority coordinated stress covering 124 EU banks, including four from the UK.

The purpose of the asset quality review is to ensure that banks are correctly valuing their loans but the more important element of the comprehensive assessment is the EBA’s stress test that will gauge banks’ ability to survive a sharp economic downturn, based on consistent and comparable methodology.

In parallel the Bank of England is stress testing the UK’s eight largest banks and building societies using a UK variant of the EBA stress test assumptions that include a 35% fall in UK house prices, although it  is important to  understand that this is not a prediction of what could happen to house prices in the future. The results of this stress test will be released in mid-December.

A couple of observations about the results on Sunday.

Firstly, we should look through the headline results to the more detailed numbers, just as when I was taught credit analysis I was encouraged to look at the notes to the financial statement rather going straight to the profit and loss account. This is because the EBA stress tests have been undertaken on the basis of each bank’s year end 2013 balance sheet which could introduce inconsistencies depending on the national discretions applied in their preparation, for instance in relation to the definition of capital.  But the EBA is also requiring banks to publish their ‘end point’ capital based on fully CRDIV/CRR compliant capital definitions which will strip out national differences and enable apples to be compared with apples.

The second important point to note is that it will not be possible to extrapolate from the comprehensive assessment the likely UK bank results under the Bank of England’s stress test. There are a couple of reasons for this. Firstly the UK stress test overlays the UK variant stress on the baseline EBA economic scenario but more importantly the UK approach is a dynamic one, in comparison to the EBA’s static approach. Rather than being frozen at the year end 2013 balance sheet the UK approach will take in to account management actions that will influence how balance sheets are projected to evolve over the three year time frame of the stress test.

So rather than leaping to conclusions about the results of the comprehensive assessment the diligent analyst will thoughtfully consider the wealth of information – 12,000 data points for each bank – in order to make like for like comparisons. And despite this wealth of information it won’t be possible to derive results to the UK stress test – to seek to do so would be like comparing apples with cauliflowers.

PS – my colleagues at the European Banking Federation have produced this helpful factsheet for anyone who wants a bit more information.

]]>
https://www.bba.org.uk/news/bba-voice/looking-ahead-to-the-european-stress-tests/feed/ 0
This week in Westminster https://www.bba.org.uk/news/banking-matters/this-week-in-westminster-17/ https://www.bba.org.uk/news/banking-matters/this-week-in-westminster-17/#comments Fri, 24 Oct 2014 14:37:14 +0000 https://www.bba.org.uk/?post_type=news&p=32613 Read More]]> Treasury Select Committee

The Prudential Regulation Authority (PRA) gave evidence to the Treasury Select Committee. The witnesses were:

  • Andrew Bailey, Deputy Governor, Prudential Regulation, Bank of England and Chief Executive, Prudential Regulation Authority
  • Iain Cornish, Non-Executive Director, Prudential Regulation Authority
  • Charles Randell, Non-Executive Director, Prudential Regulation Authority

Topics of discussion included the senior managers’ regime, ring-fencing, fines, remuneration, the leverage ratio, stress tests, cyber threats, Too Big To Fail and the bank levy.

Key points:

Senior managers’ regime

  • Chair Andrew Tyrie MP asked why the PRA had “cast its net” more narrowly than the FCA.
  • Mr Bailey said he wanted to establish clear presumption of responsibility, and to focus on those who were in charge of implementing an ethos within an institution.
  • He added that he had received a lot of comments about boards and non-executive directors having greater burden of responsibility. He said that some board positions carried responsibility as against “the generality of non-executive directors”.
  • However, he warned that it should be balanced with not turning them into “fulltime servants of the institution”.
  • On criminal sanctions, Mr Bailey said that he would rather that such a severe action be kept as a last resort.

