23rd Oct 2014 Back to top
  • BBA Brief – 23 October 2014

    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.

  • September 2014 figures for the high street banks

    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.”

22nd Oct 2014 Back to top
  • BBA Brief – 22 October 2014

    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.

21st Oct 2014 Back to top
  • Firing small and medium-sized businesses

    A bank loan or overdraft isn’t always the right way to prepare your business growth. Irene Graham looks at the increasing popularity of alternative finance to power small and medium-sized enterprises.

  • BBA Brief – 21 October 2014

    Regulator to begin work on capital rule early

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

    BoE payments system disrupted

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

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

    Cunliffe warns on bankers’ pay

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

20th Oct 2014 Back to top
  • BBA Brief – 20 October 2014

    Need for greater cooperation to fight cyber crime

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

    Large regulatory fines continue to change bank behaviour

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

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

    EBA threatens legal action over bank allowances

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

    Lynam: more change needed for challenger banks

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

    Download the BBA’s Competition in Banking report.

17th Oct 2014 Back to top
  • Update to Lending Code further strengthens consumer protection

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

  • BBA Brief – 17 October 2014

    BBA Annual Banking Conference

    Speakers at the BBA’s Annual Banking Conference yesterday have featured heavily in today’s news. Ross McEwan’s remarks that a rise in interest rates could threaten banks’ relationships with customers appear in the Telegraph (p5). The paper reports the RBS chief executive as saying his bank would sponsor a major piece of research on how customers would deal with higher interest rates. Speaking about customers’ concern over an upcoming hike in interest rates, the Guardian (p37) quotes Mr McEwan as saying: “This anxiety comes despite the fact that, like most banks, RBS and NatWest have stress-tested our customers’ affordability in the event of a significant rise in interest rates up to 7%.”

    Economic Secretary to the Treasury Andrea Leadsom outlined plans for measures to support new entrants to the banking market (FT, £, p2). The minister said that there were currently as many as 25 new banks in conversation with the regulator. Ms Leadsom’s supportive measures include new legislation to require credit data sharing to allow challenger banks to conduct risk assessments of SME borrowers, and an agreement from the larger retail banks to publish borrowing figures by postcode to allow new banks to see “where action can be taken.”

    You can read the BBA’s response to the HMT consultation ‘Competition in banking: improving access to SME credit data’ here and the BBA’s postcode lending figures here. You can also read our report on Promoting Competition in UK Banking here.

    FCA Chairman John Griffith-Jones used his speech to raise concerns about the lack of new banking products being launched due to the adverse threat of regulation (Times, £, p49). Using the example of changes to pension rules next April, Mr Griffith-Jones cited the lack of new products coming onto the market for those who are no longer obliged to purchase an annuity. A lot of banks and insurers are unwilling to “dare” to bring out something new, he told the BBA conference. Mr Griffith-Jones reassured the industry, however, that the FCA had reached a “tipping point” whereby its focus of preventing markets working badly had now shifted to how to make them work well. Bill Michael of KPMG, another speaker at the conference, warned that the financial services sector could become paralysed because of the “suffocating level of regulation” but Lord Birt, former Chairman of the BBC and PayPal Europe, defended tougher regulation and compliance.

    Also at the BBA conference:

    • The Telegraph (p5) reports remarks made to the BBA conference by Shadow Financial Secretary Cathy Jamieson suggesting there would be wide-ranging intervention in the sector if Labour gained power next year.
    • IMF official José Viñals told the BBA conference that many eurozone banks were unable to support economic recovery (CityAM, p3). The IMF reports that as many as seven in ten eurozone banks aren’t making enough money to build capital and increase lending.

     

    EU bonus cap wrong

    Andrew Bailey, chief executive of the Prudential Regulation Authority, has said that EU plans for a bonus cap are “the wrong policy” and could lead to unintended consequences (Telegraph, p5). Mr Bailey threw his weight behind George Osborne’s opposition to the plans, telling senior bankers at the Mansion House: “Let me be blunt, the bonus cap is the wrong policy. The debate around it is misguided and the best thing I can say about allowances is that they are a response to a bad policy”. His remarks follow moves by the European Banking Authority to clampdown on banks using role-based allowances in place of bonuses.

    Read the BBA’s response to the European Banking Authorities report on discretionary remuneration practices here.

    Fears over eurozone disrupt bond market

    The front page of the Telegraph reports that deepening deflation across southern Europe has caused turbulence in the European bond market, with yields on 10 year German Bunds plummeting to an all-time low of 0.72%. Andrew Roberts, credit chief at RBS, told the paper: ”This is not going to stop until the European Central Bank steps up to the plate. If it does not act in the next few days, this could snowball”. According to the report French, Italian, Spanish, Irish and Portuguese yields diverged sharply from German yields in early trading spiking suddenly “in a sign that investors are again questioning the solidity of the monetary union”. At the same time Greek yields have soared over 300 basis point to 8.73% over the last month.

