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Brexit and the cost of relocating Euro clearing activity
EU Ministers will meet in Brussels today to finalise their Brexit negotiating position, ahead of the start of formal negotiations with the UK (Bloomberg, online). The meeting follows warnings that moves to relocate Euro clearing out of the UK could increase costs for investors by €100 billion over five years (The Times, £, p37). The Times (£, p43) also reports speculation over whether banks’ existing branch structure could be used to continue to offer services for clients across the EU post-Brexit, with additional EU staff and trades booked in the UK.
UK house prices continue to rise
Asking prices for residential property rose by 1.2% last month, according to Rightmove, with the average asking price now £317,281 despite uncertainty over the impact of Brexit and the UK general election (The Guardian, p21). Commenting on the data, Brian Murphy, Head of Lending for Mortgage Advice Bureau, said “this month’s report points to the majority of movers being nonplussed about the election, with their moving plans being driven by circumstantial factors that can’t wait, eg a growing family”.
European Commission asks EBA to give Fintechs more access to banks’ data
Reuters (online) reports that the European Commission’s Vice President Valdis Dombrovskis has asked the EBA to review its proposed restrictions on Fintech firms accessing bank customer details. The rules, introduced under the second Payments Services Directive, are designed to increase competition in banking services, however regulators have raised concerns over cybersecurity and client confidentiality.
Business reaction to Conservative manifesto
The Times (£, p41) writes that business groups have criticised a number of measures in the Conservative party’s general election manifesto, raising fears that they will increase costs and reduce access to skilled labour. City AM (p1) reports that the manifesto also pledged to increase the remit of regulators and consumer bodies in addition to reforming the rules on executive pay and share buy-backs. Commenting on the proposals, Director General of the Institute of Directors Stephen Martin said, “we have been promised a ‘Global Britain’ after Brexit, but these policies are pulling in the opposite direction”.
Brexit Secretary sets out negotiation approach
Speaking to the Daily Express (p1) David Davis, currently Secretary of State for the Department of Exiting the EU, has said that while his priority will be “preserving as much as we can of our current markets within Europe”, half his time is allocated to planning for the possibility of the UK leaving the EU without agreeing an exit deal. Bloomberg (online) reports that the Conservative manifesto seeks public backing for leaving the EU without a deal if both sides are unable to agree on new arrangements.
President Trump ‘will not break up big banks’
The Wall Street Journal (£, p5) reports that US Treasury Secretary Steven Mnuchin told the US Senate banking committee that the Trump administration does not support a separation of retail and investment banks, citing risks to “financial stability… the economy and liquidity”. The Wall Street Journal notes that a number of potential options for reforming banking regulation have emerged in recent weeks, including use of the existing regulatory framework to restrict transactions between subsidiaries within the largest banking groups.
Sam Mannion, BBA Policy Director, sets out the European Commission’s proposed changes to EMIR.
Conservative manifesto published today
The Conservative general election manifesto will be launched in Yorkshire today. It is expected to include proposals to reform social care and reduce immigration, with new charges for firms that hire foreign workers (BBC News).
Sky News (online) reports that the manifesto is also expected to remove commitments to the pensions triple lock and previous promises not to increase income tax, VAT or national insurance. The Prime Minister will also highlight the importance of Brexit negotiations, noting that “now more than ever, Britain needs a strong and stable leadership to make the most of the opportunities that Brexit brings”.
European Commission to propose stronger links between EU27 Capital markets
The European Commission is expected to propose a number of measures to enhance the EU 27 capital markets framework after Brexit, including the creation of a passporting regime for technology firms, a stronger role for ESMA and an EU Small Listed Companies Act (Reuters, online).
Speaking to the European Parliament, the European Commission’s lead Brexit negotiator, Michel Barnier, warned that UK-based firms should, “not count on long transition periods to cushion the impact of Britain leaving the European Union” and called for firms to start preparing for the impact of Brexit now (Reuters).
Relocation of Euro-clearing would damage European Economy
Relocation of the Euro-clearing market would destabilise the European economy and wider global economic system (City AM, p1).