Ring-fencing

  • Mr Bailey said that the PRA recognised the banks’ protestations that there remained unknowns, but wanted to offer a “sensible steering” about whether matters were on the right track.
  • On electrification, he felt that it was fairly well understood, even though it was unpopular. He added that this would be part of a separate consultation. [Mr Bailey was unclear about whether there would be one or two more consultations on ring-fencing].
  • Pressed on the possibility of full separation, Mr Bailey said that he did not support this view as ring-fencing fitted in with the logic of both the Vickers Commission and PCBS.
  • Mr Bailey noted that the capital requirements for ring-fenced banks would emerge from Basel III and CRD IV, and that the leverage ratio will come out of the work that the FPC is currently consulting on.

Fines

  • There needs to be strong co-ordination between regulators if fines have prudential implications in order to maintain financial stability.
  • Mr Bailey said that he is often told that fines do not have the intention to make firms fail, but nevertheless he would like to see stronger co-ordination.
  • He added that it was false that US regulators impose higher fines on foreign banks than US banks, but stated that the issue becomes inflated as banks need access to dollar clearing to do international business.
  • Mr Bailey said that he was aware that heavy fines were stopping banks becoming involved in developing countries, but could not tell the Committee how pervasive it was.

Remuneration

  • On deferral of bonuses, Mr Bailey warned that if the period of time had been too long, then it risked banks increasing fixed pay.
  • He added that he wanted to have a distinction between senior managers and material risk takers, but that the choice of seven and five years was not “blinding science”.
  • He said he was not surprised that allowances had come into existence, but stressed that he had not voted in favour of the EBA’s opinion, even though the EBA had said that it was a unanimous vote. He opposed the opinion as he did not want fixed costs to rise in case a bank experienced a capital shortfall.
  • Mr Bailey advised individual banks to read the opinion and decide how big the difference was between the structure of their allowances and the EBA’s opinion.
  • He suggested that it was too late for anything to change this year, and that the EBA still has to produce new guidelines to implement CRD IV.

Leverage ratio

  • In response to Mark Garnier MP, Mr Bailey said it was sensible to keep the leverage ratio “as simple as you can”. He added that the leverage ratio, risk weighted asset and stress tests revealed different things, but that the leverage ratio told the most at its simplest.
  • The Deputy Governor told the Committee that if you were to only use a leverage ratio then it would incentivise institutions to go up the risk curve.

Too Big To Fail

  • Mr Bailey agreed that there was still work to do, but pointed to the FSB’s proposals on total loss absorbing capacity due to be discussed at next month’s G20.
  • He said he was optimistic about the outcome, but that a very big implementation task was to follow.

Stress tests

  • Steve Baker MP asked whether it was acceptable for there to be only a “strong presumption” of further action in response to a failure to pass stress tests.
  • Stress tests were not a “mechanistic pass-fail” measure, Mr Randall pointed out. He said that interpreting their results required judgment.
  • Asked about suggestions that regulators with market-shifting power could end up producing “herding”, Mr Randall said that the PRA was alive to this potential difficulty.

Bank levy

  • Chair Andrew Tyrie asked if the logic behind the levy weakened if the work on resolution and ring fencing became meaningful.
  • Mr Bailey said that he was not in a position to comment on fiscal policy, but added that the UK Government wished to use the levy as the funding for the European directive on deposit protection.

House of Lords EU Sub Committee (Economic and Financial Affairs)

HSBC Chairman Douglas Flint gave evidence to the Lords EU Sub Committee on Economic and Financial Affairs, as part of the Committee’s review into the EU financial regulatory framework. Topics of discussion included a summary of reforms, the legislative process, international regulation, cost of compliance, Too Big To Fail, remuneration, politically exposed persons (PEPs) and future regulation.

Key points:

Summary of reforms

  • Mr Flint said that the new European Commission has an opportunity to reflect on the reforms in four areas:
    • Focus on the system as a whole and its design for financial institutions
    • Competitiveness of the banking system in the EU
    • How to prioritise resources in meeting reforms
    •  Actions to support growth
  • He called on regulators to imagine what they wanted the banking system to look like five years down the line, and asked how the regulatory system would be shaped in order to achieve their vision. Regulation should move away from “preventing things happening”.
  • Getting the overall picture would help regulators and enable banks to see where regulation was heading, he added.
  • Mr Flint said that he believed that regulation on different nationalities should be based on minimum standards.

