24th Dec 2014 Back to top
  • BBA Brief – 24 December 2014

    BBA stats show mortgage approvals have fallen to an 18-month low

    The BBA’s high street banking statistics are widely reported this morning. The figures reveal that house purchase approvals in November were 20% lower than a year before. BBC News adds that 36,717 mortgages were approved in November, the lowest for 18 months.

    The BBA’s Chief Economist Richard Woolhouse said:

    “Today’s figures show quite a sharp chill to the housing market in recent months – with house purchase approvals during November 20% lower than a year before.

    “It will be interesting to see what impact the stamp duty changes the Chancellor unveiled in his Autumn Statement will have early in the New Year. They could prove a modest stocking filler for homebuyers and estate agents.

    “It’s also striking to see that unsecured borrowing such as personal loans are growing at their fastest rate for six years. This suggests consumers may be feeling more confident which bodes well for a fruitful Christmas for retailers.”

    ONS says UK growth unchanged in Q3

    Figures released by the Office for National Statistics show that UK growth remained unchanged at 0.7% in the third quarter of 2014. The ONS also revised down its estimates for the five previous quarters, and found that the UK’s current account deficit has widened. The Guardian (p1) says the news will damage Chancellor George Osborne’s hopes of using a strengthening economy in the Conservatives’ general election strategy next May. The FT (£, p1) quotes Phillip Shaw, Investec chief economist, saying that there was “not much seasonal cheer” in the numbers and there was now “no way” the UK economy would grow by 3% overall for 2014, as previously predicted the OBR.

    Coco bond issuance doubled in 2014

    The FT (£, p26) reports that a “bumper” number of contingent convertible (coco) bonds are set to be issued by European financial institutions following record volumes this year. Coco bond issuance has more than doubled year-on-year from $15.2 billion (£9.7 billion) to $33 billion (£21.2 billion), with most deals occurring in the first half of 2014. The paper quotes Simon McGeary, managing director of capital markets at Citi, who said: “2015 will be similar; there’s still a number of fairly large institutions, such as RBS or BNP Paribas, as well as Dutch and Nordic banks who haven’t issued. You would expect that, where they can, banks will fill their capital gaps with cocos instead of common equity”.

23rd Dec 2014 Back to top
  • BBA Brief – 23 December 2014

    Manipulation of benchmarks to be a criminal offence

    Chancellor George Osborne has extended legislation covering LIBOR to seven UK-based fixed income, commodity and currency benchmarks meaning that those found guilty of manipulating them face up to seven years in jail, writes the Telegraph (p27). The Financial Conduct Authority (FCA) will start policing these benchmarks from next April. The FT (£, p26) notes that the FCA wants to make administrators of key benchmarks “responsible for identifying potentially manipulative behaviour, controlling conflicts of interest and implementing robust governance structures”. The Mail (p63) quotes FCA Chief Executive Martin Wheatley saying: “I am determined to ensure that markets work well and preserve the UK’s reputation as a centre of excellence for financial services.”

    Regulator to restrict banks’ use of ratings agencies

    The Basel Committee on Banking Standards is looking to reduce banks’ use of credit rating agencies to assess risks in their portfolios, reports the FT (£, p15). The regulator wants banks to improve their own assessments in a move aimed at making lenders safer. This comes alongside an initiative to “limit banks’ ability to game the system through their use of internal models to calculate capital”.

    Customers complain about banks “every 10 seconds”

    Figures from the Robin Hood Tax Campaign suggest that banks have received a complaint from customers every 10 seconds since the financial crisis, writes the Independent (p43). The data reveals that UK banks and building societies have received 19.7 million complaints since 2008, almost 9,000 a day.

    A spokesman for the BBA said: “While it is encouraging the number of complaints about banks to the Financial Ombudsman Service has begun to fall, there are clearly still far too many. All banks have hired more staff to deal with the increased numbers of complaints. Furthermore, all of the UK’s high street banks have committed publicly to ensuring a decisive end to any bad practices that encouraged mis-selling. Banks have also overhauled the way frontline staff are paid, rewarding high levels of customer service, not sales volumes. Banks will continue to work with the Ombudsman and regulators to make sure they deliver the service we all expect and deserve.”

  • November 2014 figures for the high street banks

    Commenting of the BBA’s High Street Banking statistics for November, the BBA’s Chief Economist, Richard Woolhouse said:

    “Today’s figures show quite a sharp chill to the housing market in recent months – with house purchase approvals during November 20% lower than a year before.

    “It will be interesting to see what impact the stamp duty changes the Chancellor unveiled in his Autumn Statement will have early in the New Year. They could prove a modest stocking filler for homebuyers and estate agents.

    “It’s also striking to see that unsecured borrowing such as personal loans are growing at their fastest rate for six years. This suggests consumers may be feeling more confident which bodes well for a fruitful Christmas for retailers.”

22nd Dec 2014 Back to top
  • Five predictions for 2015

    Will the growth that the UK economy enjoyed this year continue into 2015? The BBA’s Chief Economist Richard Woolhouse considers the big issues which will impact the economy and banking industry over the next 12 months.

  • BBA Brief – 22 December 2014

    House prices falling across the country

    Property prices are falling in a third of the UK’s local housing markets, according to a Hometrack study reported on the front page of the FT (£, p1). The newspaper argues that the research shows that the recently introduced Mortgage Market Review regulations have cooled property prices. The study found that home values in a quarter of London postcodes are falling – up from 5% in May. However, prices in Milton Keynes, Aldershot, Stanwell and a minority of other places were still found to be rising.

    Forex fines should come from bonus pool, say FCA

    The Sunday Telegraph (B1) writes that the Financial Conduct Authority has urged banks fined over foreign exchange trading to fund the penalties from their bonus pots. The five banks that were punished over the scandal have been told that bonuses that do not reflect the fines will be considered “inappropriate”. Banks are trying to use clawback powers to retrieve bonuses paid to the individuals responsible for the wrongdoing, but these are unlikely to cover the full extent of the financial penalties.

    The Independent reports that a former member of RBS staff has been arrested in connection with manipulation of the forex market. Meanwhile the Mail (p56) says that RBS will this week issue an update on investigations into foreign currency trading by 50 current or former staff.