Commenting on the measures proposed by the European Commission, City of London’s Policy Chief Catherine McGuinness said, “all the evidence points one way: that the mass uprooting and offshoring of part of the industry – of clearing of transactions in one currency – would not only be vastly complicated, but also vastly damaging…if we split off one currency, with euro clearing moving to, say, Paris, all we’ll see is systemic risk going up, liquidity going down, costs hitting the roof” (Reuters, online).
EU-Singapore free trade deal may signal ‘faster, harder’ Brexit
The European Court of Justice has ruled that a free-trade deal between the EU and Singapore will largely be agreed by the European Commission, with dispute resolution mechanism and investment portfolios the only two areas where all member states must agree on final terms (Financial Times, £, p1).
The ruling has been interpreted as a potential model for a post-Brexit deal with the UK. Bloomberg (online) writes that the judgement paves the way for a quicker but harder Brexit, noting that it “makes life easier for Commission President Jean-Claude Juncker and chief Brexit negotiator Michel Barnier, who have made it clear they want to serve the UK with a large divorce bill and harsher terms”.
Henrietta Royle, BBA Chief Operating Officer blogs on the value of gender diversity in banking, 60 years on from the appointment of the UK’s first female bank branch manager.
Labour to propose financial transaction tax and executive pay reforms
The Labour party will publish its manifesto today including a financial transaction tax of 0.5% on trading in bond and derivatives, and a 2.5% levy on employers that pay staff more than £330,000, rising to a charge on 5% for companies that pay staff over £500,000 (The Guardian, p1). The Daily Telegraph (£, B1) warns that this could increase costs for pension funds, and risks damaging the UK’s competitive position after Brexit. Laith Khalaf, Hargreaves Lansdown Senior Analyst commented that, “a lot of money invested in the City is done by pension savers. It’s very difficult to add a tax like that into the system without ultimately hitting consumers in the pockets, as all of our pensions are invested into the stock market”.
Industry calls for amendments to PSD 2
Politico (£) reports that the European Banking Federation has called for the European Commission to reject changes to the second Payments Services Directive that would allow Fintech firms to control online platforms which would grant them direct access to client data. The proposals come as banks increase their investment in cyber security, with Reuters (online) reporting that although “banks generally have more robust cyber defenses than other sectors” they are targeted far more often as hackers try to exploit weaknesses in technology.
Missed debt repayments at ten year high
The Daily Mirror (p2) reports that 300,000 county court judgments were issued against individuals who missed debt payments in England and Wales in Q1 2017, the highest level in ten years, according to data from The Registry Trust. The Guardian (p21) notes concerns over potential mis-selling of car loans have contributed to debt in low-income families, triggering an investigation by the FCA. Commenting on the data, Chair of the Registry Trust Malcolm Hurlston said, “people who don’t pay their debts are increasingly likely to be taken to courts. CCJs can seriously damage credit ratings and good lenders rightly avoid people who have shown they can’t manage debt”.
Brexit could cost banking sector $1.5 billion
Consultancy Oliver Wyman has estimated that duplication of activities and capital efficiencies caused by Brexit could reduce European investment banks’ return on equity by $1.5 billion (Financial Times, £, p15). Assessing the scale of potential costs a banking source said, “if agreements allow for a set-up that enables us to contact clients out of a European entity that has European access but continue to manage risk and trading out of London, the impact would be far less”. Meanwhile Irish Central Bank Governor Philip Lane has said that “regulators across the EU are “broadly” seeking to apply the same rules in each country” amid fears that Brexit will lead to greater regulatory fragmentation across the EU 27 (Bloomberg, online).
ICAEW sets out guidance on capital ratios
The Institute of Chartered Accountants in England and Wales (ICAEW) will today publish new guidance for auditors assessing banks’ reported capital ratios (Financial Times, £, p20). Commenting on the standards, Iain Coke, ICAEW Head of Financial Services, said that banks investors were “more confident than they should be” about this data, noting that calculation of capital ratios is subject to a greater degree of user error and bias than conventional balance sheet reporting. The BBA said the publication of regulatory capital data “shows how the industry’s capital position has been steadily improving – our banks today are stronger than they have ever been and better able to withstand any shocks to the financial system”.