Legislative process

  • Financial legislation had undergone intense review by both the Parliament and ECON committee, adding that there was particular opportunity to interact with the former.
  • Mr Flint noted that the Council of Ministers had also been very reflective, such as the UK over the FTT.
  • The ECB will become more important as it will command the highest number of globally systemic institutions.

International regulation

  • A level playing field for international regulation is a “mirage”.
  • Mr Flint stated that global coherence was most important in wholesale markets as they transcend national boundaries. Derivatives markets need to be globally coherent to avoid risk of arbitrage.
  • He highlighted the importance of the structural reform agenda becoming harmonised. Extra-territoriality had caused problems, especially with large fines.

Cost of compliance

  • Mr Flint did not give a precise figure but estimated it to be in the billions.
  • However, he admitted the industry had perhaps under-invested in compliance in the past.
  • He reaffirmed the need for banks to know where regulation was heading, and said that the real costs were when regulations were recalibrated numerous times.

Too Big To Fail

  • The HSBC Chairman wants to have a banking system where banks can fail but the impact on society is minimalized.
  • He added that this did require regulators from different jurisdictions to trust each other, but that they could not be certain that policymakers would act in the same way.
  • He said that although work had been done to reduce the probability of bank failure, it was about distributing the burden of failure rather than avoiding it.

Remuneration

  • The structure of remuneration was completely different from what it was pre-crisis, but the proposals outlined by the EU were a “retrograde step” against long term deferral.
  • He cited other industries such as technology which were well paid, and that it was hard to attract them to help with cyber security in banks due to the new pay structure.

PEPs

  • Lord Flight noted that a number of peers had experienced issues due to increased anti-money laundering rules
  • Mr Flint said that the financial system is open to significant penalties for allowing people to abuse the system. He added that it was difficult to blame the regulators, but that the penalties meant that it was a “no-brainer” for banks

Future regulation

  • Banking union will increasingly be a dominant force in shaping the EU banking market.
  • He is very supportive of it, adding that a single market requires a single banking market.
  • However the dual voting between those who are inside and outside the union is important.

Link between regulation and policy

  • Mr Flint called on regulation to be framed around policy decisions. He cited an example of the market being incentivised to invest in housing and government bonds, whilst policymakers want greater investment in business lending.
  • Continuing, he said if one wants money to go into long-term liquid assets, one must looks at what stops it e.g. Solvency II. Insurers will say that it’s down to regulation that they don’t hold these assets.

Lords Oral Question

Baroness Gardner of Parkes (Con) asked the Government whether it had any plans to encourage banks to provide bridging finance to asset-rich, cash-poor homeowners who wish to downsize, regardless of age. Lord Newby (LD), Government Treasury Spokesperson responded for the Government.

Key points:

Lord Newby

  • “In the vast majority of cases, bridging finance should not be necessary. For older people, the major constraint to downsizing is often the lack of appropriate alternative accommodation.”
  • “There is a problem with how banks deal with older people who are looking to move, but it has nothing to do with bridging finance in most cases. It is simply about transferring the mortgage from one property to another.”
  • “The mortgage market review suggested that banks should have some discretion in those circumstances so that people would be able to remortgage on the same terms that they had before, but in some cases banks are interpreting this in a very rigid way.”
  • “The FCA is reviewing the way the mortgage market review rules operate, and I hope that there will be some movement there”

Baroness Gardner of Parkes

  • “Older people are having major problems because where, years ago, bridging finance would have been available to anyone—particularly if they had big equity in a house and were moving to a less expensive house—there is now a strict age limit. In some cases, some of the banks I rang said it is 65.”