    Confidence rallies bonus expectations

    The BBC covers a survey of 1,500 senior bankers, traders and City workers which said that these executives were on average expecting a 21% rise in their bonuses for this year. The study by the recruitment consultant Astbury Marsden found that 54% of executives said they would move employer if they received a poor bonus – an increase of 9% on the previous year. Respondents cited returning confidence in the City as the explanation for their higher expectations. In the new year the European Union will introduce rules that will limit bankers’ bonuses at 100% of base pay – or 200% with shareholder approval.

19th Dec 2014 Back to top
  • BBA Brief – 19 December 2014

    Regulators should be more “constructive”

    A Government report has said that financial sector regulators should be more “constructive” and involve more senior officials in decisions when launching investigations and levying fines.  The FT (£, p22) writes that the Treasury proposals have been developed following a review of City regulators, including the Financial Conduct Authority, and call for a faster system for challenging the decisions made by such bodies in order to make the system “fairer and more transparent”. The Government published 39 recommendations, which included requiring the FCA and the PRA to end the graduated system of discounted fines, offering no more than a 30% reduction for early settlement. The recommendations can be read here. The BBA’s submission to the Government on this issue is available here.

    HMT recovers more Icelandic money

    The Telegraph (p3) reports that the Government has now recovered 85% of the money used to bail out British consumers following the Icelandic banking collapse. The Treasury announced yesterday that it recovered another £1.4 billion from the estate of Icesave’s parent company Landsbanki, which went bust in 2008. Economic secretary to the Treasury, Andrea Leadsom said: “We remain committed to recovering the full outstanding amount of the British taxpayer’s claim from the Landsbanki estate, and will continue to work hard to make this happen as soon as possible.”

    Banks urge SMEs to borrow and grow

    As part of the BBA campaign to promote the Better Business Finance initiative, banks have urged SMEs to borrow on the basis that firms that do so are more likely to grow, innovate and export.  The SME Finance Monitor survey, conducted by BDRC Continental, found that 49% of businesses who had successfully borrowed money in the last year had innovated, compared with 37% of all SMEs.  Richard Woolhouse, chief economist at the BBA said: “The fact that firms who won access to bank finance were 32% more likely to have innovated suggests that if more businesses felt confident about applying for credit, our national productivity rates could receive a significant boost.” (CityAM, p13)

    Foreign banks fled Russia

    Western banks will continue their retreat from Russia in the New Year, the FT (£, p4) writes. The paper says that syndicated loan volumes fell by 14% during 2014.  As well as foreign banks withdrawing, Russia’s part state-owned domestic banks have been brought back into government hands “to be used as a buffer between the state and the grassroots economy”.  However, Morgan Stanley analyst Magdalena Stoklasa told the newspaper: “There will probably be a credit crunch. The appetite to lend has already decreased dramatically.”

18th Dec 2014 Back to top
  • 105th Brussels for Breakfast

    Today’s Brussels for Breakfast meeting – organised by the CSFI and hosted at the British Bankers’ Association

  • Helping those the missing leave behind

    The disappearance of a loved one is a distressing experience, often compounded by the fact that no one can legally manage the missing person’s financial affairs in their absence. The BBA’s Walter McCahon examines the Government’s recent proposals to change this.

  • BBA Brief – 18 December 2014

    EU agrees deal on card fees

    The EU last night reached an agreement to cap fees to process debit and credit card transactions, writes the FT (£). The new rules place a ceiling of about 0.2% for debit card rates and 0.3% for credit cards. Margrethe Vestager, the EU competition commissioner, said: “This legislation is good for consumers, good for business, and good for Europe. It will lead to lower prices and visibility of costs for consumers.” However, the paper states that banks have argued that consumers will face higher upfront bank fees as a result of the legislation. The draft deal will need to be formally approved by the European Parliament and EU members states early next year.

    Government to offload more shares in Lloyds

    George Osborne has announced that the Government will reduce its holding in Lloyds Banking Group from 25% to 20% in the run-up to the General Election (FT, £, p4). The Chancellor hopes to raise £3 billion through the sale, although shares will not be sold below 73.6p – the average price that was paid when the Labour government bailed out the bank. The Telegraph (B1) states that the sale – which “came as a surprise to many in the City” – will mean that £10.4 billion of the £20.5 billion of taxpayer funds will have been paid back. The Times (£, p47) notes that the trading plan could see a “few million shares sold every day”.

    EU announces tougher rules on research fees

    EU regulators have agreed rules on the way broker research is paid for, reports the FT (£, p21). Details of the rules will be announced tomorrow. The Financial Conduct Authority has previously stated that separating the costs of research and dealing commissions would encourage greater competition and transparency over the price of research. However, the article cites an Extel poll from last month which suggests that preventing banks from combining fees would “affect the ability of small-cap companies to access the capital markets”.

    Fed hints at rate rise

    The Federal Reserve has signalled that it expects to tighten monetary policy in mid-2015, reports the FT (£, p1). The rate setting committee dropped its forecast that rates would remain low “for a considerable time”, but added that it would be “patient” in judging when to start the rise. In addition, the Federal Open Market Committee changed its forecast of rate rises in 2015 and 2016, expecting rates of between 1% and 1.25% by the end of 2015, rather than 1.25% and 1.5%. As a result, the Fed now expects interest rates of 2.5% by the end of 2016. However, the Independent (p56) writes that the announcement left “financial markets scrambling to make sense of its meaning”.

17th Dec 2014 Back to top
  • The ECB – preparing the ground for sovereign QE, but will it help?

    As inflation continues to undershoot expectations and growth in Europe remains weak, what more can monetary policy do, asks BBA Chief Economist Richard Woolhouse.

  • Better lending conditions for businesses

    Commenting on the Bank of England’s Agents’ Summary of Business Conditions, BBA Chief Economist Richard Woolhouse said:

    “Today’s agents’ summary makes it clear that credit conditions are improving.  In particular, lending to smaller firms appears to be increasing and some sectors where credit had previously been very tight are now able to access bank finance more easily.

    “That’s very important. We need businesses of all sizes to be confident about borrowing because that helps them invest and supports economic growth.

    “The summary also underlines that the Mortgage Market Review is considered to be behind the slowdown in the housing market and supports the view that new regulation is partly responsible for this cooling.”