Europol praises banks’ cyber resilience
Europol Chief Executive Rob Wainwright has praised the banking sector’s approach to managing cyber crime, following a series of high profile ransomware attacks last week (City AM). Speaking to ITV on Sunday, Wainwright noted that, “very few banks in Europe, if any, have been affected by this and that’s because they’ve learned through painful experience about being the number one target in cyber crime, the value of having a strategy in place”. Reuters (online) reports that G7 Financial Ministers have strengthened their commitment to closer cooperation on cyber crime and terrorist funding.
UK Rate rises ‘depend on Brexit deal’
Bank of England Governor Mark Carney has said that interest rates could be back to “normal” levels within three years depending on the outcome of Brexit negotiations (Financial Times, £, p1). Traders interpreted his comments as a signal that rates are unlikely to rise before 2019, while the Bank lowered its GDP prediction for 1.9% reflecting weaker than expected Q1 economic growth (The Times, £, p40).
FCA to review retail banking business models
The FCA has published details of its review into the ongoing sustainability of retail banks, building societies and credit unions’ business models in a low interest rate environment (Reuters). The review is expected to look at the provision of free in credit banking, with findings to be published in Q2 2018. Commenting on the announcement, the BBA said, “the BBA welcomes the FCA’s commitment to ensuring that its regulatory approach remains fit for purpose and helps the sector deliver the right outcome for customers. We look forward to engaging with the regulator to help inform this review”.
US regulator to consider modifying Volcker rule
The Wall Street Journal (£ online) writes that acting Comptroller of the Currency Keith Noreika will consider relaxing restrictions on banks’ trading activity by, “cataloging types transactions or investments, then evaluating whether to grant regulatory exemptions for those activities”.
Bundesbank won’t seek to attract UK banks after Brexit
Bundesbank Board Member Andreas Dombret has said that the German authorities will not seek to attract UK banks to relocate after Brexit, commenting that, “we will not be calling banks, we will not be giving discounts or goodies, we will not allow shell companies” (Politico, £, online). He also promised to offer resources to European regulators in other jurisdictions, noting that, “it is in everybody’s interests that we don’t have a cliff-edge effect. I am enough of a European that to me, the issue of which city hosts [the relocating banks] is of secondary nature.”
Bank of England to publish interest rate decision
The Bank of England will today publish its quarterly inflation report setting out its outlook for the UK economy, as well as its latest decision on interest rates. The Financial Times (£, online) speculates that, while interest rates are widely expected to remain unchanged, more members of the Monetary Policy Committee could vote for a rate rise. The Independent (online) summarises analyst predictions, noting that many expect the Bank to lay the groundwork for future increases.
Labour to promise tax and pay reforms
A number of papers, including The Daily Telegraph (£, p1), Daily Mirror (p1) and BBC (online), have published exclusive details of a draft version of Labour’s election manifesto, which includes pledges to rule out a “no deal” outcome on Brexit, increase corporation tax and introduce a levy on firms that offer “very high pay”.
Spitch, blogs on the value of making audio archives fully searchable to comply with PCI DSS and MiFID II requirements.
BBA Executive Director, Prudential, and Nicholas Edge, BBA Policy Director, Prudential, blog on measures taken to safeguard the financial system since the crisis.
European Banks could face extra capital costs of €40 billion European banks have warned that they may relocate staff and operations to the EU after Brexit if the Bank of England rules that they must convert their UK branches to subsidiaries, which have higher capital requirements (Reuters, online). Boston Consulting has estimated that European banks could face an additional €40…
Banks set out Brexit contingency plans
More than a quarter of financial services firms are planning to move some of their staff or operations out of the UK after Brexit, according to EY (Financial Times, £, p2), with 21 of the 47 investment banks it surveyed setting out some detail on their contingency plans in recent weeks. Omar Ali, EY’s UK Financial Services Leader said, “the more complex the organisation, the longer it is going to take to create workable contingency options, and so investment banks in particular are putting their plans on record”.
Reuters (online) also reports that French authorities are expected to step up efforts to attract banking business from the UK. Arnaud de Bresson, Chief Executive of Paris Europlace estimated that Paris could attract 20,000 workers from Britain, noting that “Macron will personally make it his mission to convince the international banks as well as investors of the benefits of Paris”.