Lord Flight

  • “Some banks are now refusing to provide mortgage loans to anyone over 70. It is very well to say that banks can exercise discretion here, but when they are told by the regulator that that is what the regulator wants, not surprisingly they want to protect themselves”
  • “The regulator needs to be advised to make it clearer that it wants to see banks use their initiative.”

The full debate can be read here.

Ministerial Questions

Ministers answered questions on repossession orders, financial education, savings accounts, financial crime, homes secured against bank loans, Credit data and business lending.

Legislation

Amendments to the Serious Crime Bill to be moved on Report [Supplementary to the Marshalled List] have been published here. The Bill will continue its Report Stage on Tuesday 28 October 2014.

The full Hansard transcript of the Small Business, Enterprise and Employment Bill’s fifth, sixth, seventh and eighth Committee Stages are available online.

Amendments to the Deregulation Bill to be moved in Grand Committee have been published here. The Bill will continue in Committee Stage on Tuesday 28 October 2014.

Key dates for the week ahead:

28 October

House of Commons: Treasury Select Committee – Proposals for further fiscal and economic devolution to Scotland

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

29 October

House of Commons: European Scrutiny Committee – UK’s Commissioner-designate Lord Hill

]]>
https://www.bba.org.uk/news/banking-matters/this-week-in-westminster-17/feed/ 0
This week in Brussels https://www.bba.org.uk/news/banking-matters/this-week-in-brussels-17/ https://www.bba.org.uk/news/banking-matters/this-week-in-brussels-17/#comments Fri, 24 Oct 2014 14:32:43 +0000 https://www.bba.org.uk/?post_type=news&p=32610 Read More]]> Juncker’s Commission approved in Parliament

After weeks of confirmation hearings, the European Parliament in Strasbourg voted and approved the Commission College by 423 to 209 with 67 abstentions. The vote directly followed Jean-Claude Juncker’s presentation of his new Commission and a debate with MEPs. During his presentation, Juncker confirmed further portfolios changes. Notably, the Hungarian Commissioner Tibor Navracsics saw ‘citizenship’ removed from his remit while Frans Timmermans’ responsibility was extended to ‘sustainable development‘. This was in response to S&D MEPs’ ask to supervise Spanish Commissioner for energy and climate Miguel Arias Cañete.

Group leaders then took the floor. Manfred Weber (EPP), Gianni Pittella (S&D) and Guy Verhofstadt (ALDE) confirmed their political groups’ support for the new Commission. Syed Kamall – representing the third largest group in the EP – said that even though the ECR welcomed the proposed cutting of red tape and Frans Timmerman’s role for better regulation, his group would abstain from the vote due to the track record of some of the Commissioners. The GUE/NGL, Greens, and EFDD groups clearly stated they would reject the new Commission.

The College now needs to be formally confirmed by the Council. Commissioners will then be sworn for five years in front of the European Court of Justice so that, on 1 November, the Juncker Commission can officially take office in Brussels, as initially planned.

Comprehensive Assessment

On Sunday 26 October at 11 am GMT the European Banking Authority (EBA) is issuing the results of its EU-wide stress tests. This exercise, carried out by national authorities and coordinated by the EBA, looks at 124 banks’ balance sheets in 22 Member States, including non-Eurozone countries. It is also part of the wider comprehensive assessment conducted by the European Central Bank, that will issue its asset quality review (AQR) results simultaneously on Sunday.

This health check will cover banks’ composition of capital, risk weighted assets (RWAs), profit and loss (P&L), exposures to sovereigns, credit risk and securitisation. The EBA will also disclose a fully loaded CRR/CRD4 Common Equity Tier 1 (CET1) capital ratio for each bank.

For the last week, media has been heavily speculating on the comprehensive assessment’s results which triggered an ECB press release dismissing all rumours.

In the UK, the Bank of England will also conduct its own stress tests, the results of which will be announced on 16 December.

