9th Oct 2015 Back to top
  • Strengthening accountability in banking: the impact on HR

    Philippa Grocott, partner at training and consultancy company FSTP, sets out what the Individual Accountability Regime will mean for banks’ human resources departments.

  • BBA Brief – 9 October 2015

    Treasury Select Committee Chairman voices concerns over corporation tax surcharge and competitiveness

    Andrew Tyrie, Chairman of the Treasury Select Committee, has called on the Prudential Regulation Authority (PRA) to ensure that the corporation tax surcharge on bank profits does not damage customer choice by making it too expensive for challenger banks to compete, the Times (£, p51) reports. The paper says that in a letter to PRA Chief Executive Andrew Bailey, Mr Tyrie acknowledged that the regulator had helped challenger banks establish themselves, but said small banks are pressing for more reforms to help them compete with bigger players. The FT (£, p4) adds that the letter comes just weeks after the Treasury refused smaller lenders relief from the charge. In it, Mr Tyrie said it was essential that the tax “does not obstruct parliament’s efforts over the past four years to increase competition in the banking sector”.

    CityAM (p2) quotes Paul Lyman, Chief Executive of Secure Trust Bank and the Chair of the BBA’s challenger banks panel, saying: “Andrew Tyrie is one of the few politicians thus far who are taking a holistic view of the ineffective competition across the UK banking market. Our position as a collective of challenger banks is very straightforward: we don’t mind being on the same tax structure, so long as we create a level playing field for banks of all sizes.”

    “Vote Leave” campaign launches

    The Telegraph (p1) splashes with the news that a cross-party group calling for the UK to leave the European Union has the backing of some of the country’s most successful entrepreneurs. Vote Leave, which launched last night, has the support of former Conservative Party co-treasurer Peter Cruddas, John Mills, the head of television shopping firm JML, and Stuart Wheeler, a UKIP donor and former party treasurer. The paper says the group believes EU red tape is damaging businesses and that it “cannot cope” with the “technological and economic forces” that are changing the world. It adds that David Cameron will tonight host German Chancellor Angela Merkel at Chequers, where he will try to secure support for his EU reform agenda.

    Banks asked to check commodities exposure

    The PRA has asked the UK’s big banks to disclose their full exposure to commodity traders and falling prices of raw materials, the FT (£, p18) reports. The request was prompted by concerns over the impact of the oil and metals slump, although it was not in response to any immediate concerns of a default, the paper writes. It adds that the regulator is checking that banks know what their exposures are to individual commodity houses and they are aware of the wider consequences if a larger commodity trader were to collapse.

8th Oct 2015 Back to top
  • BBA Brief – 8 October 2015

    FCA set to examine competition in the mortgage market

    Most papers this morning cover the decision by the Financial Conduct Authority (FCA) to begin preliminary work on a full market study into competition in the mortgage market, planned for 2016. The FT (£, p2) reports that the regulator is seeking to understand whether there is sufficient clarity and competition in the market. Christopher Woolard, the FCA’s Director of Strategy and Competition, said: “If you want innovation in a market you have to accept that people will come along and do things that don’t fit the existing model. The question is can you make transparent to consumers what the pricing is for those products?”. He also added it was a “very big jump” to suggest that asking for information signalled a future crack down on the sector.

    IMF signals increased risk of financial crisis

    The Times (£, p42) and others pick up stark warnings from the International Monetary Fund (IMF) ahead of its meeting in Peru this week that another potential financial crisis could be looming due to a slowdown in emerging market economies and a decline in world trade. It said the scale of borrowing by emerging market countries, reaching $3trillion, meant policymakers needed to act quickly to shore up the financial system. José Viñals, the IMF’s financial counsellor, said the threat of instability and recession hanging over China, Brazil, Turkey and Malaysia was one of a “triad of risks” that could knock 3% off global GDP. Mr Viñals said “Vulnerabilities in emerging markets are important, given their significance to the global economy, as are the roles of global markets in transmitting shocks to other emerging markets and to advanced economies. The recent financial market turmoil is a demonstration of this materialisation of risks.”

    London is tech venture capital of the UK

    CityAM (p1) splashes on the news that venture capitalist firms are pouring a record £1.4bn into UK tech companies, a tenfold increase on 2010 and with over three quarters of the investment (£1bn) going to London-based firms. Eileen Burbidge, partner at Passion Capital and the Government’s special envoy for fintech, said: “Today’s figures and the fact that London is home to more software developers than anywhere else in the world, validate the fact that London’s tech sector is maturing and is one of the world’s leading tech hubs”. An Accenture report also showed how last year fintech really caught the imagination of investors around the world, after $12.2bn was poured into groups applying new technology to the world of finance. Observers point to the rise of the sector is due to the rise of mobile technology which has led consumers to organise parts of their life online, as well as low interest rates which have made start-ups a more attractive investment for those with capital at their disposal.

    Read the BBA’s digital disruption report here.

7th Oct 2015 Back to top
  • BBA Brief – 7 October 2015

    IMF cuts its global growth forecast

    CityAM (p1) leads with the International Monetary Fund warning that a slowdown in emerging markets is dragging down global growth. The fund cut its forecast for global growth for 2015 and 2016 to 3.1 per cent and 3.6 per cent respectively, down 0.2 per cent. The report pointed to falling commodity prices and weak demand in emerging markets as the cause of the cut. The IMF called on Germany to do more to stimulate growth in Europe while also saying that the US and the UK would lead economic growth among major developed nations. The UK’s growth forecast was raised slightly from 2.4 per cent to 2.5 per cent. The FT (£, p4, 6) reports the IMF’s Chief Economist Maurice Obstfeld as saying that the positive figures for the UK could signal an imminent rate rise.