16th Oct 2014 Back to top
  • Anthony Browne speech – BBA Annual Banking Conference 2014

    The Annual Banking Conference was held at The Brewey on the 16 October 2014.

  • CII and BBA announce partnership

    Joint initiative aims to secure trust and confidence in banking

    The  BBA and the Chartered Insurance Institute (CII) today announced the launch of a new working partnership to promote and develop standards and skills in retail banking.

  • BBA Brief – 16 October 2014

    Bankers gather for BBA Annual Conference

    Senior bankers are gathering today for the BBA Annual Conference to discuss how to build an industry that fuels economic growth, lends to businesses and helps customers. Keynote speakers include Economic Secretary to the Treasury Andrea Leadsom and Shadow Financial Secretary Cathy Jamieson. In today’s CityAM (p21) BBA CEO Anthony Browne outlines the themes of the conference, arguing that “whilst we must learn from the past, it must not shape our future. Lingering on those mistakes could limit our ambitions”. Anthony also appeared on this morning’s BBC Radio 4 Today Programme, where he emphasised the need to make sure the UK remains a global financial centre. To find out more about the BBA’s conference click here.

    EBA calls curb on bankers’ use of allowances

    The European Banking Authority (EBA) has written to the European Commission and national regulators claiming that a number of major banks are using pay allowances for their senior staff that breach EU rules on bonuses (FT, £, p2).  The EBA’s opinion, which is not legally binding, acknowledged that “allowances are discretionary” but insisted “firms should behave in such a way to remain in line with the [bonus payment] legislation”. The Telegraph(B1) reports comments by chairman of the Treasury Select Committee Andrew Tyrie who said the move was “a fundamentally flawed approach”. Responding to the announcement a BBA spokesman said: “Any move which increases fixed costs and reduces the ability to use these tools… seems counterproductive”.

    Customer switching growing at 22% higher than last year

    The latest current account switching data, released by the Payments Council, reveals that more than 1.2 million customers have changed bank since the launch of the free-to-use service in September 2013. It also shows that customer switching is 22% higher than this time last year (Guardian, p36). The Payments Council noted that the switching data is limited to those who use the service to move account and “may not represent a complete picture of the current accounts acquired or lost by the banks.”

    Markets hit by “flash crash” but UK employment still rising

    The FT (£, p1) leads with the news that bond markets in the US and UK experienced a “flash crash” yesterday as investors reacted to concerns about Eurozone deflation and weakening global growth prospects. Falling Brent oil prices and a marked drop in US Treasury yields, from 2.18% to 1.95%, caused the FTSE Eurofirst 300 to drop by 3.2%, its biggest fall since 2011. CityAM (p1) reports that £46 billion was taken off the value of the UK’s blue chip equity market. The US S&P 500 also fell by 10%, removing the gains experienced in 2014.

    Elsewhere, the FT (£, p2) reports that UK employment levels continued to grow with unemployment at a six-year low. Vacancies also rose over the summer. Despite the trend, the Bank of England has not indicated that it will end quantitative easing or seek to normalise interest rates.

15th Oct 2014 Back to top
  • Get ready for MiFID II

    What does MiFID II mean for your business? Avantage Reply’s Mohammad Adil urges companies to get ready for new regime.

  • BBA Brief – 15 October 2014

    Financial fraud in the public eye

    Money Mail (p39) features a “fight the fraudsters special” which describes online fraud as the “21st century’s biggest crimewave”. The nine page spread gives examples of vishing, phishing and fake investment calls – all of which are included in the BBA’s Know Fraud, No Fraud campaign. BBA CEO Anthony Browne penned an article for Which? about the campaign – which aims to raise awareness amongst consumers of different types of fraud – highlighting eight things banks would never say or do, but a fraudster might. Meanwhile, the Courier and Advertiser (p18) cites the BBA’s campaign in an article on an Experian report which reveals that the rate of detected and prevented fraud across financial services products has increased year-on-year since 2013.

    ECOFIN agrees data sharing laws

    EU finance ministers yesterday agreed legislation that would require all 28 member states to disclose assets held by foreign EU nationals in their financial institutions. Under the law, participating countries would be required to automatically send data back to tax authorities in a European depositor’s home country, a requirement regarded as “one of the most powerful ways to prevent tax evasion”, writes the FT (£, p7). Le Monde reports on the current information sharing arrangements in Switzerland, Singapore, Austria and Luxembourg.

    Commenting on ECOFIN’s agreement, a BBA spokesman said: “We welcome government efforts to clamp down on global tax evasion and our member banks have been working hard to support the development of a global standard for financial account information exchange, the Common Reporting Standard (CRS), to assist these efforts globally…  However, we are disappointed that Europe’s finance ministers have not simply incorporated the CRS into the Directive on Administrative Cooperation (DAC), but have introduced the potential for a higher European standard within the DAC. This undermines the global CRS, even before its effectiveness has been evaluated.” The full press release can be read here.