EFDD reforms

Following last week’s defection of Iveta Grigule, a Latvian MEP, the EFDD collapsed. Nigel Farage however announced this week that his group was able to reform. To exist, a political group needs at least 25 MEPs from at least seven Member States. Ms Grigule’s departure left the EFDD with only six represented countries.

Polish MEP Robert Jaroslaw Iwaszkiewicz, a member of a very controversial right-wing party (Polish Congress of the New Right), joined Mr Farage’s group which triggered its immediate revival.

Key dates for the week ahead:

26 October

EBA/ECB: publication of comprehensive assessment results

27 October

Council Working Group meeting on Securities Financing Transactions

28 October

Council Working Group meeting on Banking Structural Reform

30 October

Council Working Group meeting on Money Market Funds

31 October

Council Working Group meeting on Benchmarks

]]>
https://www.bba.org.uk/news/banking-matters/this-week-in-brussels-17/feed/ 0
Forward Look https://www.bba.org.uk/news/banking-matters/forward-look-15/ https://www.bba.org.uk/news/banking-matters/forward-look-15/#comments Fri, 24 Oct 2014 14:30:12 +0000 https://www.bba.org.uk/?post_type=news&p=32604 Read More]]> Weekend:

EBA/ECB: publication of comprehensive assessment results (Sunday)

Monday:

FCA / HMT/ Bank of England: Fair and Effective Market Review consultation to be published

Council Working Group meeting on Securities Financing Transactions

Tuesday:

House of Commons: Treasury Select Committee – Proposals for further fiscal and economic devolution to Scotland

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

Council Working Group meeting on Banking Structural Reform

Wednesday:

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

House of Commons: European Scrutiny Committee – UK’s Commissioner-designate Lord Hill

Thursday:

Council Working Group meeting on Money Market Funds

US Bureau of Economic Analysis: Q3 GDP (advance estimate)

Friday:

Bank of England: Record of Financial Policy Committee meeting held on 15 October 2014

Council Working Group meeting on Benchmarks

]]>
https://www.bba.org.uk/news/banking-matters/forward-look-15/feed/ 0
BBA Brief – 24 October 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-24-october-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-24-october-2014/#comments Fri, 24 Oct 2014 09:02:47 +0000 https://www.bba.org.uk/?post_type=news&p=32564 Read More]]> Lending stats show housing market slowdown

The BBA’s High Street Banking Stats for September – which show a cooling in the housing market – were reported in many of the papers this morning. The FT (£, p4) considered the figures alongside the CBI’s industrial trends survey and GDP figures and wrote that that they gave the impression “the speed of economic growth in the UK is moderating”. The Telegraph (p3) wrote: “Some experts have said that the housing market appears to be reaching the end of a cycle of strong price growth which has taken place as the economy has picked up and consumer confidence has shown signs of returning”. CityAM (p5) reported that the fall in approvals could be down to the Mortgage Market Review which requires lenders to gather much more information about prospective borrowers, stating that: “Economists have speculated that it could severely hit housing demand.”

Richard Woolhouse, Chief Economist at the BBA, said: “A year ago there were many of us who were concerned by the heady pace of property price rises. Today’s figures suggest we are now experiencing a steadier housing market and that’s no bad thing. There’s also some encouraging growth in business lending amongst manufacturers and retailers which is pleasing to see”.  Read the full release here.

Bank of England plans to avoid bailouts

The Bank of England has laid out its plans to avoid future bank bailout scenarios in the event of another financial crisis. The new rules, to come into effect next year, mean that a bank’s creditors would need to absorb losses of at least 8% of total liabilities before any public support could be provided. Before that point is reached bondholders would be exposed to losses – referred to as “bail in” (Telegraph, p1). Other measures outlined by the BoE include powers to step in and take control of a failing bank over a 48 hour period – usually a “resolution weekend” – including the right to sack bank bosses on the spot and replace them with external executives (Times, £, p50). A bank could also be ordered to sell-off assets or transfer customers elsewhere. Andrew Gracie, executive director of resolution at the Bank of England, said: “The failure of these firms should have the same impact as that of the failure of any other institution – the rest of the system is not impacted and taxpayers do not bear the cost.”