House prices fall by 0.2% in Q1 2017
House prices were 0.2% lower in the first quarter of 2017, the first fall since November 2012, according to Halifax data (The Daily Telegraph, £, B1). Commenting on the data, Halifax Economist Martin Ellis said, “signs of a decline in the pace of job creation and the beginnings of a squeeze on households’ finances as a result of increasing inflation may also be constraining the demand for homes” (The Times, £, p40). The Daily Mail (p21) notes that the Bank of England is expected to warn of further downward pressure on household income in its inflation report, to be published on Thursday.
Judicial Review of PPI time bar
City AM (p15) reports that a claims management firm will bring a judicial review against the Financial Conduct Authority, following the regulator’s decision to set a two year time limit for customers to make PPI claims. The Sunday Times (£, online) notes that, “lenders have paid out nearly £30bn to compensate customers who were mis-sold PPI”. Under the FCA’s proposals customers have until August 2019 to submit a claim.
Bank of England publishes bailout requirements
The Bank of England has published MREL requirements – the minimum amount of its own funds and eligible liabilities – that banks must hold to cover losses in the event of failure (Financial Times, £, online). Reuters (online) notes that banks are working towards an interim MREL target which applies from 2020. Simon Hills BBA Executive Director, Prudential Capital, Risk and Regulatory Relationships, noted that: “it would be very helpful if the Bank of England and authorities around the world were very clear that there is a transition period to getting to the TLAC end state”.
Two years ‘not long enough’ to adjust after Brexit
Policy-makers should commit to a phased implementation period that lasts for more than two years, to allow financial services firms to ensure continuity of service for their clients after Brexit, according to a Freshfields report for TheCityUK (The Guardian, p40). Commenting on the report, Miles Celic, Chief Executive of TheCityUK, said: “The UK-based financial and related professional services industry has long been a driver of growth and job creation on both sides of the Channel. It is in our common interest that this role is not just preserved, but promoted”.
Spitch, blogs on how automated data redaction can help banks comply with their regulatory requirements.
Mark Russell, BBA Senior Policy Director, Financial Stability blogs on the Bank of England’s latest MREL publication.
Mortgage approvals fall in March
Mortgage approvals fell to 66,837 in March, the lowest level since September 2016 according to data published by the Bank of England (Sky News, online). This mirrors the BBA’s latest high street lending figures, which show mortgage borrowing in March was 2.8% lower than February (The Times, £, p44). Commenting on the mortgage market, Kay Daniel Neufeld, of the Centre for Economics and Business Research, said, “the numbers paint a sobering picture. [The UK property market] has been struggling to gather momentum in 2017”.
EU considers new Euro clearing regulation
The European Commission has suggested that the UK will not be able to retain Euro clearing activity, worth €1 trillion, after Brexit and is considering imposing “location requirements” and enhanced oversight of clearing activity (Politico, £, online). Vice President of the European Commission, Valdis Dombrovskis, said: “The bulk of EU-denominated derivatives are cleared in the UK and therefore we need to assess what implications it has for financial stability” with further legislative proposals expected in June (The Times, £, p41).
Fraudsters ‘imitate bank domain names’
Criminals are targeting online banking customers by setting up websites that mimic banks’ domain names to persuade them to hand over personal details or download malicious software (Daily Mail, online). Kyle Wilhoit, Senior Security Researcher at DomainTools warned that customers “should remember to carefully inspect every domain they are clicking on”, adding that common warning signs included website addresses with, “added letters, dashes, reversed letters, and a plural or singular form of the domain name”.
Rob Colwell, Partner, Strategy & Customer Advisory, Financial Services at EY blogs on what banks can learn from Fintech start-ups when it comes to customer experience.
CBI calls for the Government to prioritise jobs in Brexit deal
The CBI has warned that public discussion over the scale of a potential Brexit payment is distracting from the priority issues of maintaining trade flows, securing jobs and maintaining economic growth (The Daily Telegraph (£, B1). CBI Director General Carolyn Fairburn has called for the Government to ensure “robust interim transitional arrangements are in place as soon as possible” and called for continued access to skilled labour (The Times, £, p40).