    Inflation falls to five-year low

    The Consumer Price Index dropped to 1.2% yesterday – the lowest since 2009 – which “cemented investor expectations” that an interest rate rise will not come until after the general election next May, writes the FT (£, p2). The Telegraph (B1) notes that analysts predicted a fall of just 0.1 percentage point, and that markets only expect to see interest rates at 1% by December 2015. However, the FT argues that it is unlikely to change the views of the two MPC members who have called for an immediate rate rise. The Times (£, p41) observes that it is now unclear whether Britain or the US will be the first to tighten monetary policy.

  • BBA: Changes that increase fixed costs could be counterproductive

    Responding to the European Banking Authorities report on discretionary remuneration practices, a spokesman for the BBA said: “The British banking industry has made great strides in recent years to reform the way in which highly paid staff are remunerated.

  • Fighting tax evasion is vital – but it must not be at the expense of customers’ rights or legal certainty

    The BBA comment on ECOFIN’s agreement of a revised Directive on Administrative Cooperation 2 (DAC2), to integrate the OECD’s global standard for automatic exchange of financial account information for tax purposes into EU law.

14th Oct 2014 Back to top
  • Apple faces up to the battle between security and user experience

    For years banks have battled to balance making their online payments system easy to use but also safe. Now Apple faces the same challenge, writes Aspect Software’s Keiron Dalton

  • BBA Brief – 14 October 2014

    BBA launches Know Fraud, No Fraud campaign

    Yesterday the BBA launched a new campaign to help members of the public identify when they’re being scammed. Chief Executive Anthony Browne announced the campaign on the BBC Radio 4 programme You & Yours where he listed the 8 things your bank would never ask you (but a fraudster might). The campaign was picked up by BBC News who cite the BBA’s YouGov polling revealing that millions of people are inadvertently leaving themselves open to being scammed. This Is Money reported that the banks and the BBA have produced a new leaflet with real life examples of some of the most prevalent scams, to go into branches and police stations across the country.  Anthony was also interviewed on the Radio 2 Simon Mayo programme and the BBA’s Head of Campaigns, Fiona McEvoy appeared on a range of local radio stations including BB WM and BBC Cumbria.

    You can read the new leaflet and find out more about the campaign here: www.knowfraud.co.uk.

    FSB outlines new shadow banking repo rules

    The FT (£) splashes on the news that the Financial Stability Board (FSB) has published a framework imposing new minimum requirements on the shadow banking sector when it makes short-term loans secured by stocks or bonds from banks. The FSB now wants a minimum 1.5 per cent “haircut” for corporate bonds with a maturity of between one and five years, up from 1 per cent before, and a 6 per cent haircut for equities, instead of 4 per cent previously. The latter would mean that a borrower would have to post $106 of equity collateral for a $100 loan.  Daniel Tarullo, chairman of the FSB Standing Committee on Supervisory and Regulatory Co-operation, said: “Securities financing transactions such as repos are important funding tools for a wide range of market participants, including non-bank financial firms. The implementation of the numerical haircut floors on securities financing transactions will reduce the build-up of excessive leverage and liquidity risk by non-banks during peaks in the credit and economic cycle.”  In the Lombard (£, p23) column, Jonathan Guthrie describes the move as “gently tilting a skewed regulatory framework a few inches back in favour of conventional banks”. Robert Peston also blogs (BBC Online) on the new rules questioning whether in the long term it is healthy to discriminate in favour of government debt.

    Online wealth managers increase competition in the private banking market

    The FT (£, p25) looks at the rise in online wealth managers and their challenge to the more traditional private banking industry. It reports, “Rising demand for online and mobile services and the increasing expense of gaining financial advice have created an opportunity for these start-ups.”  It quotes BBA statistics that show that nearly 40m mobile and internet banking transactions were made each week in 2013 and banking mobile applications were used 18.6m times a week – more than double the number in 2012.  The article quotes Joe Norburn, head of digital at Coutts who said: “We haven’t seen a material impact just yet; but we can’t rest on our laurels and assume that will be case going forward.”  Coutts is planning to unveil digital tools next year to help customers plan their wealth goals and portfolios.

    Read the BBA’s recent report on what the private banking industry brings to the UK – “A wealth of opportunities”.

    Commentators react to Carney’s “reckless” banking speech

    A number of commentators follow up on Mark Carney’s remarks that the new criminal sanctions for “reckless” bankers would end the injustice of bank executives not being punished after the financial crisis.  Alastair Osborne warns in the Times (£, p39) that “the risk is that the endless regulation keeps the talent out.”  In the Guardian (p29) Nils Pratley argues, “if reform means that a chief executive can lose part of his pension if he is responsible for stuffing punters with crass products such as payment protection insurance, so be it. Most people would regard that as a reasonable way to encourage better banking.” In the Mail (p67) Alex Brummer writes that, “Carney deserves praise for arguing that if senior bankers are unhappy with regulatory change then they should resign. “

  • Bank support for customers in Northern Ireland Q1/Q2 2014

    There was new SME borrowing in Q1 of £349 million and in Q2 of £408 million, the highest quarterly amount we have seen in this data series, some 29% more than in the same quarter a year earlier. The approval rate for SME loans continues to run at 9 out of every 10 applications.