  • BBA Brief – 17 December 2014

    Bank of England warning on emerging markets

    Mark Carney has vowed to put banks’ emerging market exposures under scrutiny in Britain’s next round of stress tests (FT, £, p17). Dr Carney warned that new financial stability risks were brewing overseas, and there was a danger of a “sharper adjustment” in emerging nations that could rebound into core markets. In a press conference yesterday, he said: “You can expect we will look towards some of those global risks much more closely – they will figure more prominently.”

    Agreement reached on Fourth Anti Money Laundering Directive

    An informal agreement has been reached on the EU’s fourth Anti-Money Laundering Directiveon the prevention of the use of the financial system for money laundering and terrorist financing. The directive will oblige EU member states to maintain central registers listing information on the ultimate beneficial owners of corporate and other legal entities, as well as trusts. A BBA spokesman said: “It is important that there is consistency across the EU when it comes to tackling money laundering so we are pleased that politicians have agreed this important directive. It is crucial that the proposed rules allow for a proportionate, risk-based approach when it comes to complex matters like due diligence, handling customer data and examining the customer relationship. We will work with policy makers and regulators to implement these rules in a way that balances good customer service as well as a focus on reducing financial crime.”

    Inflation falls again

    Inflation fell to 1% in November as measured by annual growth in the Consumer Price Index, City AM reports (p2). Figures released by the Office for National Statistics yesterday revealed that inflation now stands at a 12-year low. The paper adds that the Governor of the Bank of England, Mark Carney, believes that inflation is likely to fall below 1% in the first six months of 2015. The Independent (p9) says the fall has given shoppers “an early Christmas present” as falling oil prices and supermarket price wars have pushed the rate down.

    Russia faces financial crisis

    The rouble fell by more than 11% yesterday after a failed intervention by the Russian central bank (FT, £, p1). As a result, investors piled into haven assets, pushing German bond yields to a record low. The paper quotes Sergey Shvetsov, deputy governor of the central bank, saying: “I couldn’t imagine even a year ago that such a thing would happen – even in my worst nightmares.” Yesterday Russian shoppers rushed to buy goods before the currency lost more value, while some banks ran short of cash as customers stocked up on dollars and euros, the paper writes.

16th Dec 2014 Back to top
  • Plumbing for the nation’s lifeblood: deal on basic bank accounts will improve people’s access to banking

    The landmark deal on basic bank accounts will help customers across the UK.  StepChange’s Mike O’Connor welcomes the agreement, and says banks will be providing the plumbing for the nation’s lifeblood.

  • Surviving stress: the Bank of England’s results today demonstrate that the UK’s banking system remains resilient

    The BBA’s Simon Hills explains how the results of the Bank of England’s stress tests confirm that the UK banking system remains resilient, even in the face of severe distress.

  • BBA response to BoE stress tests announcement

    Responding to the results of the Bank of England’s stress testing exercise of the UK banking system, BBA Executive Director Simon Hills said:

    “These tests confirm that the UK’s banking industry is in a much stronger position and that the recent reforms are working.

    “The majority of our major banks would be able to weather even the severest of storms and appropriate action is being taken to make all banks more resilient.

    “This is good news for customers because it means that banks should be able to continue to perform their necessary functions of taking deposits and giving out loans, even if the UK experiences a severe downturn.”

  • BBA Brief – 16 December 2014

    Stress test results published

    The Bank of England published the results of its stress tests of the UK’s main banks this morning. Following the stress testing exercise, the PRA Board judged that, as at end-2013, three of the eight participating banks (Co-operative Bank, Lloyds Banking Group and Royal Bank of Scotland) needed to strengthen their capital position further. But, given continuing improvements to banks’ resilience over the course of 2014 and concrete plans to build capital further going forward, only one of these banks (Co-operative Bank) was required to submit a revised capital plan. Commenting on the results the Governor of the Bank of England, Mark Carney said “This was a demanding test. The results show that the core of the banking system is significantly more resilient, that it has the strength to continue to serve the real economy even in a severe stress, and that the growing confidence in the system is merited.”

    Following publication of the results Kamal Ahmed (BBC Online) writes that the overall message of the stress tests was that banks and building societies were stronger than when the first test was carried out in 2013. However, he notes the Bank did raise concerns that banks faced “misconduct risk” in the future. The FT (£) note that under the terms of the scenario the banks were projected to make £13 billion of cumulative losses in the first two years before returning to profit in the third year. The banks would have an additional £70 billion of impairment charges under the stresses envisioned. The Guardian is following up the results with a live blog throughout the morning.

    Economic problems for Russia with falling oil prices and the threat of tougher sanctions

    Russia has raised its interest rate from 10.5 per cent to 17 per cent this morning, just five days after the last rate rise and hours after the rouble suffered its worst drop since 1998. (FTBBC). The FT (£, p1) leads on the findings of a report by Goldman Sachs which suggests more than $1 trillion of future investment in oil projects is under threat as a result of the 45% fall in prices to nearly $60 a barrel. The Times (£, p43) reports that the prospects for the Russian economy were further exacerbated on Friday when the US Congress passed a bill for tougher sanctions against Russia. President Obama has 10 days to sign or veto the bill but reports suggest he is resisting signing the law unless the EU commits to further sanctions as well (Times, £, p33).

    Moscovici warns Greece against restructuring its sovereign debt

    Ahead of Greece’s presidential election tomorrow, EU Commissioner, Pierre Moscovici has made a two-day trip to the country to meet with Prime Minister Antonis Samaras and his Finance Minister. Speaking during his trip, the FT (£, p10) reports that Moscovici “praised the Greek authorities and promised ‘much lighter surveillance’ of the Greek reform effort once the bail-out ends in February”. Moscovici also warned that suggestions that Greece should restructure its sovereign debt could be “suicidal, with a risk of default”.

15th Dec 2014 Back to top
  • AIFMD: Big challenges and big opportunities for custodians

    Ralf Menegatti, Product Owner at AxiomSL discusses the challenges and opportunities presented by the Alternative Investment Fund Managers Directive.

  • Back to Basics

    The BBA’s Eric Leenders explains how the improvements announced to basic bank accounts today will expand financial inclusion and end the fear of unforeseen charges.