Public still hold £150 million worth of paper £5 notes
BBC News (online) reports that over £150 million worth of paper five pound notes – equivalent to three per adult in the UK – remain in circulation. Shops will no longer have to accept them from Saturday, although customers will be able to exchange them for new polymer five pound notes with the Bank of England.
Disagreements over future European supervisory model
Politico (£, online) notes that French former Central Bank Governor, Jacques de Larosière, has warned against merging the EBA and EIOPA – reported to be the model favoured by German authorities – after the UK leaves the EU. Meanwhile, Sweden’s Financial Supervisory Authority has argued that the Italian debt crisis shows that a single EU rulebook does not work, and called for regulators to move away from greater harmonisation of capital requirements (Bloomberg, online).
Stilpon Nestor, calls for ESMA and the EBA to refine their proposed governance guidelines, or risk bank boards simply becoming talking shops.
EU to publish Brexit guidelines
The European Commission is expected to publish draft guidelines on Brexit negotiations today (Politico, £, online). The Financial Times (£, p1) speculates that EU negotiators are likely to raise the UK’s bill for leaving the EU to €100 billion which includes administration costs and farm payments, while The Times (£, p1) notes that Prime Minister Theresa May will be unable to negotiate Brexit terms directly with her EU counterparts, with talks to be held with the European Commission’s chief negotiator, Michel Barnier.
Over 65s to borrow mortgages worth £39.9 billion by 2030
BBC Radio 4’s Today programme reports that 1.42 million homeowners aged 35 to 64 will not have paid off their mortgage by the time they retire, according to the International Longevity Centre and Building Societies Association. Homeowners over 65 currently borrow £19 billion, but this is expected to rise to £39.9 billion by 2030. The report warns that, “ economic trends such as house price inflation, tighter credit conditions and low real growth means we can expect to see a significant shift in the customer base over the next thirteen years” ( Daily Mail, online).
ECB calls for final agreement on Basel
Danièle Nouy, Chair of the ECB’s Supervisory Board, has called for global supervisors to agree a minimum ‘floor’ for capital requirements for banks (Politico, £, online). Commenting on the regulation, Nouy said, “the final design and calibration of the floor are still being discussed, and the intention is to avoid significantly increasing the overall capital requirements for banks. It is crucial that an agreement is reached as quickly as possible. We have to finalize the entire Basel III package to ensure that a global standard is in place.” The full speech is available here.
UK criticised over tone of pre-Brexit talks
There is widespread coverage of the Prime Minister’s meeting with European Commission President Jean-Claude Juncker last week. The Guardian (p1) reports EU sources have criticised the tone of the discussion, suggesting that the chances of the negotiations failing are now greater than 50%, while the Prime Minister has sought to downplay the remarks (Reuters, online). BBC News (online), notes that the most contentious issues are agreeing EU citizen’s rights, parallel trade negotiations and any outstanding financial commitments.
European Commission to propose centralised supervision of euro clearing
The European Commission is expected to propose “more centralised supervision” of central clearing houses that provide critical capital markets functions to EU countries in June (Financial Times, £, p1). The regulations may force euro clearing activities to relocate to the EU ahead of the UK’s exit from the EU, with EU officials warning that there is little point in, “wasting time on unrealistic ideals in Brexit talks”.
Bank of Mum and Dad lends £6.5bn to homebuyers
Financial contributions from parents, family members and friends to help home-buyers purchase a property have risen to £6.5 billion, up 30% from last year, supporting 26% of all UK transactions according to L&G (Financial Times, £, p1). The under 30s benefit most from this, receiving 79% of funding, with average contributions to rise from £17,500 to £21,600 (City AM, p15).
Welcome to my newsletter. Despite the various bank holidays, it’s been a busy period, with elections at home and across the Channel dominating the political and media agenda. The snap General Election announcement following the Easter holiday was certainly a surprise. While purdah has commenced we are continuing to focus our activity with ongoing engagement with policymakers across the EU.
The British Bankers’ Association (BBA), the Building Societies Association (BSA) and the Tax Incentivised Savings Association (TISA) committed that for 2017, a minimum of 80% of cash ISA transfers would be completed within seven working days.