    New whistleblower rules for financial firms

    The Times (£, p36) and others report on new whistleblowing rules for financial firms announced yesterday by the Financial Conduct Authority and the Prudential Regulatory Authority. The rules require firms to name a “whistleblowers’ champion” as well as to tell their staff how to whistleblow on bad behaviour, however, they stop short of the American system which offers financial compensation to whistleblowers. The rules were a recommendation of the Parliamentary Commission on Banking Standards and will come into effect in September 2016.

    European Court of Justice rules against ‘safe harbour’ data transfers

    Papers report widely the European Court of Justice ruling that a legal provision (Safe Harbour) which allows the transfer of personal data by firms between Europe and the US is invalid (FT, £, p1, 5). Privacy campaigners celebrated, but businesses warned that the ruling would impose steep costs on technology companies and could threaten the creation of a European digital market. The ruling is being described as particularly harsh because it does not allow a grace period. Companies that rely on US servers to store European data will now have to find a work around in short order.

6th Oct 2015 Back to top
  • BBA Brief – 6 October 2015

    Chancellor’s speech at Conservative Party conference

    There is widespread coverage of George Osborne’s speech at the Conservative Party conference yesterday.  The speech included the announcement that Government would sell off the final tranche of its holdings in Lloyds Banking Group, in parallel offerings to retail investors and institutional investors.  Osborne set out plans for devolution of business rates to councils, which would see local authorities retain up to £26 billion in taxes in exchange for new responsibilities. He also signalled the creation of a National Infrastructure Commission to be chaired by Labour peer Lord Adonis (FT, £, p3). The FT described the speech as “a coherent manifesto, poaching Labour turf” that “put purpose behind [his] ambition” to be leader.

    New OECD proposals on multinational tax avoidance

    More than 60 Governments have agreed on new OECD proposals to cut global tax evasion, led by G20 members (Times, p38). The culmination of two year’s work to update the rulebook has been described as a “once in a generation change.”Under the new scheme, companies will be required to reveal their earnings and activities by jurisdiction. Countries will also introduce rules to guard against multinationals building cross-border structures to exploit differences between jurisdictions. The full package will be presented to Finance Ministers at the OECD meeting in Peru this week.

    Institute of Directors publishes productivity report

    Ahead of its annual convention today, new Institute of Directors research, reported in CityAM (p15), argues that ministers should focus on promoting business “agility” rather than looking at single metrics. In the Business Beyond Boundaries report, IoD Chief Economist James Sproule, calls for the Government to invest more in STEM education, commit to flexible labour market practices and put in place regulations that support entrepreneurialism and innovation.

5th Oct 2015 Back to top
  • BBA Brief – 5 October 2015

    HM Treasury announces Lloyds public share sale

    The Government has unveiled plans to exit its holding in Lloyds Banking Group by selling shares worth at least £2bn to private investors next spring. The Treasury announced that it intends to sell its remaining 12% stake in the coming months (BBC News). Members of the public will be offered a 5% discount to Lloyds’ market price and small investors seeking shares worth less than £1,000 will get priority. Speaking to Sky News this morning, the Chancellor said: “I want them [the shares] to go to members of the public, people watching this programme and others. So our offer is this: Buy Lloyds shares. We’ll favour small investors, we’ll favour those who hold the shares for a long time. You’ll get a discount. And we’ll help create that share-owning democracy that we want to see in this country.”

    Foreign banks forced to capitalise UK subsidiaries

    A number of foreign banks have been forced to inject additional capital into their UK subsidiaries as a result of tighter regulations imposed by the Bank of England (FT, £, p17). Foreign banks offering retail services to UK consumers have been forced to overhaul their structure, with up to 50 lenders expected to be required to establish more heavily regulated subsidiaries. Sanjiv Chadha, UK Head of State Bank of India, said: “In some ways it is unfortunate. But it is an incremental cost that we will absorb and we will move on. While we could have done without it, we don’t see it as discriminatory.”

    FCA consults on PPI compensation deadline 

    There was widespread coverage of the Financial Conduct Authority’s announcement on Friday that it is consulting on a possible 2018 deadline on personal payment insurance (PPI) compensation. FT Weekend (£, p1) reported that claims management companies are expected to lead a surge in claims ahead of the deadline. Richard Lloyd, Executive Director of Which?, was quoted in the Times (Saturday, £, p45) stating: “Efforts must be redoubled to ensure that anyone mis-sold PPI is given fair, speedy compensation so that people get back what they’re rightly owed.”

  • Chief Executive’s newsletter – October 2015

    The whiff of autumn can only mean one thing: it is party conference time again. So I’ve been busy meeting policymakers up and down the country to make the case on some of the big issues affecting our industry.

2nd Oct 2015 Back to top
  • BBA Brief – 2 October 2015

    FCA to consult on PPI time barring

    BBC news and other online outlets widely report the announcement this morning by the Financial Conduct Authority (FCA) to consult by the end of the year on the introduction of a deadline for claims over mis-sold payment protection insurance (PPI). The FCA intends to consult on a two year deadline from when the ruling comes into force (anticipated by early next year) – which could give consumers until the spring 2018 to complain. The FCA cited “increasingly stale” evidence from a high number of customers who are pursuing older cases. It also said claims management companies are costing customers too much in legal fees.