    The construction and real estate sectors, which account for half of all existing borrowing, are seeing their borrowing stocks reduce markedly as larger corporate businesses repay borrowing to deleverage, use alternative finance or bank debt is written-off.

13th Oct 2014 Back to top
  • Poll finds millions leave themselves open to scams as banks launch campaign

    The BBA is launching a fraud awareness campaign as YouGov polling reveals that millions of people in Great Britain are unwittingly leaving themselves vulnerable to scams perpetrated by fraudsters posing as their bank.

    The poll assessed customers’ responses to some of the common tactics used by criminals, over the phone, via email or via text. Based on the answers, the BBA calculates that people all over the country could fall foul of the most prevalent frauds around:

    • 8 million vulnerable to “vishing” or voice phishing
    • 4 million might transfer money into another supposed “safe” account if instructed
    • 3 million could be willing to carry out “test transactions” online
    • 1.7 million would pass their bank card over to a courier on their doorstep if they carried some form of ID card

  • BBA Brief – 13 October 2014

    Concerns that Bank could hike new leverage ratio

    The Bank of England’s Financial Policy Committee will meet this week to discuss where to set the new leverage ratio with an announcement due later this month.  The FT (£, p3) reports that some are speculating that it could be set as high as 4-5%.   The top five UK banks would have to raise £46bn by the end of this year to reach a 5 per cent leverage ratio, falling to zero over three years, according to Morgan Stanley analysts.  The article references the BBA’s submission to the Bank of England which warns of “unintended consequences” of a high leverage ratio which could incentivise banks to prioritise riskier lending.  “The potential risks and uncertainty for the housing market in particular should not be underestimated,” said Robin Fieth, the chief executive of the Building Societies Association.

    Farage offers to do a deal with Conservatives in return for 2015 EU referendum

    Nigel Farage told the BBC’s Sunday Politics that he would consider entering a ‘confidence and supply’ arrangement with the Conservatives after the next election in return for “a full, free and fair referendum on our continued membership of the European Union.  I’m not prepared to wait for three years. I want to have a referendum on this great question next year… Sometime in July next year strikes me as a very good time to do this.”

    In the Mail on Sunday a Survation poll put UKIP on 25% of the vote with Labour and Conservatives on 31%.  If replicated in a General Election this could see the party win over 100 seats.  In the same paper, James Forsyth, reported that Cabinet Ministers are warning that if the party loses the upcoming by-election in Rochester that there could be a leadership challenge to David Cameron.  Amid rumours of more defections to come, according to calculations by the academic Matthew Goodwin for the FT (£, p2), four Conservative constituencies – Amber Valley, Cleethorpes, Bury North and Dudley South – face a Ukip threat so strong that defection could be the sitting MPs best strategy for survival.

    Twitter introduces tweet payments in France

    According to the FT (£, p19) Twitter has teamed up with French banking group BPCE to allow its users to tweet money to each other.  S-money, a division of the second-largest French banking group by customers, Groupe BPCE, has teamed up with Twitter to offer the service which will be available to anyone with a bank account and a Twitter handle in France.

    Carney tells bankers to embrace new rules or quit

    The Telegraph (B1) reports that Bank of England Governor Mark Carney defended new rules to make senior bankers more personally responsible for behaviour in their banks.  He told the IMF annual meeting, “If you’re chair of an audit committee, you have responsibility for the activities of an institution. And if you don’t think you can discharge that responsibility, you shouldn’t be on that board.”

10th Oct 2014 Back to top
  • BBA Brief – 10 October 2014

    Bowe named as chair of new banking standards board

    Dame Colette Bowe has been named as the first full-time chair of the Banking Standards Review Council (BSRC). She told the FT (£, p2) that the task is “the most worthwhile thing I can think to do”.  The former chairman of Ofcom will assume the role on November 1, taking over from the former CBI Director General Sir Richard Lambert, who served as acting chair.  The BSRC has been set up to improve professional standards across the industry and improve the culture of banks.

    The BBC cites Anthony Browne, the Chief Executive of the BBA, saying: “Dame Colette’s appointment by a committee headed by Mark Carney demonstrates the importance of the new Banking Standards Review Council.  The industry stands ready to assist her to help it bring about the improvements in standards we all want to see.”

    Osborne warn on Eurozone growth

    George Osborne yesterday warned that the UK economy is at a “critical” juncture due to increasing concerns that the European Union is close to sliding into a triple-dip recession, the Daily Mail (p2) reports.  The Chancellor’s warning comes amid a gloomy outlook from the IMF, which said that the EU was facing a period of deflation and slow economic growth similar to that seen by Japan in its “lost decade”.  Read the BBA’s plan to boost economic growth in the Eurozone here.

    Home loan lending cools after new regulation

    Mortgage lending to first time buyers has fallen for the first time since January, according to Council of Mortgage Lenders figures reported in the Times (£, p44).  The number of loans to all home movers weakened for the first time in five months, sliding by 3% to 36,500.  The paper said that experts attribute the decline to new rules from the Financial Conduct Authority that aim to limit risky lending and those from the Bank of England’s Financial Policy Committee which hope to limit high loan-to-income deals.