  • BBA Brief – 15 December 2014

    Banks and Government agree deal to help customers with basic bank accounts

    The BBC reports that the main banking providers have agreed with the Treasury to do more to help basic bank account customers – including those who are vulnerable – avoid triggering fees and charges. The BBA, working closely with the nine largest personal current account providers in the UK, has developed a new industry standard for basic bank accounts in the UK in order to expand financial inclusion and give customers the confidence to use a wide range of day-to-day banking services without fear of unforeseen charges. The revised account is aimed at those who don’t currently have a bank account who might not be able to open a standard account, customers looking to switch and customers in financial difficulty. BBA Chief Executive Anthony Browne said: “These basic accounts will make it easier for more people to manage their money. They will have many features that will help people to budget, pay bills and save up.”   BBA Executive Director Eric Leenders appeared on BBC Wake up to money and the Today programme to discuss the agreement this morning.

    Stress test speculation

    Ahead of the announcement of the Bank of England’s stress tests tomorrow, the Times (p41) reports that the number of banks to undergo stress testing next year could treble to 30.  The Mail (p53) reports on speculation that Co-op Bank might not pass the tests.  The FT (£, p22) reports that the Institute of Chartered Accountants in England and Wales is set to produce proposals to draw up a framework for providing assurance for banks’ capital levels and their control systems.

    Carney: reforms “reinforce London’s advantage”

    In an interview with the Independent (p16-17) Bank of England Governor Mark Carney says that the UK is “out at the front of the pack” in terms of making banks safer and that the Bank will focus on making markets more “fair and effective” in 2015.  He says: “If we do all that, with all the human capital and the expertise here in London, it reinforces London’s advantage. It is not why we do it, we do it because we have to.”

    Deal between banks and Post Offices doubles branch network

    An article in the Mail on Sunday looked at how deals between high street banks and the Post Office mean that customers are able to use Post Offices to do basic banking, like checking their balance or paying in cash to their account.  It quotes a BBA spokesman saying: “By allowing bank customers to use post offices we would effectively be doubling the bank branch network.”  The article quotes a source close to Business Secretary Vince Cable saying that the Government is working with the banks to look at how “business and personal bank customers will still be looked after if the last bank in a community closes.”

14th Dec 2014 Back to top
12th Dec 2014 Back to top
  • Building capital markets to power European growth

    Richard Woolhouse  and Victoria Powell explain how Capital Markets Union could help promote sustainable economic growth across Europe.

  • BBA Brief – 12 December 2014

    New rules on current accounts for illegal immigrants come into force

    Banks and building societies will face fines or criminal sanctions if they open current accounts for known illegal immigrants, under new rules which come into force today. The FT (£, p2) writes that these measures – designed by the Home Office – aim to make it harder for those who do not have leave to remain to get credit cards, mortgages or loans by denying them access to a current account.

    Bank of England to become more transparent

    Governor Mark Carney has announced plans to make the Bank of England more transparent in communicating voting details, reports the FT (£, p2). Following a review by former Federal Reserve Governor Kevin Warsh, the Bank will hold fewer Monetary Policy Committee meetings, and will publish transcripts of the meetings after eight years. However, the Telegraph (B5) laments that the transcript of the first day of MPC discussions, when “the most lively and arguably the most important conversations take place”, will remain unpublished. The Times (£, p54) notes that starting from August 2015, minutes of the meetings will be published concurrently with the announcement of the rate decision.

    ECB moves closer to full QE

    The European Central Bank looks more likely to embark on a full-scale programme of government bond purchases after poor take-up of its cheap credit, writes the FT (£, p1). However, some members of the Bank such as Bundesbank president Jens Weidmann are more hawkish. They believe that the Bank’s current measures – which include buying covered bonds and asset-backed securities – will be enough to raise inflation to the target of 2%. The Telegraph (B4) writes that these “hawks” are becoming isolated, stating “their suggestions that quantitative easing will not work because rates are already low are hard to square with orthodox monetary theory”.

11th Dec 2014 Back to top
  • From conflict to collaboration

    Eighteen months on from their creation, Simon Hills looks at how Financial Conduct Authority and the Prudential Regulation Authority are settling down.

  • BBA Brief – 11 December 2014

    FCA admits reputation has “taken a knock” over media leak

    Four senior staff at the Financial Conduct Authority will lose their bonuses after a report found “serious” inadequacies in the way it disclosed market sensitive information to the media. The inquiry by the law firm Clifford Chance found a series of errors in the way it briefed a Telegraph journalist whose story wiped billions off the share prices of major insurance companies. John Griffiths-Jones, the FCA’s chairman, is quoted in the Telegraph (B1), saying: “I certainly believe our reputation has taken a knock.”

    Miliband to address deficit and debt

    Ed Miliband will set out more of his party’s economic policies in a keynote speech in London later this morning, the BBC reports. The Labour leader is expected to say that dealing with the deficit is an “essential test” for his party. He will rule out including any uncosted spending plans in his party’s next manifesto, arguing instead for heavier taxes for the better off and higher wages for the less wealthy.

    Northern Rock customers to receive £261m compensation

    Around 43,000 borrowers are set to receive redress because of misleading wording in the terms of Northern Rock mortgages, City AM (p2) reports. A High Court ruling yesterday ordered Northern Rock Asset Management (NRAM), the government-owned vehicle which owns remnants of the lender, to make the payments to customers who borrowed between £25,000 and £30,000 with its Together product. NRAM is considering appealing against the decision.

10th Dec 2014 Back to top
  • Moving Tax Transparency to a New Level

    BNY Mellon’s Mariano Giralt and Lorraine White discuss the range of projects the OECD is working on in the area of international taxation.

  • FTT: much ado about nothing

    Is Europe getting closer to an agreement on the FTT? Recent late night meetings seemed to suggest so, but politicians are as far away from reaching a consensus as ever. The BBA’s Head of EU Affairs, Ashley Dorrington, explains more.

  • Bearing down on bad credit brokers

    The Financial Conduct Authority has announced it will introduce new rules to tackle bad practices by credit brokers that charge upfront fees. The BBA’s Ian Fiddeman sets out how the rules will help customers.

  • BBA Brief – 10 December 2014

    Wheatley under pressure ahead of Davis report’s publication

    The front page of City AM reports that Financial Conduct Authority chief executive Martin Wheatley “is expected to face questions over his future today after the publication of a report into the regulator’s leak of price sensitive information concerning life insurers.” The regulator has already announced the departure of Clive Adamson, its director of supervision, and Zitah McMillan, its communications director. Earlier in the year the leak to the Telegraph concerning an investigation hit the share prices of leading insurance firms. The paper quotes one insurance executive, who said “we’d have been put in jail for something like this.”