BBA High Street Banking statistics – March 2017
The Financial Times (online) reports that consumer credit growth slowed in March 2017, with fewer than expected new house purchase approvals also recorded, according to the latest BBA High Street Banking statistics. Although net mortgage borrowing was 2.2% higher than a year ago, consumer growth dropped to 6.1% in March, compared with 6.5% in February 2017. Commenting on the statistics, Eric Leenders, BBA Managing Director for Retail Banking said: “In March, annual growth in consumer borrowing from the main high street banks slowed, perhaps mirroring the dip seen in retail sales volumes as price rises appear to have started biting into consumers’ spending. House purchase approvals were largely in line with last year’s average, broadly reflecting a steady housing market. Business lending increased in March across a number of sectors including construction, manufacturing, retail and wholesale, and utilities”.
Venture Capital funding to fintech companies in Europe jumps
FinExtra (online only) reports on the latest figures from CB Insights which shows that VC funding to fintech companies in Europe spiked in Q1. Amid upcoming legislation that could open the door for fintech companies to challenge incumbent banks, Europe saw Q1 funding to VC-backed fintech companies jump 222% sequentially. The statistics show that, in total, fintech startups in Europe raised $667 million across 73 deals in Q1, a rise 121%, while deals rose 38%. The increase in activity in Europe is in sharp contrast to a more subdued outlook in US markets, where deal activity dropped nine percent sequentially and funding fell eight percent. BBA CEO Anthony Browne has discussed the future of financial technology in the latest edition of Raconteur, which you can find here.
Foreign investors back Brexit Britain
The Daily Telegraph (B1) reports on figures from the Organisation for Economic Co-operation and Development (OECD), which suggest that Britain is the number one destination in Europe for foreign direct investment, with a surge in inflows to levels not seen since before the financial crisis. According to the OECD, UK FDI inflows rose to $253.7bn (£197bn) in 2016, up from £33bn the previous year, with Britain climbing above Ireland, Switzerland, the Netherlands and France to become the top destination for inward FDI across Europe and second only to the US in the OECD club of 35 rich economies. The OECD highlighted that the massive surge in FDI inward flows to the UK was driven by a handful of significant deals.
Eric Leenders, BBA Managing Director for Retail Banking said:
“In March, annual growth in consumer borrowing from the main high street banks* slowed, perhaps mirroring the dip seen in retail sales volumes as price rises appear to have started biting into consumers’ spending.
House purchase approvals were largely in line with last year’s average, broadly reflecting a steady housing market.
Business lending increased in March across a number of sectors including construction, manufacturing, retail and wholesale, and utilities.”
Anthony Browne, BBA CEO, discusses the future of the banking industry with particular regard to financial technology or “Fintech” in the latest edition of Raconteur.
The euro clearing market debate continues
The ‘battle’ for London’s euro clearing market has gained pace, City AM writes (p1, online). French finance minister Michel Sapin told BBC News (online) that in order to uphold the security of European monetary markets, clearing houses cannot stay in London after Brexit. In conversation with The Telegraph (B1, online), Michael Spencer, chief executive of Nex Group, said such a move would be ‘protectionist’ and ultimately, a dangerous act. Markets will stay in Britain post-Brexit if the UK has a ‘swagger’ and is ‘open to business’, said ICE CEO Jeff Sprecher (Reuters, online).
Code of Conduct launched by Bank of England
The Bank of England has launched a new voluntary code of conduct designed to promote ‘fairness and integrity’ in UK money markets (Financial Times, £, online). Although not legally binding, it is hoped senior managers will oversee the code’s implementation within financial firms. The code sets out key behavioural principles around ethics, information-sharing and trade execution, and helps to build trust and transparency; ‘cornerstones’ of financial transactions (City AM, p21, online).
Tories expected to change ECHR manifesto pledge
Theresa May met with Michel Barnier, Jean-Claude Juncker and other Brexit negotiators last night during which May reiterated her commitment to the UK’s ‘deep and special relationship’ with the EU (Financial Times, p3, £, online). Meanwhile, the Conservatives are expected to drop their pledge to withdraw the UK from the ECHR. According to The Daily Telegraph (p1, online), leaving the ECHR would ‘distract’ from Brexit negotiations, so Britain can expect to be bound by European human rights laws for another five years.