    Fed rate rise risks emerging markets capital flight

    The FT’s (£, p1) front page today reports how emerging markets such as China and Brazil could be hit by a net outflow of capital investment this year as the spectre of a Fed rate rise looms large. The subject is likely to feature highly at the annual meeting of the IMF and World Bank in Lima next week. “Flows to [Emerging Markets] have weakened sharply in volatile market conditions and a jump in risk aversion,” said Charles Collyns, chief economist at the Institute of International Finance, adding “we now project overall negative flows for the first time since the emerging markets concept was first devised in the late 1980s”. Mr Collyns noted that, unlike the crisis of 2008, the factors driving capital flows this year were largely internal to emerging markets.

    Bank of England could raise capital buffers

    City AM (p6) and other papers report that the Bank of England is considering raising the countercyclical capital buffers (CCBs) in small increments, which have been at zero since they were introduced in 2013. The minutes of the Monetary Policy Committee suggest that while the overall resilience of the British financial system has improved, fears loom over the global economic outlook. The committee also expressed concerns over the level of credit in the UK’s banking system which is still at a historical high. However, the Bank of England intends to postpone any potential decision on raising CCBs until the results of the 2015 bank stress testing exercise have been completed.

1st Oct 2015 Back to top
  • BBA Brief – 1 October 2015

    EU’s CMU proposals welcomed by UK businesses

    British businesses and business groups welcomed the Capital Markets Union action plan launched by Lord Hill yesterday. The proposals, which are aimed at making it easier for markets across the EU to raise funds included a new consultation into post-crisis financial regulation.  Commenting on the proposals in CityAM (p13) the BBA’s Chief Executive, Anthony Browne said: “We welcome the pragmatic balance between legislative and non-legislative approaches within the action plan”.

    The Telegraph (£, p5) writes that the action plan aims to ease funding costs for small businesses with proposals to reform the Prospectus Directive so that they are “affordable for SMEs to produce”.

    FCA sees rise in current account complaints 

    The FCA’s latest quarterly complaints data receives broad coverage. The FT (£, p6) reports that although PPI complaints are falling the industry saw a 31% increase in complaints on current accounts in the first six months of this year.  Director of Strategy and Competition at the FCA Chris Woolard called for companies to “take action” to address the issue.

    Commenting on the latest figures a spokesperson for the BBA said: “Banks have redoubled their efforts to ensure that any packaged account bought by a customer is right for their individual needs” (BBC News).

    Growing concerns about a global slow down

    The World Trade Organisation cut its global trade forecasts yesterday from 3.3% to 2.8% amid concerns about the health of the Chinese economy and emerging markets and the possibility of further “ructions” from a rate rise by the US Federal Reserve (Independent, p49). The IMF also warned of a slow-down in global growth as the IMF’s Managing Director Christine Lagarde said forecasts to be published next week would show the weakest growth in activity since the financial crisis (Guardian, p26).

    Calling for a “policy upgrade” to meet the current global challenges, Lagarde said: ““At the global level, there is a pressing need to complete and implement the regulatory reform agenda – with a special focus on improving the transparency and oversight of non-banks, or shadow banks. And we still have another major upgrade ahead of us – the resolution framework for systemic, globally active financial institutions remains inadequate.”

30th Sep 2015 Back to top
  • BBA response to European Commission Capital Markets Union Action Plan

    Anthony Browne, Chief Executive of the BBA, responded to the European Commission’s Action Plan on building a Capital Markets Union, saying:

    “The UK Banking Sector is strongly supportive of the Commission’s plans to build a Capital Markets Union that works for investors, businesses and, ultimately, consumers across the EU.”

  • BBA Brief – 30 September 2015

    Commission to publish Capital Markets Union Action Plan today

    The FT (£, p6) previews the publication of the European Commission’s Capital Markets Union Action Plan today, describing Lord Hill as “presenting a proudly workmanlike agenda” and “at pains to avoid a regulatory blunderbuss”. Writing for the paper, Lord Hill, says the benefits of stronger capital markets are clear but that he has no intention of disrupting markets in pursuit of “some theoretical perfection.”

    He argues the CMU action plan could give Europe’s businesses more choices over funding, help them to invest and grow; increase investment in infrastructure; draw in more funding from outside the EU; help businesses sell into bigger markets; and help those saving for their old age.

    Jeremy Corbyn gives first conference speech as Labour Leader

    There is widespread coverage of the Jeremy Corbyn’s first conference speech as Labour Party leader.  Mr Corbyn used his hour long speech to call for a politics that is “kinder and more inclusive” (Guardian, p1). The new leader also used his speech to call for statutory maternity and paternity pay for the self-employed and reiterating his personal view that Trident should not be renewed. (Times, £, p7)

    The FT (£, p3) reports that there was concern that Mr Corbyn did not speak about the deficit and commenting on the speech Director General of the CBI, John Cridland said: “You could argue that it was an unbalanced speech. There was a lot about values and human rights but not a lot about the private sector.”

    IMF issues a warning on emerging markets

    The FT (£ p1 and p7) covers the IMF Global Financial Stability report highlighting that rising global interest rates could prompt a new credit crunch in emerging markets. With the US Federal Reserve expected to raise interest rates in the next few months, business debt as a share of economic output grew from less than half in 2004 to almost 75%. Debts of non-financial firms in emerging markets have more than quadrupled over the same period. The IMF warned that emerging market governments should ready themselves for an increase in corporate failures as firms struggle to meet higher borrowing costs.

    The report also urged regulators to take action to address the risk reduced liquidity in financial markets, to mitigate consequential impact on prices, Guardian (p21).

  • Capital Markets Union Action Plan: taking the next steps

    It’s welcome news that CMU will be visible and measurable, writes Conor Lawlor, the BBA’s Policy Director, Capital Markets.