  • Lenders set out levels of borrowing from across the country

    BBA Chief Economist Richard Woolhouse said:

    “This data gives a close-up view of SME and personal borrowing right across Great Britain. People can use it to look-up what the picture is like near them.

    “When we look up and down the country, we can see a good spread of lending. That’s important for individuals, businesses and the wider economy.

    “It’s difficult to draw firm conclusions about demand for a number of reasons, but lenders are publishing these figures in a clear commitment to greater transparency.”

9th Oct 2014 Back to top
  • BBA Brief – 9 October 2014

    Investors criticise change in derivatives aimed at curbing damage from bank failure

    The INYT (£, p18) and the FT (£, p21) report that this weekend it is expected that 18 of the biggest international banks and regulators will agree on a change to derivatives that is intended to contain the damage caused by a future collapse of a large bank. However the new rules have led to a warning from institutional investors and pension funds.  Investors have warned that they may resist new protocols to rewrite derivatives contracts as they may clash with their clients’ interests. Tracy Alloway and Tom Braithwaite (FT,£,p21) look at the issue in more detail noting that critics have said the industry-led rewrite is a “piecemeal solution that could end up exacerbating a future run on banks”.

    Eurozone growth concerns

    A number of the papers cover the IMF’s “Global Financial Stability Report” published yesterday which notes that many banks in the Eurozone lacked the “financial muscle” to boost regional growth. José Viñals, the IMF’s Financial Counsellor said that although trading banks were safer, thanks to capital requirements many banks “do not have the financial muscle to provide enough credit vigorously to support the recovery”. (Times, £, p44) The Guardian also reports Viñals’ concerns that more risks are shifting into the shadow banking system in the form of rising market and liquidity risks and that “if left unaddressed, these risks could compromise global financial stability”(Guardian, p27). The Times also reports that yesterday President Hollande appealed to EU leaders to ease austerity rules underpinning the Eurozone because excessive focus on deficit cutting was stifling economic growth (Times, £, p38)

    EU Tax sharing agreement could be agreed next week

    Reuters reports that agreement could be reached at next week’s Ecofin meeting on cross border exchange of tax information. The European Commission wants all 28 EU member states to strengthen rules on how income on savings in bank accounts is taxed, including an automatic exchange of information about which account holders receive what interest payments.

    Lord Hill confirmed by MEPs

    The UK’s Lord Hill has been confirmed as the EU Commissioner for financial services by members of the ECON Committee, with a margin of 45 to 13, writes CityAM (p2). Former French finance minister Pierre Moscovici was approved by 44 votes to 12 as Commissioner for Economic and Monetary Affairs. While both portfolios remain unchanged European Voice notes that with the rejection of the Slovenian Commissioner-designate Juncker may be forced to reshuffle his College portfolios. MEPs will vote to approve or refuse the College of Commissioners on 22 October.

8th Oct 2014 Back to top
  • BBA Brief – 8 October 2014

    Banks write new rules on derivatives

    Eighteen bank “dealers” have agreed new plans which will prevent counterparties terminating derivatives contracts in the event of a bank failure, according to the FT (£).  The discussions – which were led by the International Swaps and Derivatives Association – will make it easier to resolve a future failing institution and will come into force on 1 January 2015. One source close to the negotiations told the paper that it was an important step in ending “too big to fail” as “you have the financial sector absorb the losses but you have the company stay in business”.

    New rules will make it easier to clawback incorrect payments

    A number of banks have introduced rules which will allow them to clawback cash which has been paid into an account unintentionally, reports the Mail (p38). Lenders will notify a customer who has received an accidental payment, and if they do not respond then the money will be automatically returned to the sender or ring-fenced so it can’t be spent. The article cites BBA research which shows that the use of mobile banking apps doubled to 18.6 million per week last year, and that by 2017 60% of all transactions will be done on apps or over the internet.

    Lord Hill set to win confirmation

    Following his second hearing in front of the ECON Committee yesterday, Lord Hill is expected to secure his nomination as the EU’s financial services commissioner, writes the FT (£, p8). After a more “assured” performance with an improved technical knowledge, senior MEPs said that he was “on the brink of being approved”. The Times (£, p2) reports that MEPs voiced concerns over his previous job as a financial lobbyist, but that he was “applauded for voicing strong pro-EU beliefs”.

    The Telegraph (B1) suggests that the Tory peer could lose powers over banking regulation due to anger over the “double majority” voting system – which requires both Eurozone and non-Eurozone countries to support financial legislation – secured by the UK last year. Green MEP Philippe Lamberts said: “He is too close to David Cameron and can’t do this job. There needs to be a reshuffle of responsibilities.” However, the FT quotes senior liberal MEP Sylvie Goulard who said: “We think it is unfair just to reject him because of his passport.”