Nick Kemp, Senior Manager at Deloitte, blogs on the recent changes to the way firms must report received complaints to the FCA.
Tyrie stands down from Parliament
Conservative MP and Chairman of the Treasury Select Committee Andrew Tyrie has announced he will not stand for Parliament in the upcoming election. Tyrie reflected on his time in parliament as ‘exhilarating’ and counted shaping a ‘more trusted and resilient financial sector’ among his accomplishments (Financial Times, p2, £, online). FCA Chief Executive Andrew Bailey commended Mr Tyrie for his role in ‘enhancing the accountability of economic and financial policy’ (The Independent, online).
Account switching increases, as customers abandon cash for card payments
The payment body BACs has revealed that 248,302 customers changed banks between January and March 2017, a fifth more than the same time last year (The Sun, p41). As well as switching accounts, the way customers make payments is also changing. A study by ING shows that most customers prefer using card over cash, with 21% of those surveyed admitting they rarely carry notes or coins and 29% saying they would be happy to abandon cash altogether, due to developments in financial technology (fintech) and peer-to-peer lending (Bloomberg, online).
Basel Committee outlines annual commitments
The Basel Committee on Banking Supervision (BCBS) has outlined its strategic priorities for 2017 – 2018 including a “greater focus on supervision” and continued monitoring of “emerging cyclical and structural risks”. The Committee will hold off from launching ‘new projects’ until it has finished assessing reforms introduced in the near-decade since the financial crisis (City AM, p3, online). The industry has welcomed these proposals, with Bank of England Governor Mark Carney highlighting the continued need to “resist regulatory fatigue”, especially amid economic uncertainty surrounding Brexit and Trump’s attempts to pursue deregulation (Financial Times, £, online).
Eurozone ‘pop-up branches’
It could take up to a year to secure a license that will allow UK banks to operate in the eurozone post-Brexit, the ECB has warned, prompting concern that they won’t be ready to leave the EU by 2019 (Financial News, p19, £, online). The Times (p. £, online) reports that US banks have proposed ‘pop-up branches’ that will enable them to provide services to the eurozone, while keeping the majority of staff and work in London, as a means to minimise financial disruption. Regulators are concerned that ‘pop-up branches’ will mean banks won’t have a ‘proper presence’ in European countries. In other Brexit news, the EU has ring-fenced UK financial services from a future trade deal to ‘safeguard financial stability in the Union’ (Bloomberg, online).
Election campaigns in the UK and France continue
Sir Keir Starmer, Shadow Brexit Secretary, will reveal the Labour party’s Brexit manifesto today (i paper, p4, online). If elected, the party has pledged to scrap the Great Repeal Bill in favour of legislation that protects EU workers’ rights and environmental standards, and prioritise UK access to the single market during exit negotiations. Meanwhile, the French Presidential contest continues as Macron’s success prompted $290 billion to be added to the global market (City AM, p1, online). His opposition, Marine Le Pen, has stepped down as leader of the National Front in a bid to widen her voter appeal (BBC News, online).
Employment in the financial services sector
City AM reports (p1, online) that the financial services sector employs 7.3% of the UK’s working population, and workers in the sector contribute 1.5 times more to the economy than the average UK employee. In the year to March, financial services salaries rose by 3.5%, four times faster than other professional industries, as employers seek to secure top talent (City AM, p7, online). Meanwhile, a study by Boston Consulting Group has found the most efficient way to achieve workforce gender diversity is to promote women already working in the company, as opposed to relying on a ‘scattergun approach’. Robust flexible working schemes, clear targets and visible role models also help (Financial Times, p17, £, online).
Financing Growth has been produced to help small to medium-sized businesses identify some of the different finance options that may be available to expand their business, including information, tips and Read More
Brexit and the cost of relocating Euro clearing activity EU Ministers will meet in Brussels today to finalise their Brexit negotiating position, ahead of the start of formal negotiations with Read More
Business reaction to Conservative manifesto The Times (£, p41) writes that business groups have criticised a number of measures in the Conservative party’s general election manifesto, raising fears that they Read More