  • “Resetting” the securitisation market

    The European Commission’s proposals for simple, transparent and standardised securitisations will help businesses and investors to take advantage of the funding opportunities that securitisation can bring, writes Simon Hills, the BBA’s Executive Director for Prudential Regulation and Capital.

  • What EU Member States want from the CMU proposals?

    Ahead of today’s publication of the Capital Markets Union Action Plan,  Professor John Ryan, Gergely Polner and Ashley Dorrington discuss what  the EU’s members want from this ambitions plan to promote growth in the Union.

29th Sep 2015 Back to top
  • BBA Brief – 29 September 2015

    McDonnell sets out plans to reform the BoE and HMT

    Shadow Chancellor John McDonnell used his speech to the Labour Party conference yesterday to set out plans to reform the Bank of England (BoE) and HM Treasury (FT, £, p2). Mr McDonnell would maintain independence of the BoE, but overhaul its 18-year-old mandate to focus on growth, jobs, wages and inflation. Similarly, Mr McDonnell has asked Lord Kerslake, who until last year was head of the civil service, to review the operation of HM Treasury which he believes to be excessively focused on public spending cuts and insufficiently interested in growth.

    Mr McDonnell also pledged a series of tax reforms, including plans to raise the top rate of tax to 50p or 60p, cut tax breaks for buy-to-let landlords, and force companies to “pay their fair share” (Telegraph, p4).

    Swiss regulators launch bank investigation on metal market manipulation

    The Swiss competition authority, Weko, has launched an investigation into some of the world’s biggest banks over the pricing of metals (FT, £, p32).  The investigation comes after similar investigations by the European Commission and the US Department of Justice. The investigation focuses on suspicions that the banks may have colluded on the level of bid and offer prices. A spokesman for Weko has said that the investigation is likely to be concluded either next year or 2017 (CityAM, p17).

    Bank of England probed over advice to lenders

    The FT (£, p1) reports that the Serious Fraud Office (SFO) has launched an investigation into the advice given by the Bank of England to lenders during financial crisis emergency auctions. In particular, the SFO will investigate whether banks and building societies were told to bid at a certain rate, and not to over-pledge collateral during the auctions so as not to add to market volatility. The auctions allowed banks and building societies to pledge assets as collateral to gain access to emergency liquidity. An institution over-pledging could have been seen as a sign of weakness. The SFO will decide if there is a public interest test to pursue the case by the end of the year.

28th Sep 2015 Back to top
  • BBA Brief – 28 September 2015

    Labour to set out its economic plan

    Labour’s new Shadow Chancellor, John McDonnell, will address his party’s annual conference in Brighton today. This morning Mr McDonnell told Sky News he plans to launch a review into “all taxation policies” and financial institutions. He confirmed that he will conduct a review of HM Revenue and Customs, but denied that he plans to introduce a Financial Transaction Tax. The Guardian (p6) says Mr McDonnell will call for the Bank of England’s mandate to be broadened so that it has a wider brief to achieve economic growth. His aides insist its independence would not be interfered with. On Sunday BBC News reported that the Shadow Chancellor had announced the appointment of six economists to advise the party on economic policy, including Nobel Prize-winning economist Joseph Stiglitz and author Thomas Piketty. Mr McDonnell’s economic plan will also include a sharp rise on income tax, scrapping the Conservative inheritance tax reforms and increasing corporation tax, according to the Telegraph (p1).

    Banks may have “one board” under ringfencing structure

    Yesterday’s Sunday Times (£, p2) reported that the Governor of the Bank of England, Mark Carney, is considering allowing the retail and investment arms of banks to be controlled by one board under ringfencing proposals, rather than the two separate entities that were initially proposed. Dr Carney will start a consultation on the new rules in the middle of next month, the paper says. Today’s CityAM (p1) adds that some lenders say the ringfencing structures would disrupt business practices and diminish directors’ accountability to shareholders. It quotes Chancellor George Osborne, saying that the decision is for regulators. He adds: “Broadly speaking we should let a lot of this banking regulation settle down. I would include the ringfencing legislation.” The ringfencing structure is set to take effect in 2019.

    Senior Managers Regime could affect small number of top executives

    The Senior Managers Regime – which comes into force in March 2016 – will affect the top 15 executives in some of the largest banks in the UK, the FT (£, p2) reports. Banks and regulators are currently discussing which staff will be labelled “senior manager” and captured by the new rules, which are designed to make individuals working in the banking sector more accountable. The number is lower than some banks had expected, the paper writes. It quotes the BBA saying that it was good the number was so low because it meant that the regime was “not too burdensome for small banks”. A final list of those captured by the regime must be drawn up by February, the paper adds.

    Elsewhere, CityAM (p8) reports that employment law firm GQ Employment Law has warned that the Senior Managers Regime could lead to pre-emptive firings, as managers need to demonstrate they have taken “reasonable steps to prevent the breach of regulatory requirements”. This could result in an increase in the number of legal claims over dismissals, the paper says.

    Regulator delays PPI ruling

    The Mail on Sunday (p89) yesterday reported that the Financial Conduct Authority has delayed the release of its interpretation into the Supreme Court’s ruling on Payment Protection Insurance commissions paid to staff who sold the policies. A decision on whether to set a deadline for all outstanding PPI claims is now expected to be announced either this week, or when the FCA’s board next meets in a month’s time.