    Banks must be ready for “worst-case scenarios” on cyber security

    Banks under the supervision of New York’s Department of Financial Services must view cyber security as a key part of their risk management strategy, the department’s head Benjamin Lawsky has said (FT, £, p8). In a letter to banks that have a New York state charter or licence, Mr Lawsky will say that as cyber attacks become more sophisticated, banks and their regulators need to be thinking of the “unimaginable, worst-case scenarios” for which they should all be prepared. Banks will also be given a 96-question survey to provide more details on their cyber security efforts, the paper writes.

    The BBA’s report, The cyber threat to banking: A global industry challenge, is available on our website.

    Greek markets fall as early presidential poll called

    Greece’s stockmarket fell by nearly 13% yesterday after Greek prime minister Antonis Samaras decided to call an early presidential election (Guardian, p24). Markets feared that the news could lead to an early general election, with anti-austerity party Syriza winning power. Other financial markets reacted badly to the news, with the FTSE100 down more than 2%, Germany’s Dax dropping 2.1% and France’s Cac closing down 2.4%.

9th Dec 2014 Back to top
  • Professor Russel Griggs to carry out Lending Code review

    The Lending Standards Board has confirmed that Professor Russel Griggs will undertake an independent review of the Lending Code. Robert Skinner, the Board’s Chief Executive tells BBA Insight more.

  • Chief Executive’s newsletter – December 2014

    Welcome to my newsletter

    The twinkling of Christmas lights, the scent of mulled wine and the sight of high streets crammed with shoppers shows that another year is coming to a close. It has certainly been a year of challenges and change for the banking industry.

    The Competition and Markets Authority announced an investigation into the current account and small business banking markets.  Meanwhile, the Chancellor asked the Bank of England to launch the Fair and Effective Markets Review to assess the operation of wholesale financial markets.  Last month’s fines for manipulation of foreign exchange trading only underlined why that review is so necessary to rebuild trust in this important part of our industry.

  • BBA Brief – 9 December 2014

    Consumers take advantage of interest free credit cards

    BBA credit card statistics released today show that spending on cards is 8% up on last October, and that 42% of borrowing on cards does not incur interest as consumers continue to take advantage of interest free offers.

    Richard Woolhouse, Chief Economist at the BBA, said: “The number of credits cards carried by British customers has been rising by 1,000 a day.Purchases and borrowing on plastic is also growing, suggesting that consumers are feeling optimistic about their job prospects and happy to spend.It looks like retailers can expect a rather Merry Christmas and because 42% of credit card borrowing does not incur interest the January festive hangover may require a little less Alka-Seltzer than in previous years.”

    All change at the Financial Conduct Authority

    A number of executives will forsake their bonuses and three are set to leave the financial services regulator as part of a shake-up commissioned in November (Telegraph, p5). The move comes just two days before the publication of a report which assesses the handling of an FCA probe into life insurance companies which resulted in millions of pounds being knocked off their value. The report, commissioned by Clifford Chance and out tomorrow, is expected to criticise several individuals at the FCA. Clive Adamson, the regulator’s director of supervision, Zitah McMillan, its director of communications and international, and Victoria Raffe, the director of authorisations are all due to move on. Tracey McDermott, the FCA’s current head of enforcement, is expected to be given a bigger role.

    FTT to miss deadline

    The Telegraph (p4) writes that “European plans to introduce a tax on financial transactions have fallen into disarray” as year-end deadlines are missed. Finance ministers from 11 countries have been working to produce an outline for the tax but have disagreed on some of the detail, meaning that it will not be signed off this week. The paper says that it is now unlikely that the January 2016 deadline for implementation will be reached. The UK Government challenged the idea of the “Tobin tax” in the courts as the City of London is likely to feel the impact of a levy on equity and derivative transactions.

    One German diplomatic source said: “The meeting finished without a result. We’ve only agreed to keep trying. But there’s no timeline, and the positions haven’t gotten closer”. (EUbusiness)

  • October 2014 – Credit Card Market

    Richard Woolhouse, Chief Economist at the BBA, said: “The number of credits cards carried by British customers has been rising by 1,000 a day.

    “Purchases and borrowing on plastic is also growing, suggesting that consumers are feeling optimistic about their job prospects and happy to spend.

    “It looks like retailers can expect a rather Merry Christmas and because 42% of credit card borrowing does not incur interest the January festive hangover may require a little less Alka-Seltzer than in previous years.”

8th Dec 2014 Back to top
  • The financial services industry and the regulators – friends or foes?

    BDO’s Financial Services Group has just published, Friends or Foes? From Conflict to Collaboration in Financial Services Regulation. Nearly two years on from the creation of the FCA and PRA, this survey of 269 financial services risk and compliance professionals provides compelling insight into the industry’s reactions to UK regulation.

  • BBA Brief – 8 December 2014

    Police call for new law on fraud reporting

    In an interview with the Evening Standard on Friday City of London Police Commissioner Adrian  Leppard said that the scale of cyber fraud in the UK is “enormous”.  He said the costs were £30 billion a year and called for legislation to force banks to report all fraud.  He said, “The banks will not give us information about crimes at the moment and there is no regulatory requirement to do so. I have been saying for some time that we must find ways of encouraging that.  Unless the country and society can get a true feel about the nature of crime we cannot address it. I don’t think we will necessarily get the banks and industry to do that voluntarily. We should have a conversation about whether it is time to regulate that — to find some sort of means by which it is enforced.”

    Today’s FT (£, p2)  reports that the Treasury Select Committee has published letters that it has sent to the chief executives of the main high street banks in the UK asking for clarity over the fraud figures that they publish.  National Crime Agency Director Donald Toon tells today’s Times (£, p14) that poor fraud intelligence is a “major problem”. He said: “There’s an issue about under- reporting but it’s a complicated issue. We are seeing a response from law enforcement and the government but there is still an issue of confidence in the system. That means we have a lot of development work to do to understand exactly where the risks lie.”  In the Guardian (p19) Conservative MP Stephen Barclay raises concerns about anti-money laundering controls in the banking industry.