The FT (£, p3) reports on the struggle to find a suitable cross-border strategy to maintain stability in the face of an international crisis.

Firms more diligent in reporting insider trading

The Times (£, p53) features figures from the FCA that show a quadrupling in the number of reports of suspicious activity since 2008. As firms respond to closer scrutiny a total of 1,912 tip-offs were made in 2013 compared to 558 in 2008. The regulator says that not all reports of insider dealing were found to be suspicious and that some activity was reported multiple times.

Stat of the day

Mortgage approvals in September were 10% lower than a year ago (BBA High Street Banking)                                                                                                                                

Today’s diary

ONS: Q3 GDP (first estimate)

European Council

In brief

The BBC reports that TSB is picking up more new customers than expected, with one in ten choosing the bank.

In the context of shift in focus to digital banking at Lloyds Banking Group, the International New York Times (p16) quotes BBA The Way We Bank Now figures, including the 40% rise in the use of online banking between 2009-13.

The Serious Fraud Office has asked the Treasury for 75% more funding in order pursue high profile investigations into corruption and the rigging of financial benchmarks (Mail, p87)

What the commentators say

In the Telegraph (p2) Allister Heath reflects upon the notion of bailouts as used during the financial crisis, and hopes that new measures from the Bank of England will convince the public that they are a thing of the past and that “financial capitalism has once again been made fair and free.”

In CityAM (p32) Jeremy Hazelhurst argues that family run firms like Santander are a good mechanism for getting more women in senior city positions.

In the FT (£, p11) Gillian Tett considers the US phenomenon of “jingle mail” (where homeowners post the keys of their properties to lenders in order to escape debt), home loan default and prospects for borrowers seemingly trapped in debt.

]]>
https://www.bba.org.uk/news/bba-brief/bba-brief-24-october-2014/feed/ 0
BBA Brief – 23 October 2014 https://www.bba.org.uk/news/bba-brief/bba-brief-23-october-2014/ https://www.bba.org.uk/news/bba-brief/bba-brief-23-october-2014/#comments Thu, 23 Oct 2014 09:08:25 +0000 https://www.bba.org.uk/?post_type=news&p=32510 Read More]]> Housing market steadies as approvals fall

The BBA’s September High Street banking statistics provide further evidence of a cooling housing market, with approvals for new mortgages down 10% on levels seen last year. Approval levels of re-mortgages and equity release were also lower. The release also show that net lending to a range of business sectors – including retailers, wholesalers and manufacturer – has been growing consistently.

Richard Woolhouse, the BBA’s Chief Economist, said: “A year ago there were many of us who were concerned by the heady pace of property price rises. Today’s figures suggest we are now experiencing a steadier housing market and that’s no bad thing.” The release can be read here.

Lloyds to unveil new digitally focused strategy

The FT (p21) reports that Lloyds Banking Group will launch a three-year strategy to put mobile and internet banking at the heart of its business at its third-quarter results next week. The paper suggests the plan will lead to 9,000 job cuts - a 10% reduction in the group’s current head count.  The bank already has 10 million users of internet banking services, including 4.5 million mobile banking customers. To read the BBA’s work on the take-up of digital banking click here.

Smaller banks deliver strong growth

The FT (£, p22) reports that Metro Bank has increased the number of its customers by 71% in just one year. Meanwhile, CityAM (p7) reports that Handelsbanken, the Swedish lender, has more than doubled business deposits in the past 12 months to £6.5 billion. Read the BBA’s report of the new generation of competitors shaking up the banking industry here.

ECB attacks claims 11 banks will fail stress tests 

The European Central Bank has dismissed press reports that 11 banks from six countries will fail stress tests to be published this weekend: Telegraph (B1). The Spanish newswire EFE suggested that Greece and Italy both had three banks unexpected to be given a clean bill of health, alongside others from Austria, Cyprus and Belgium. In all, 130 organisations will be vetted by the ECB, with the results published at noon on Sunday. The ECB stressed that the reports were “speculation”.