25th Sep 2015 Back to top
  • BBA Brief – 25 September 2015

    France calls for common European treasury

    Emmanuel Macron, the French economy minister, has proposed the creation of a common treasury so that wealthier eurozone members can channel funds to countries in difficulty, the FT (£, p8) reports.  Mr Macron is quoted saying: “From a competitive and fiscal point of view we have to reconverge. Without any change the eurozone cannot survive.” Mr Macron believes that the current system, involving last-minute summits, is not sufficient to guarantee the long-term survival of the currency union and instead says countries should set up a structure of permanent fiscal transfers to reduce the divergence caused by policies, the paper writes.

    Warning over new banker rules

    Senior lawyers have warned that new rules that govern the Senior Managers Regime, which comes into effect in March 2016, may breach human rights laws, the Times (£, p51) reports. The new rules will shift the burden of proof for serious failures so that bankers could be regarded as guilty until proven innocent. The lawyers have said that any attempt by the Prudential Regulation Authority to adopt this approach would be challenged in court under the Human Rights Act. Barney Reynolds, a partner at law firm Shearman & Sterling, is quoted describing the approach as “novel and untested by case law”. He adds: “I think it is essential that the PRA flesh out in its rulebook what is meant by presumption of responsibility in a way that is objectively fair, reasonable and realistic.”

    Osborne plans Iran delegation

    Chancellor George Osborne has told the FT (£, p1) that in 2016 he wants to take what is expected to be Britain’s biggest ever trade delegation to Iran. Mr Osborne said he was prepared to take risks to boost the economy. He is quoted saying: “Assuming that Iran honours the nuclear deal, and it’s properly verified, I think there will be growing potential to do business with Iran.”

    Mortgages at pre-crisis high, say BBA figures

    The BBA’s August High Street Banking Statistics, published yesterday, are widely reported in today’s papers. The Telegraph (B3) says that house buyers borrowed more last month that at any time since the financial crisis in 2008. Mortgage lending jumped by 14% on the year, the paper adds.  BBA Chief Economist Richard Woolhouse is quoted saying: “People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain. Remortgaging numbers also continue to be strong, as shrewd homeowners snap up competitive deals.”  Mr Woolhouse’s comments are also quoted in the FT. The Times (£, p16) adds that the number of mortgage approvals in August was 23% higher than a year ago, with remortgaging up 38 per cent.

24th Sep 2015 Back to top
  • How do you manage your model risk?

    In the first of a series of blogs for BBA Insight, Clayton Mitchell, senior manager at Crowe Horwath LLP, sets out why model risk management is so important to institutions. 

  • Personal Savings Allowance to simplify tax for savers

    Sarah Wulff-Cochrane, BBA Director of Financial Policy and Operations, blogs about how the new Personal Savings Allowance could make understanding tax liabilities easier for savers.

  • BBA Brief – 24 September 2015

    Mortgage lending growing at fastest rate for seven years

    BBA High Street Banking statistics published this morning show that gross mortgage lending in August was 14% higher than a year before – the fastest annual growth rate since 2008. Total gross borrowing stood at £12.2 billion. The number of mortgage approvals in August was 23% higher than a year ago, with remortgaging up 38% – its highest level for four years. Richard Woolhouse, the BBA’s Chief Economist, said: “People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain. Mortgage borrowing continues to pick up. The August increase is the largest in five years, although borrowing is still some way below pre-crisis levels.”

    Don’t fear “honest mistakes”, says UBS chief

    Sergio Ermotti, the chief executive of UBS, has urged senior bankers not to be afraid of taking risks or making mistakes – as long as they are honest ones (FT, £, p17). The head of the leading Swiss bank said in a speech that failing to show a “degree of tolerance” for errors would undermine the pursuit of legitimate business opportunities. The paper said that the scars of the financial crisis, large fines and tougher regulation had fostered a climate of “risk aversion”. In its main leader, the FT (£, p12) argues that the “negative exceptionalism” that tarnishes banking can be taken too far. Mr Ermotti’s follow similar comments last year from HSBC chairman Douglas Flint.

    FCA to mull PPI time bar

    The Financial Conduct Authority;s board will today consider introducing a time bar for payment protection insurance mis-selling claims, City AM (p3) and the Telegraph (online only) report. Banks and other loan providers have set aside more than £30 billion to compensate customers for PPI policies since 2010. Complaints to the Financial Ombudsman Service about these products fell by 10% in the first six months of this year.

    Wages will continue to grow, says Broadbent

    Bank of England deputy governor Ben Broadbent has said that pay growth will probably accelerate in the months ahead (Telegraph, B1). The economist said in a widely-reported speech that wage inflation had remained weak in recent years due to the high proportion of low-paid jobs created during the recovery. “The skew towards lower-paid jobs has diminished,” Mr Broadbent said, adding that pay packets should continue to rise as the labour market tightens and the eurozone’s economic recovery gathers pace.

  • August 2015 figures for the high street banks

    Richard Woolhouse, Chief Economist at the BBA, said:

    “People are putting their money into bricks and mortar while interest rates are low and the timing of a likely rate rise remains uncertain.

    “Mortgage borrowing continues to pick up. The August increase is the largest in five years, although borrowing is still some way below pre-crisis levels.

    “Remortgaging numbers also continue to be strong, as shrewd homeowners snap up competitive deals.”

23rd Sep 2015 Back to top
  • Putting a figure on the UK banking sector’s contribution in taxes

    Janet Kerr from PwC blogs about a new report on the total tax contribution of the banking sector.

  • Banking on jobs all around the UK

    BBA CEO Anthony Browne blogs about how the industry is crucial for jobs and growth right across the country.