    MEPs will vote to approve or refuse the 27-member commission on 22 October. Uncertainty remains over a number of positions after Hungary’s nominee, Tibor Navracsics, was rejected for the post responsible for education, culture, youth and citizenship.

    HSBC directors resign over PRA rules

    The FT (£, p1) writes that two HSBC UK board members have resigned over new rules which could see senior bankers jailed in the event of misconduct in the area their responsibility. One senior banker told the paper: “This is an industry concern. A lot of people are saying they won’t join bank boards or won’t stay on them.” Treasury Select Committee chairman Andrew Tyrie MP said: “The crisis showed that there must be much greater individual responsibility in banking. A buck that does not stop with an individual often stops nowhere.”

7th Oct 2014 Back to top
  • BBA Brief – 7 October 2014

    Bank of England proposals for structural reform

    A number of the papers report on yesterday’s announcement from the Bank of England which published proposals “to improve the resilience and resolvability of deposit-takers”. The FT (£, p3), however, said that banks were still in the dark as the amount of capital a ringfenced firm has to hold remains undefined, as does the Bank’s leverage ratio. Banks have until 6 January to submit formal proposals on ringfencing. The article reports that non-executive directors will be needed to oversee the ringfenced operations, adding £1-2 million a year to banks’ running costs. Additionally, no more than a third of a ringfenced bank’s board can be employees or directors of another part of the banking group. There was an acknowledgement from the central bank that the EU’s own structural reforms might affect UK plans.

    The Bank also announced that deposits of up to £1 million will be protected in certain circumstances if a bank collapses under the Financial Services Compensation Scheme. The Telegraph (B1) reports that currently the scheme protects £85,000 but it will be extended to people who temporarily have a larger amount in their account for defined reasons such as if they are buying a house, have received a life insurance payout or if they have been granted compensation.

    Regulators and chief executives meet to discuss cyber concerns

    New York’s banking regulators are to meet with the chief executives of a number of financial institutions to discuss the cyber threat following an attack on JP Morgan Chase’s systems on Thursday which compromised the personal details of 76 million households (FT, £, p20). Superintendent Benjamin Lawsky of New York’s Department of Financial Services said that such cybercrime “isn’t just an issue that should be on a list of problems and things to worry about and work on”. He also said that “the cyber threat has to become urgent, one of the most important issues facing financial services chief executives. It is not an IT problem, it is a bank problem”.  Mr Lawsky also questioned whether, as regulators, they should be considering the cyber threat as something as fundamental to institutions as capital levels.

    This year the BBA published a new paper on the issue – The cyber threat to banking: A global industry challenge – as well as holding the first in a series of conferences on the global cyber risk to banking. You can read more about the work being done in the UK here.

    Rise in internet and telephone fraud

    Financial Fraud Action UK published figures from the banks that show a 59% increase in telephone and internet banking fraud, with £35.9 million of losses in the first six months of the year (FT, £, p20). Following an increase in “vishing” or “voice phishing” – where criminals urge bank customers to call the number on the back of their credit card to validate the call, then keep the line open and play a dial tone to their victims so that they can pretend to be bank customer services – the banks have called upon telecoms operators to reduce the amount of time people can stay on the line. According to the article, the telecoms companies are hoping to reduce the time by next year.

  • August 2014 – Credit Card Market

    Richard Woolhouse, Chief Economist at the BBA, said:

    “Credit card borrowing is now rising faster than at any time since the height of the financial crisis. That suggests consumers are feeling more optimistic about their economic circumstances and the strength of the recovery.

    “It’s also striking that more than 42% of all borrowing on cards incurs no interest at all – a proportion that has risen from 34% just two years ago.

    “This shows how many of us are using credit cards to give us more control over how we manage our finances without being charged for doing so.”

6th Oct 2014 Back to top
  • Why a 0.49% increase is a big deal

    After years of contraction, the number of staff at Britain’s retail banks is finally rising again. Anthony Browne explains why that’s good news for our economy and communities across the country.

3rd Oct 2014 Back to top
  • BBA Brief – 3 October 2014

    Private banks contribute £3 billion to UK plc

    Britain’s private banking and wealth management industry (PBWM) now oversees more than half a trillion pounds, according to the BBA’s new in-depth report into the sector covered in the FT(£, p20) and the Independent. The wide-ranging report shows that the sector, including its 23,000 staff, pays £1.2 billion a year in tax and contributes more than £3 billion to the economy.

    Citywire have posted a slideshow showing many of the findings of Oxford Economics research included in the study, demonstrating the wide-ranging contribution the sector makes to UK GDP. The subscriber only site Wealth Bulletin also covered the report extensively.

    Anthony Browne, the Chief Executive of the BBA described the PBWM, as “one of our country’s hidden success stories.  It is an area in which Britain is a world leader and which creates a wealth of opportunities for people right across the UK. Our report also shows how the benefits of private banking reach well beyond those who use these services, helping our country to attract and retain inward investors- creating jobs and growth.”

    Read the press release here and the full report here.