    BCBS criticises EU rules on Basel III

    The Basel Committee on Banking Supervision (BCBS) has graded the EU implementation of global rules on capital as being “materially non-compliant” with the Basel III agreement.  In particular it criticised rules on exposure to SMEs, corporates and sovereign debt, and a section of the rules relating to the management of derivatives exposures. It ruled that eight out of 14 components examined in the review met the minimum Basel requirements.  MEPs including ECON chair Roberto Gualtieri MEP criticised the BCBS, accusing it of “working without legitimacy and without any transparency”. (Weekend FT, £, p17)

    BBA launches new audit confirmation service

    The Telegraph (B4) reports that the BBA has launched a new online audit confirmation service with the world’s leading audit solution provider – confirmation.com .  The new service should speed up auditing for hundreds of thousands of business in the UK reducing hassle and fraud.

    For more information on the service see www.bbaconfirmations.com

    BoE – higher income families to be hit harder by rate rise but vast majority could cope with an increase to 2.5%

    Several papers lead with the Bank of England’s annual survey of household finances and the effect that an interest rate rise could have on mortgage borrowers.  The Mail (p2) says that “300,000 families would struggle to pay their mortgages if rates rose from 0.5 per cent to 2.5 per cent overnight” and that this would hit the younger generation hardest.    The front page of the Times reports that the middle classes will be the most affected by any rate rise. It quotes figures from the report which show “ that a one percentage point increase in interest rates would lead to the highest earners’ income falling by 0.3 per cent after tax. Their spending would drop by 0.8 per cent, it said. In contrast, the post-tax income of the lowest earners would rise by 0.2 per cent and spending would fall by 0.2 per cent.”

    However the front page of the FT adopts a less cautious stance, saying that: “the vast majority of mortgage borrowers could handle interest rate rises of up to 2 percentage points”.  It interprets this as a shift in tone from the Bank which “suggests that the UK central bank might be thinking of raising rates before next autumn — earlier than markets expect.”  It quotes BoE staff saying, “These results do not imply that increases in interest rates from their current historically low level would have unusually large effects on household spending.”

    Read the full Bank of England report here.

    BoI claims to have biggest branch network in the UK following deal with Post Office

    In the Mail on Sunday Bank of Ireland chief executive Des Crowley says that due to his bank’s deal with the Post Office his bank now has the biggest branch network in the country.  He says: “The way we have chosen to go to market in the UK is not to build our own branch system, nor are we intending to acquire branches from other people. Our strategy is to look for other people who are trusted in this market and the Post Office is the most trusted brand in financial services.”

  • BBA joins forces with Confirmation.com to speed up auditing for hundreds of thousands of businesses

    Banks, auditors and hundreds of thousands of businesses, charities and other organisations will be able to harness a new online service, BBA Confirmations, to make auditing safer, faster, more secure and less stressful in the New Year.  This new service should cut response times by up to 90% saving hundreds of thousands of businesses valuable time.

5th Dec 2014 Back to top
  • Experts are divided as they tell MEPs about proposals for bank structural reform

    Experts appeared before MEPs to give evidence on the European Commission’s proposals on bank structural reform this week. Claudia Trauffler, the BBA’s EU Policy Advisor was in the Brussels to hear the heated exchange.

  • At last, a good call on CMCs

    The Ministry of Justice is currently consulting on changes to regulation fee levels for claims management companies. BBA policy advisor Melanie Worthy explains why the new proposed regime will help benefit consumers.

  • BBA Brief – 5 December 2014

    EU considers dropping bank structural reform plans

    The FT (£, p18) reports that EU Commissioner Lord Hill is considering withdrawing controversial EU plans to change the structures of banks in Europe.  In a private letter to fellow Commissioner Frans Timmermans he says: “Member states are pulling in different directions in opposition to it, so withdrawal could be an option next year if member state support does not pick up.”

    Read the joint BBA/ FBF letter to the EU Commission calling them to look again at the proposals.

    CMA warns BBA conference that it will take action on competition if necessary

    At the BBA’s better banking conference yesterday, Alex Chisholm, the chief executive of the Competition and Markets Authority (CMA), has denied that the body’s decision to launch an inquiry to the UK retail banking market was due to political pressure.  However, he warned the industry that: “the CMA has powers, following a market investigation, to order remedies to any adverse effects on competition that might be identified, rather than merely to make recommendations.”  CityAM (p8) reports that he also made it clear that the CMA would also be able to look at wholesale banking markets if it felt it necessary.  Reuters reports that BBA Chairman Nigel Wicks told the conference that progress had been made to improve culture in the banking industry but that more needed to be done.

    Adamson to leave the FCA

    The Times (£, p57) reports that Clive Adamson is set to step down from the Financial Conduct Authority days before Clifford Chance publishes its report into the investigation about a newspaper interview on the insurance industry that caused the share prices of many of the big firms to tumble.  His decision to step down is said to be unconnected to the report.

    In the Guardian, Nils Pratley argues that “clarity is still required. Clive Adamson, head of supervision, is reported to be leaving the FCA but his departure is said to be unconnected with the inquiry. Let’s have that possible complication removed by the time the FCA speaks. If Adamson did nothing wrong, the regulator must say so out loud.”

4th Dec 2014 Back to top
  • Autumn Statement #2: George Osborne must make sure UK deficit reduction remains on track

    BBA Chief Economist Richard Woolhouse analyses the Chancellor’s Autumn Statement – and spots a hidden gem.

  • Trading Standards Institute (TSI) approves financial services industry’s ‘Simple Product’ framework

    The Association of British Insurers, the BBA and the Building Societies Association today announce approval of the ‘Simple Product’ framework. This is in line with the recommendations set out in the Sergeant Review (March 2013) which made the case for Simple Products – a suite of financial services products with standardised features that are easy to understand and transparent.

  • BBA Brief – 4 December 2014

    Autumn Statement fallout

    Following on from yesterday’s Autumn Statement he front page of the FT declares that the Chancellor has “laid out a battleground” ahead of the next election, with the banks and multinational companies amongst his targets. The article refers to the announcement that banks will be limited in their ability to use losses to reduce future tax bills, with only up to 50% of profits to be offset by losses carried forward. The Telegraph (B1) estimates that the total cost of what they call Mr Osborne’s “raid on business” will be around £8 billion, with £3.9 billion of that coming from the banks, and the rest coming from multi-national business and other tax clampdowns.  The FT (£, p5) describes the measures affecting banks as the single biggest revenue raiser laid out by the Chancellor, but reports that it caused only a brief drop in bank share prices. The Independent (p10) described the changes as amounting to “a US style mega fine”.