  • BBA Brief – 23 September 2015

    Digital disruptors pose €22 billion threat to banks

    The FT (£, p22) reports that European banks risk losing out on €22 billion of revenues, as technology firms with more efficient digital services gain market share of retail payments. The gains are expected to come due to regulatory change to lower entry barriers, allowing digital services to provide direct bank account payments, rather than through a stored debit or credit card, which is currently the case. Research from Deloitte estimates that payments revenues represent a quarter of total revenues for European retail banks. Click here to read our report with Accenture on this topic.

    “We need a better global financial safety net” – Minouche Shafik

    Minouche Shafik, deputy governor of the Bank of England, said yesterday that policymakers need to enhance the “fragile” and “fragmented” financial safety net (Telegraph, B4). According to the deputy governor, the current tools available to address sovereign debt crises are “more of a patchwork than a safety net”. Among the recommendations, Dr Shafik suggested increasing the powers of the International Monetary Fund to “stress test” countries to test the risk of capital flight, particularly in emerging economies that are vulnerable.

    Challenger banks call for tax level playing field

    A group of CEOs from challenger banks have urged George Osborne to “level the playing field” in taxation, explaining that their lending to small businesses will be disproportionately affected by the new profit surcharge (FT, £, p4). The new tax combined with higher capital requirements for new banks, due to fewer years’ data, makes lending less economical and could restrict lending to small businesses by as much as £6 billion over this parliament, the CEOs say. As a response to Mr Osborne’s letter explaining there would be no changes to the new tax, the CEOs will write to the Chancellor to call for the creation of a working party.

    London awarded 2015 top financial centre

    CityAM (p1) reports today’s study from think tank Z/Yen that places London as the world’s leading financial centre. Despite concerns over the EU referendum and migration policy, the certainty following the General Election in May helped London climb 12 points, overtaking New York to take the top spot. The index, covering 98 business districts around the world, bases its results on factors including business environment, infrastructure, quality of human capital and financial sector development. London came top in every category.

22nd Sep 2015 Back to top
  • BBA Brief – 22 September 2015

    Chancellor unveils plans to strengthen China ties

    The Chancellor is leading a five-day trade mission to China in an effort to strengthen bilateral ties (FT, £, p2). The People’s Bank of China has unveiled plans to issue short-term debt in London, for the first time outside the country. A feasibility study into linking the London and Shanghai stock exchanges was also announced. Writing in City AM (p6), the Chancellor and City Minister Harriett Baldwin state: “We want to cement London’s position as China’s partner of choice as it raises finance on international markets…Our expertise in financial regulation and our deep and liquid capital markets provide a strong foundation from which to build.”

    FCA hires industry experts

    The Financial Conduct Authority has recruited six industry experts from banking, law and regulators to join its enforcement panel. Five of those members are also joining the Payments Systems Regulator’s enforcement panel. Tim Parkes, a long-term partner at law firm Herbert Smith, will chair both panels. Former Royal Bank of Scotland executive Kevin Brown, who is now a fellow at the Chartered Institute of Bankers, is also joining both. (Daily Telegraph, online only)

    Sanctions fears could drive banks away from Iran

    The Independent (p49) reports that concerns over an aggressive approach from US regulators could undermine efforts to normalise trade relations with Iran and drive Western banks away from the country. International sanctions on Iran could start to be lifted next year after an agreement in July. Ross Denton, a partner at law firm Baker & McKenzie, said: “I can’t see any Western banks wanting to get involved with Iran for a long time…Jump the gun, cut corners, and you’re going to get absolutely murdered in the US.”

21st Sep 2015 Back to top
  • The UK FinTech Rush: ensuring the UK becomes the global FinTech hub

    Did you know that the UK is Europe’s leading location for FinTech investment? BBA Policy Advisor Ariane Poulain discusses London’s place as a global FinTech hub.

  • Punitive tax hikes jeopardise UK banks’ competitiveness

    Benjamin Franklin, one of the founding fathers of the United States, wisely noted that only two things are certain in life: death and taxes. Unfortunately, his observation – or at least half of it – no longer holds true today. When it comes to banking, uncertainty on tax has become a serious concern.

  • Banks’ tax contribution climbs to £31.3 billion

    • Total tax contribution of the UK banking sector in 2014 estimated as £31.3 billion
    • For the six main UK banks this represents a 55% rise between 2010 and 2014
    • £15.3 billion was paid by UK-headquartered banks and £16 billion by foreign headquartered banks

    New figures published today show that the tax contribution of the UK banking sector climbed to £31.3 billion in 2014.

  • BBA Brief – 21 September 2015

    Banks pay more than £30 billion in tax

    There is extensive coverage across CityAM (p1), the Times (£, p41) and the Telegraph (B3) of the PwC total tax contribution report, published today, which finds that banks contributed £31.3 billion to the Exchequer in 2014. The study also shows that the six main banks have seen their taxes rise by 55% from 2010 to 2014.

    BBA Chief Executive Anthony Browne writes in CityAM (p29): “Banks, like all businesses, need a stable and transparent tax system so that they can plan for the future. But BBA analysis shows that the UK government has introduced £40bn in additional industry-specific taxation over a period of a decade…Much of the sector is internationally mobile. Foreign-headquartered banks paid just over half of the total tax contribution last year, at £16bn, while UK-headquartered banks contributed £15.3bn.

    Banking for the future

    The Telegraph (p4) looks at how banking is developing technology to offer customers information about the best products, deals and even bank accounts based on analysis of their spending habits. As computing power increases banks can start to review spending habits of customers to advise them on how to save money on their energy bills or to pay car insurance by the mile using a direct debit from your bank account.

    Read the BBA’s report World of Change which looks at the revolution in the way we spend, move and manage our money.