    FPC takes new powers of mortgage lending, BBA welcomes faster leverage ratio timetable

    The Bank of England’s Financial Policy Committee (FPC) has asked for new “powers of direction” over the mortgage market. Under its plans, it will be able to impose limits on the amount people will be able to borrow compared to their salaries and the size of their deposit. (Telegraph, B3)  It will also be given powers over the buy-to-let sector for the first time.  The BoE plans, which will be subject to consultation, are expected to come into force before the end of the current parliament.  In its first annual assessment of the Help to Buy scheme the FPC stated that it did not believe that the scheme posed a threat to financial stability.

    The FT (£, p2) reports that the FPC also said that it would bring forward the announcement of the calibration of the leverage ratio imposed on banks to the end of October.   Reuters quotes BBA Executive Director Simon Hills, welcoming the move, “Addressing this issue sooner rather later will bring helpful clarity to investors as well as banks, but ultimately this will be a decision for government which should take into account the impact of the proposal on economic growth”.

    Political tensions grow in Brussels over Commission hearings

    The French nominee to the European Commission Pierre Moscovici faced a “tough” hearing in the European Parliament yesterday as political tensions in Brussels escalated.  The Guardian (p30) reports that this has led to rumours that there could be a reshuffle of portfolios for the Commissioners.  The FT (£, p10) reports that Downing Street has signalled it would not accept Lord Hill being given a different portfolio.

    Virgin IPO boosts Treasury coffers and banking competition

    The Independent (p57) reports that Virgin Money has announced plans to float on the stock market which could return as much as £50 million to the taxpayer. Virgin said the latest contribution as a result of the flotation would take the total paid to the Treasury to £1.02 billion of the money used to purchase Northern Rock in 2011.  Virgin Money said it was “uniquely placed to provide effective competition to the large incumbent banks in the UK”. (p57).  In the Mail, Alex Brummer writes that, “Britain’s growing band of challenger banks that includes the recently floated TSB, Virgin and soon-to-be hived off Williams and Glyn’s have a wonderful opportunity.   Faster switching means that a great deal of the hassle involved in changing banks has been removed.”

    The Telegraph reports that Aldermore has unveiled its price range for its stockmarket float, valuing the lender at around £800 million. The challenger bank is looking to raise £75 million in new funds from the IPO.

  • Been turned down for finance? Here’s how you can appeal…

    On Monday Professor Russel Griggs, the independent external reviewer of the Appeals Process for small business lending, launched his first quarterly report of 2014. His numbers show that thousands of SMEs have used the Appeals Process successfully to obtain the finance they need.

    BBA Executive Director of Business Finance Irene Graham’s blog sets out a simple step-by-step guide on how the Better Business Finance website that could help you launch an appeal.

2nd Oct 2014 Back to top
  • A Wealth of Opportunities

    A wealth of opportunitiesThe BBA’s Wealth of Opportunities report, which is supported by the Wealth Management Association (WMA), reveals that investors rate the UK higher than other financial centres for these services, and that the sector last year paid taxes of £1.2 billion – equivalent to £19 for each individual living in the UK.

  • BBA Brief – 2 October 2014

    Lord Hill recalled for second hearing

    Lord Hill has been called back for a second time at the European Parliament in an unprecedented move by MEPs.  While the hearing was said to have been fairly gentle, Lord Hill was reported to have been likeable without having a detailed knowledge of his brief. The FT (£, p7) quotes one MEP saying: “It was very strange. The hearing was tame and then they all turned on him in private.”  Michael Theurer MEP said that Lord Hill was “rhetorically brilliant” but “completely lacking substance”.

    Fears over banks withdrawing from benchmarks

    The front page of the FT (£) reports that many global banks are pulling out of providing data for benchmarks over fears of being hit by accusations of manipulation.  In the paper’s Lombard column (£, p20) Jonathan Guthrie warns, “tottering benchmarks would cause turmoil for investors no longer able to price contracts worth trillions. That would be just another negative unforeseen consequence of over-regulation. The need for governments to yank on the choke chains of watchdogs such as the NYDFS is clearer than ever.”

    New York vs London

    The FT (£, p19) looks at the rivalry between New York and London to be the world’s leading financial centre.  While New York is the “undisputed global king of equities” and has the world’s largest banks, London has the largest currency trading and over-the-counter interest rate derivatives.  The article warns that more top executives are open to moving away from London following the introduction of EU bonus rules and suggests that both cities need to be on their guard for the challenges from Asian competitors.

  • A wealth of opportunities: Private banking and wealth management attracts investment, creates jobs and boosts growth

    A new major study into Britain’s private banking and wealth management (PBWM) industry today reveals that the sector now oversees £524 billion and contributes £5.5 billion a year to the economy – equivalent to a city the size of Brighton and Hove.

    The BBA’s Wealth of Opportunities report, which is supported by the Wealth Management Association (WMA), reveals that investors rate the UK higher than other financial centres for these services, and that the sector last year paid taxes of £1.2 billion – equivalent to £19 for each individual living in the UK.