    Many of the articles quoted BBA Chief Executive Anthony Browne: “Banks contribute more than £25 billion each year to the nation’s public finances – enough to pay the salaries of around half a million nurses. It is absolutely right that this important industry pays its fair share of tax, but it is important to note that where banks have offset losses they have done so legally, just as all other businesses can.

    “The industry will work with the Treasury to implement these new rules.” See his full statement here.

    In the Mail, Ruth Sunderland calls the Autumn Statement a “pre-Christmas package of goodies” for small firms, referring to the additional £900 million to be made available through the British Business Bank with extensions to the Enterprise Finance Guarantee Scheme and the Enterprise Capital Funds. There will also be £61 million made available to catapult centres – technology and innovation hubs – to develop innovative ideas, support for export and a one-year extension of the Funding for Lending Scheme.

    In addition to these announcements, there will also be changes to the Current Account Switch Service which opens it up to 99% of all SMEs, with an extension to the redirection service to 36 months (Telegraph).

    BBA Chief Economist Richard Woolhouse wrote a reaction to the Autumn Statement for the International Business Times, arguing that “the measures George Osborne announced will barely touch the big numbers that shape our public finances.”

    Hackers steal cash from banks and customers

    The Times (£, p58) reports figures from the FCA, released under the Freedom of Information Act, that show 18 hacking incidents were reported to the regulator because they had “a material impact” on business operations. The article states that this means “significant disruption affecting customers or clients”. The FCA report apparently details the use of a virus to infect an institution’s systems and empty customer accounts, which would then have to be refunded by the bank. A report by Kaspersky Lab – a security company that develops technology to defend against cyber threats – suggests that these criminals are becoming bolder “shifting from attacks on the customer, previously seen as the weak link, to hit the institutions themselves”. This research also describes how once a hacker has infiltrated a bank’s network they can remotely control cash machines, causing them to spew out money. It also identifies Apple Pay as a potential future target.

    See the BBA’s report on cybercrime and the millions spent by the banks defending their systems from it – Cyber Threat to Banking.

    Non-execs deterred by regulation

    The FT (£, p27) writes that increased regulation is putting candidates off taking non-executive positions on bank boards. The report says: “Now increasing regulatory focus, requirements for deeper involvement and new rules on personal accountability are raising the stakes for candidates considering whether to take up positions”.  New rules introduced as part of the Senior Managers Regime will place an onus on senior staff taking adequate steps to prevent breaches of regulation and failing to do so could lead them to being guilty of misconduct.

    Treasury Select Committee chair Andrew Tyrie has denied these measures will act as a deterrent, and BBA Chief Executive Anthony Browne told the paper he wasn’t aware of any resignations as a result of the proposals.

3rd Dec 2014 Back to top
  • BBA Autumn Statement submission

    Read the BBA’s recommendations to the Chancellor ahead of his 2014 Autumn Statement.

  • Autumn Statement #1: Building 21st century Britain

    Richard Woolhouse delves into the new National Infrastructure Plan and gives a taster of the BBA’s thoughts on how to improve the financing that underpins such projects.

  • BBA welcomes better switching service

    Responding to the Autumn Statement, BBA Chief Executive Anthony Browne said: “More than a million customers used the new Current Account Switch Service to move to a different bank in the last year – with the latest figures showing a 22% rise in switches. It’s good news that more businesses will be able to use this service and that customers will have even greater protections in the future.

    “Banks contribute more than £25 billion each year to the nation’s public finances – enough to pay the salaries of around half a million nurses. It is absolutely right that this important industry pays its fair share of tax, but it is important to note that where banks have offset losses they have done so legally, just as all other businesses can.

    “The industry will work with the Treasury to implement these new rules.”

  • BBA Brief – 3 December 2014

    Small business support to be announced in Autumn Statement

    Chancellor George Osborne will deliver his Autumn Statement to the House of Commons today. The Financial Times (£, p1) says the Chancellor will announce £1 billion of support for small businesses, with additional powers being made available to the British Business Bank. Mr Osborne is set to announce £400 million for the business bank’s venture capital programme and £500 million of new lending guarantees for its enterprise finance guarantee scheme. Measures to help people in the housing market are expected, including reforms to stamp duty. The Government has already announced that it will commission directly the building of homes on state-owned land. The Independent (p47) adds that the Treasury and Bank of England confirmed last night that the Funding for Lending Scheme (FLS) will be extended for a further year.

    Eurozone banks ready for more mergers and acquisitions

    The new co-ordinated approach to European regulation has made it easier to do business across borders, City AM reports (p5). The paper says that banks are preparing for a “wave” of mergers and acquisitions, as Eurozone banks have been through stress tests and are less worried about picking up a bank which is full of unforeseen bad debts. It adds that new technology will also help manage cross-border business and cut barriers to entry.

    Household spending rises

    Average household spending rose to £517 per week last year, up from £501 in 2012 and £209 in 2011, according to figures from the Office for National Statistics (Times, £, p17). The ONS found that householders are increasing their spending on big ticket items such as cars and holidays, despite the increased cost of housing, fuel and power. Earnings growth overtook inflation earlier this year, with wages up 1.3% and prices up 1.2%, the paper writes.

2nd Dec 2014 Back to top
  • We’ve steadied the ship – now we need to be able to make headway

    Banks are much sturdier and more tightly regulated than before the financial crisis, writes Richard Woolhouse. But what does this mean for economic growth?

  • BBA Brief – 2 December 2014

    BBA raises concerns over Senior Managers Regime 

    Anthony Browne, the BBA’s Chief Executive, appears on today’s FT Banking Weekly podcast to discuss the Senior Managers Regime and Britain’s future in the single market. Mr Browne stressed that the BBA supports the Senior Managers Regime and its aims, but that it holds a few concerns over the number of staff caught by the rules and their impact on non-executive directors. “We also want to make sure that there is time to implement these rules – the current timeframe is rapid,” he said. When asked on the BBA’s attitude to concerns that Britain might leave the EU, Mr Browne added: “The single market is one of the key reasons that Britain has thrived as a financial centre in recent years. We want British leaders to be there to hold the pen when the rules of the single market are written.” You can listen to the podcast here.