    House prices continue to rise

    The average house price could hit £300,000 in the next three months according to Rightmove’s House Price Index. The September figures show the biggest September rise in 13 years. (Telegraph, B3). A new report by Shelter finds that the Government’s Help to Buy Scheme has pushed up the cost of the average home by £8,250 and that total mortgage lending is 8.4% higher than it would have been without the scheme (FT, £, p4).

    The Sunday Times (£, p9) reports that at least one mortgage provider is offering a 95% mortgage. Richard Woolhouse, Chief Economist at the BBA, said in the article that “a lot of ordinary people are unable to get on the property ladder without support, so there is certainly a market for high loan-to-value mortgages”.

18th Sep 2015 Back to top
  • BBA Brief – 18 September 2015

    Federal Reserve holds rates at record low

    The FT (£, p1) splashes on the story widely reported across all papers of the US Central Bank’s decision to hold interest rates at record lows amid fears over the global economic outlook. Despite the resilience of the US economy, the recent turmoil in Chinese markets has led the Federal Reserve Chair, Janet Yellen, to hold the federal funds target rate at 0.25%, where it has been since the financial crisis in 2008. Ms Yellen said: “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term”. She added: “In light of the heightened uncertainties abroad … the committee judged it appropriate to wait for more evidence”. However, Ms Yellen was keen to stress that the prospect of a 2015 increase was still on the table.

    Corbyn sets out commitment to keep Britain in the EU

    Writing in the FT today (£, p1), newly elected Labour leader Jeremy Corbyn has ended weeks of uncertainty over Labour’s position in the upcoming referendum, pledging that his party would campaign for the UK to stay in the European Union. Mr Corbyn, who remains in favour of a £50bn EU Financial Transaction Tax, said:  “We will make the case that membership of the European Union helps Britain to create jobs, secure growth, encourage investment and tackle the issues that cross borders – like climate change, terrorism, tax havens and the current refugee crisis”.

    Mortgage borrowing highest since 2007

    The Mail (p75) and others report a the latest data by the Council of Mortgage Lenders showing that £20bn of home loans have been approved last month, a 12% rise on last year and the highest level since the financial crisis. The strong performance was driven by a pick-up in both house purchase and remortgage lending as households prepare for a possible rate rise, predicted by some economists in the first three months of next year. Bob Pannell, CML chief economist, said: “We expect further modest growth for the rest of the year, although affordability pressures are likely to limit gains for first-time buyers and home movers”.

    We’re no pushover, warns FCA interim head

    In her first interview since taking up the interim position of head of the Financial Conduct Authority, Tracey McDermott, reveals in the Times (£, p44) today that she hopes to stay in the role permanently. Ms McDermott said that moves to regulate banks had often moved too far to “extremes”, hinting at a more open relationship with the industry. She said: “Whoever is appointed to this role has to be there to deliver on the statutory objectives of the FCA . . . that is around not cosying up to the industry, but it is about trying to make the system work.”

17th Sep 2015 Back to top
  • BBA Brief – 17 September 2015

    Carney raises concerns about “People’s QE”

    The Governor of the Bank of England has suggested that one of Jeremy Corbyn’s flagship economic policies risks “imperilling price stability” and could “hurt” the poor. In comments to members of the Commons Treasury Select Committee reported in the Telegraph (p1), the Mail (p2) and other papers, Mark Carney said that the Labour leader’s proposal for a money-printing programme called “People’s Quantitative Easing” could lead to inflation and undermine the Bank’s independence. Mr Carney said: “The people who tend to get hurt the most by inflation are the poor, the elderly… that’s been the experience throughout history and I’m sure that will be the experience in the future if the Bank of England were to conduct policy not consistent with achieving its mandate from parliament.”

    Business Secretary pledges to prioritise deregulation

    In a wide-ranging interview with the FT (p3), the Business Secretary Sajid Javid says he will focus on pushing for reform of Britain’s relationship with the EU. He said he would not decide how he will vote in the impending referendum until that renegotiation was complete. “We’ll work hard for these reforms and hope that they bring about the changes that we want, but ultimately nothing is off the table,” Mr Javid said. The Business Secretary also told the FT (p3) that he was planning to overhaul UK Trade & Investment and bring more private-sector expertise into the agency.

    Contactless on the Tube celebrates first birthday

    City AM reports more than 180 million journeys on London Underground have been paid for by using contactless bank and credit cards in the year since such payments became possible on the tube. The “tap” technology now accounts for one in seven pay-as-you-go journeys on the network. London Mayor Boris Johnson said: “It is clear passengers love using the payments to travel, and why on earth not – it’s quick, it’s easy and ensures you get the best fare.”

    Banks are second most-improved industry for service

    The number of customers who rate banks as one of the worst industries for service has fallen sharply this year, according to research by the design consultancy Engine reported by the Telegraph (online only) and a number of other papers. Banking was rated as the second most improved sector, with only 23% of those polled highlighting poor service by banks – down from 29% the year before. Oliver King, Engine’s founder, said: “Banks have been quicker to improve customers’ digital, human and branch experiences. They’ve responded to growing consumer expectation and confidence to transact online and on mobile, but also the important role branches and call centres play in account set-up and resolving issues.” To read about how consumer-friendly banking technology is transforming the way we spend, move and manage our money read the BBA’s latest Way We Bank Now report here.

  • 113th Brussels for Breakfast

    (Hosted by the BBA and organised by the CSFI – with Graham Bishop and Simona Amati of Kreab)

    Topics included: President Juncker’s State of the Union speech; Brexit developments; G30 Report on Banking Culture and Conduct; BBA report on the rise of Fin Tech; EIOPA’s consultation on infrastructure as a new asset class and the EMIR review.