Bailey acknowledges allowances may be paid this year

The chief executive of the Prudential Regulation Authority has acknowledged that banks may not heed guidance from the European Banking Authority over role-based allowances, the FT reports. While giving evidence to the Commons Treasury Select Committee, Andrew Bailey said: “It is too far into this year as a matter of good practice to change anything.”  Mr Bailey has previously said that the debate about bankers’ remuneration is “misguided” and that variable pay is an important element of earnings.

Today’s diary

BBA: High Street Banking stats

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

European Council

European Commission: Final vote on Commission College

Stat of the day

3.5% – the annual growth rate of personal deposits by Britain’s savers. BBA.

In Brief 

The pound fell against the dollar after minutes of the latest meeting of the Bank of England’s Monetary Policy Committee suggested there was “insufficient evidence” to prompt an interest rate rise. BBC.

A Commons Treasury Select Committee report into the problems at Co-operative finds fault with regulators, auditors as well as senior bank staff. Telegraph (B2).

The FT (p15) reports that Mohamed El-Erian, a former chief executive of Pimco, is moving into the peer-to-peer lending industry by taking a leading stake in the online platform Payoff. Read BBA’s Irene Graham on the rise of P2P lending.

House building in the UK is now higher than at any point since 2007, according to figures from the National House Building Council reported in the Guardian (p34).

Bank of New York Mellon’s Hong Kong unit is launching a wealth management strategy, following a tranche of US banks seeking to expand fee-based services. FT (£, p20). Read the BBA’s report on the UK private banking and wealth management here.

Research by Deutsche Bank reported in the Times (£, p53) suggests that Europe is braced for a wave of shareholder activism over the next five years.

What the commentators say

Alex Brummer, in the Daily Mail (p87), argues that “regulators, enforcers and prosecutors” should take a tougher line with executives that damage their institutions – or risk losing public confidence.

Robert Peston of the BBC suggests that transferring more fiscal and financial powers to cities might make our nation richer.

In the Telegraph (B2) Ben Wright argues that the new Senior Persons Regime could actually make bankers less responsible and accountable.

Money Marketing’s Sam Dale (p4-7) asks if the Money Advice Service is being “erased from Treasury thinking” and discusses the future of the organisation.

Chris Giles (FT, p11) admits that keeping interest rates on hold is a “high stakes” experiment.

]]>
https://www.bba.org.uk/news/bba-brief/bba-brief-23-october-2014/feed/ 0
September 2014 figures for the high street banks https://www.bba.org.uk/news/statistics/september-2014-figures-for-the-high-street-banks/ https://www.bba.org.uk/news/statistics/september-2014-figures-for-the-high-street-banks/#comments Thu, 23 Oct 2014 08:29:30 +0000 https://www.bba.org.uk/?post_type=news&p=32493 Read More]]> Richard Woolhouse, Chief Economist at the BBA, said:

“A year ago there were many of us who were concerned by the heady pace of property price rises.

“Today’s figures suggest we are now experiencing a steadier housing market and that’s no bad thing.

“There’s also some encouraging growth in business lending amongst manufacturers and retailers which is pleasing to see.”

statssept14

Please read the full release and excel tables via the links below.

]]>
https://www.bba.org.uk/news/statistics/september-2014-figures-for-the-high-street-banks/feed/ 0
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.

]]>
https://www.bba.org.uk/news/bba-brief/bba-brief-22-october-2014/feed/ 0
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

]]>
https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/bank-supervision/bba-responds-to-eba-o-sii-paper/feed/ 0
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.

]]>
https://www.bba.org.uk/policy/financial-and-risk-policy/prudential-capital-and-risk/bank-supervision/bba-responds-to-eba-srep-paper/feed/ 0