    Business lending increases as consumer credit growth hits eight-year high

    Bank of England figures released yesterday reveal the fastest annual increase in credit growth since July 2006. The Telegraph (B5) writes that “cheap credit and fierce competition” led to borrowing rising by 6.4% in October compared to the same month last year. The Independent (p50) reports that mortgage approvals dipped to 59,426 – the lowest total since June 2013 and 22% lower than January this year. In addition, gross borrowing by SMEs in the three months to October rose 30% on the same time period a year earlier to £13.7 billion.

    BBA Chief Economist Richard Woolhouse said: “These figures show a pick-up in net lending to small and medium-sized businesses, with gross borrowing hitting £5 billion for the first time in two years. At the same time a boost in demand for personal loans and credit cards indicates people are feeling confident about the economy and looking to take on new finance for bigger purchases. Another drop in mortgage approvals indicates that we are now experiencing a cooling of the housing market, which is no bad thing given previous concern about the pace of property price rises.”

    Northern Ireland to gain power over Corporation Tax

    In Wednesday’s Autumn Statement, Chancellor George Osborne will announce his support for the devolution of Corporation Tax to Northern Ireland, writes the FT (£, p1). The Republic of Ireland’s tax rate of 12.5% is lower than the UK’s 21%, and handing over this power to Stormont will aim to improve the performance of Northern Ireland’s private sector. Furthermore, the paper suggests that Mr Osborne’s proposal “could create the conditions for a Tory electoral pact with unionist MPs in a hung parliament”, as Stormont is unlikely to receive the power until after next year’s General Election.

    However, the FT states that the Chief Secretary to the Treasury Danny Alexander has warned that handing over such powers will be seized upon by the SNP, with the party calling for Scotland to have control over its business taxes. Indeed, First Minister Nicola Sturgeon has this morning come out in support of such devolution (BBC). In addition, the Telegraph (p4) cites a report by the Nevin Economic Research Institute which claims that devolving the tax could cost the region £400 million in spending cuts.

    City leaders share concerns on EU exit

    In an online debate organised by the FT (£, p2), 50 leading bankers, insurers, asset managers and policymakers voiced their thoughts on the prospect of the UK leaving the EU. Former Lloyds Banking Group chairman Sir Win Bischoff wrote: “The City will lose some of its relevance and a lot of its international dominance”, if the UK decided to leave, whilst UniCredit’s Jean-Pierre Mustier stressed an exit would be “a catastrophe, though actually much more for Europe than the EU”. However, not all participants were in agreement. Investment Management Association chairman Helena Morrisey argued that “the City won’t just survive but prosper if the UK leaves the EU”. A full transcript of the debate is available here (£).

1st Dec 2014 Back to top
  • Net lending to businesses picking up

    Commenting on the latest Bank of England monthly Money and Credit statistical release, BBA Chief Economist Richard Woolhouse said:

    “These figures show a pick-up net lending to small and medium-sized businesses, with gross borrowing hitting £5 billion for the first time in two years.

    “At the same time a boost in demand for personal loans and credit cards indicates people are feeling confident about the economy and looking take on new finance for bigger purchases.

    “Another drop in mortgage approvals indicates that we are now experiencing a cooling of the housing market, which is no bad thing given previous concern about the pace of property price rises.”

  • BBA in the news

    26/11/14 BBA High Street lending statistics Guardian Tougher rules for getting mortgages help to cool UK housing market Reuters UK banks approve fewest mortgages since May 2013 - BBA Financial Reporter Mortgage market continues to cool: BBA FT Adviser House purchase approvals fall 16%: BBA BBC Mortgage approvals fall by 16% over a year Telegraph Autumn Statement 2014: Nationwide warns…

  • BBA Brief – 1 December 2014

    Banks agree new deeds of priority protocols

    The Telegraph (B3) reports that Britain’s major banks have implemented new procedures to help businesses secure alternative finance. The BBA and the four main high street lenders: Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland; have agreed a common protocol that will enable alternative lenders to more readily agree with banks standard forms of Deeds of Priority or Waivers to small businesses seeking other finance options. The measures should allow lenders to efficiently agree an order of priority of security to support their business finance arrangements.

    BBA Executive Director Irene Graham welcomed the news saying: “We want to make sure businesses trying to get a loan have certainty on security arrangements as quickly as possible so we are really pleased the banks have now implemented the agreed protocols. Banks already have several hundred of these agreements in place but public standard documents should speed matters up for new lenders. Businesses should ensure all necessary information is provided to support these requests. With all information present, the banks are committed to respond to all but the most complex of requests within seven working days which should allow businesses certainty on their new finance arrangements as quickly as possible.”

    Banks to launch video banking services

    Barclays and Coutts have announced plans to launch a new video banking service for customers.  Barclays said that if the pilots run well it plans to roll out a 24/7 service to all of its retail customers by the end of 2015.  Steven Cooper, chief executive of personal banking at Barclays said: “We’re trying to give customers a choice of when, where and how they bank with us but with the added comfort of a human face… We will have fewer branches, but the branch network will always exist and this is just about developing extra services on top of it to complement the branches”.  (FT, £, p18)

    Read more about the future of banking in the BBA’s way we bank now reports.

    Tyrie criticises bank lobbyists

    Treasury Select Committee chairman Andrew Tyrie has criticised bank lobbying on the new senior managers regime after publishing correspondence with HSBC chairman Douglas Flint over reports that two HSBC non-executive directors planned to resign over the rules.  Mr Tyrie said: “Banks should certainly speak up when they think regulators are getting it wrong. But they should do so clearly and openly, and on the basis of the facts. To do otherwise gives the impression of bankers attempting to put pressure on regulators by the back door.” (FT, £, p2)

    Banks step up surveillance of traders

    The FT (£, p24) looks at how banks are using increasingly sophisticated technology to ensure that traders are not breaking the law.  One unnamed US lawyer told the paper, “The holy grail is marrying up the communication surveillance with trading surveillance.”  Brandon Daniels, president of Clutch says: “This is the zeitgeist… Everyone will be monitored.”

28th Nov 2014 Back to top
  • A taxing question for our biggest firms

    A new report has some intriguing insights about the way Britain’s biggest businesses are contributing to our public finances, writes Sarah Wulff-Cochrane.