  • Post offices branch out into banking

    You can now withdraw cash, pay in cheques and do many other counter transactions at thousands of post offices across the UK. Eric Leenders says that’s good news for customers – and for the many post office managers now offering banking services.

16th Sep 2015 Back to top
  • BBA Brief – 16 September 2015

    Banks hit capital targets ahead of schedule

    Global banks have nearly reached their 2019 capital targets already, according to the Basel Committee on Banking Supervision (Telegraph, B5). The report found that – for the first time – the 100 biggest international banks all met the capital requirements that will come into force as part of the 2019 Basel III rules. The FT (online only) reports that banks have also made considerable progress on meeting new liquidity rules.

    Two million customers use switching service

    The Current Account Switch Service (CASS) has been used by two million bank customers since it was launched two years ago (Telegraph, online only). The scheme was designed to make it easier for customers to move between rival providers. Harriett Baldwin, Economic Secretary to the Treasury, said: “Increasing competition in banking so that customers get a better deal is at the heart of the Government’s long-term plan. That’s why we challenged industry to make it easier for customers to switch accounts, and welcomed the launch of seven-day Current Account Switch Service in September 2013.”

    Investment banks join forces on blockchain initiative

    The FT (£, p32) reports that nine leading investment banks are teaming up to develop common standards for blockchain technology in an effort to widen its use. They will coordinate data, ideas and financing via R3 CEV, a New York trading and technology start-up. Christopher Murray, global co-head of FX, rates and credit at UBS, said: “If you’re looking to introduce applications with distributed ledger technologies to improve the financial markets, you can’t have each participant working to a different pattern.”

15th Sep 2015 Back to top
  • One of the flagship events of the year for our industry

    BBA Chief Executive Anthony Browne talks through the glittering line-up for next month’s BBA International Banking Conference.

  • BBA Brief – 15 September 2015

    Unions react to John McDonnell as Shadow Chancellor

    Most papers lead today with the appointment of Jeremy Corbyn’s Shadow Cabinet and in particular the choice of John McDonnell as Shadow Chancellor of the Exchequer. The FT(£,p1) describes Mr. McDonnell as a “hardline socialist” and describes what it sees as cracks appearing in Labour over Britain’s place in Europe. The Times (£, p1) leads with concerns from trade union bosses about Mr Corbyn’s first 48 hours in office, with Dave Prentis, general secretary of Unison,  noting that the leader will have to “grow into the job”.

    Concerns for emerging markets ahead of Fed decision

    Several papers discuss the uncertainty over a possible interest rate rise from the US Fed. The Telegraph (B1) reports on research by Fitch that emerging markets are particularly vulnerable to a rapid rate rise. However, CityAM (p2) reports a rise will not be the end of emerging markets as predicted. The FT (£, p7) writes that the mixed signals in the US are causing Fed officials to question the wisdom of a rate rise despite unemployment of just 5.1%.

    McKinsey report on the future of bank branches

    A new report by McKinsey suggests that as many as 2,400 bank branches could close over the next five years as customers choose to move their banking online (Telegraph B1).The report also shows that branches remain popular with customers for larger more complicated transactions. Read more about how technology is changing banking for customers in the BBA’s World of Change report.

14th Sep 2015 Back to top
  • BBA Brief – 14 September 2015

    Corbyn appoints John McDonnell as Shadow Chancellor

    There is widespread coverage over the weekend and today (BBC News) as the new leader of the Labour Party, Jeremy Corbyn puts the finishing touches to his Shadow Cabinet. Mr Corbyn was elected as leader of the Labour Party with a landslide majority of 59% of the vote (more than Tony Blair in 1994). Following his election several senior Labour figures resigned from the Shadow Cabinet including Chuka Umunna and Yvette Cooper. John McDonnell has been appointed as the Shadow Chancellor, Seema Malhotra Shadow Chief Secretary to the Treasury and Angela Eagle becomes Shadow Business Secretary and Shadow First Secretary of State (Telegraph, p1).

    There has been a mixed reaction from business leaders to the election of Jeremy Corbyn as Labour Leader. The IoD has warned that his policies “would undermine our open and competitive economy” while the CBI urged Jeremy Corbyn to support “a pro-enterprise agenda”. One FTSE 100 Chairman warned that he feared that the Conservative Party would react by a move to the right (Sunday Times, £).

    Schauble to press for EU wide financial transaction tax

    The German Finance Minister Wolfgang Schauble has said that the Financial Transaction Tax which is currently being considered by 11 member states, including France and Germany, should be seen as a first stage. Mr Schauble said he believed that an FTT across only 11 member states did not sit well against the EU’s Capital Market Union proposals.

    The proposed FTT was discussed by the 11 participating states at an informal meeting of finance ministers in Luxembourg on Saturday. Commenting on the discussions, the European Commissioner for Economic Affairs Pierre Moscovici said: “We made important if not decisive progress…This deal is possible, and more than possible, if we go on working with ambition.” (FT, £, p8)

    Bank for International Settlements warns debt levels are higher than pre-crisis peak

    The Bank for International Settlements’ (BIS) quarterly review, published today, warns that total debt ratios are now higher than they were at the peak of the last credit cycle in 2007. BIS’s Chief Economist Claudio Borio commenting on the market fluctuations of recent weeks and the growing concerns regarding capital outflows in China said: “We are not seeing isolated tremors but the release of pressure that has gradually accumulated over the years along major fault lines”. (Telegraph, B1)