1st Oct 2014 Back to top
  • BBA Brief – 1 October 2014

    FCA gives more details of “portability” review

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

    M&A activity at its strongest for five years

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

    ECB eyes junk bonds purchases to power growth

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

    RBS wipes out more than £800 million of bad debt

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

30th Sep 2014 Back to top
  • BBA Brief – 30 September 2014

    FSB backs derivatives plan

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

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

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

    BoE’s stats suggest cooling housing market

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

29th Sep 2014 Back to top
  • BBA Brief – 29 September 2014

    Jourová takes over on City pay

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

    Global economists warn on interest rates

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

    Appeals Process has led to fewer mistakes

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

    Card fees to cost shoppers £785 million each year

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

  • Lending Appeals Process working for small businesses

    Responding to the  Q1 2014 Appeals Process report by the Independent External Reviewer, Professor Russel Griggs, BBA Executive Director of Business Finance, Irene Graham, said:

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

26th Sep 2014 Back to top
  • BBA Brief – 26 September 2014

    FCA holds forex discussions with banks

    On Sky News, Mark Kleinman reports on speculation that “some of the world’s biggest banks” have met with the Financial Conduct Authority (FCA) to discuss a settlement for the manipulation of global foreign exchange markets. The article says that the regulator has agreed with the banks an eight week “consultation period” so that they might reach a deal on penalties by the end of November. According to the article the penalties handed out could be higher than the FCA’s fines for Libor.

    EU recommendations on bank allowances

    The FT (£, p1) reports that Jean-Claude Juncker, president of the European Commission, has removed Lord Hill’s responsibility for overseeing financial sector pay if he is accepted as Commissioner for Financial Stability, Financial Services and Capital Markets Union. The article speculates that this is intended to head off objections in the European Parliament. The report also looks at the European Banking Authority’s proposals that would push British regulators to tighten rules on banks’ plans to pay their staff allowances. The paper writes that to be excluded from the EU bonus cap, the draft report concludes that “allowances must be awarded over a set period, include no forfeiture provisions if a person hands in their notice, and be impossible to adjust midterm without staff consent. Fixed allowances would be expected to be assigned to particular positions rather than individuals, meaning that bankers or traders with the same role should receive the same allowance, regardless of performance.”

    Chancellor allows regulators to police benchmarks

    In a consultation yesterday the Treasury said that seven market benchmarks are to be newly scrutinised by regulators (FT, £, p3). Under rules proposed by the Treasury, the FCA would be the responsible regulator with powers to impose criminal sanctions on those creating false or misleading impressions in the financial markets. Andrea Leadsom, the Economic Secretary to the Treasury, said: “Ensuring that the key rates that underpin financial markets are robust and that anyone who seeks to manipulate them is subject to the full force of the law, is vital.”

    Commenting a spokesman for the BBA said:  “We welcome these moves to introduce clear, robust regulation of benchmarks with tough criminal sanctions. This did form part of the announcement of the Fair and Effective Market Review and will only enhance London’s reputation as a safe place to do business. We also believe it is absolutely right that anyone who has been found guilty of manipulating market benchmarks should be properly punished.” The consultation paper can be read here.

    Interest rates rises around the corner

    Bank of England Governor Mark Carney has said that the strength of the recovery has put the UK in a position to cope with higher interest rates (Times, £, p43). The Governor restated that any rise would be “gradual and limited” and he emphasised that rate rises would be lower than those seen in the past. Mr Carney said that keeping rates too low for too long could encourage risks to build up in the financial system – including the housing market, which he said posed the biggest risk to the economy (Telegraph, p1). In a separate interview with the Yorkshire Post, Minouche Shafik the Bank’s deputy governor for markets and banking said policymakers might have to raise rates more quickly if pay rises aren’t matched by higher productivity.

    New rules on buy-to-let mortgages

    The Telegraph (p1) reports how new EU affordability rules are being extended to buy-to-let homeowners. The new measures, to be introduced in March 2016, will now impact “accidental landlords” including those who have inherited property or rent out their home after being unable to sell it. The Council of Mortgage Lenders estimated that these accounted for less than 20% of the buy-to-let market. The rules for ordinary mortgage borrowers require lenders to assess their incomes and spending habits in great detail to ensure that they can afford the loan, which could impact upon older landlords as some companies require mortgages to be paid off before retirement.

25th Sep 2014 Back to top
  • BBA: those who manipulate benchmarks should be properly punished

    Commenting on the HM Treasury consultation launched today on extending legislation of financial benchmarks, a spokesman for the BBA said:

    “We welcome these moves to introduce clear, robust regulation of benchmarks with tough criminal sanctions. This did form part of the announcement of the Fair and Efficient Market Review and will only enhance London’s reputation as a safe place to do business.

  • BBA: “encouraging” signs on complaints – but there can be no complacency

    Commenting on FCA statistics showing a 5% fall in complaints to banks and other financial services firms, a spokesman for the BBA said:

    “Banks are trying hard to lower the number of complaints and have been working closely with the Financial Conduct Authority to achieve this.