4th Aug 2015 Back to top
  • Can banks satisfy the digital generation?

    Tim Franklin, an advisory board member at business process management company Firstsource Solutions, discusses the challenges for banks in a swiftly evolving digital world.

31st Jul 2015 Back to top
  • BBA Brief – 31 July 2015

    The BBA Brief will return on Tuesday 1 September.

    IMF unlikely to play a role in next Greek bailout

    The International Monetary Fund has announced that it will not decide whether to agree to a new bailout programme for Greece for months – potentially into next year, the FT (£, p4) reports. The Fund’s board was told on Wednesday that Athens’ high debt levels and poor record of implementing reforms disqualify the country from a third IMF bailout, the paper says. According to documents seen by the FT, the IMF will “participate in policy discussions” to ensure the eurozone’s new bailout “is consistent with what the fund has in mind”. But negotiators “cannot reach staff-level agreement at this stage”. The documents also revealed that the IMF will decide whether to take part only after Greece has “agreed on a comprehensive set of reforms” and after eurozone bailout lenders have “agreed on debt relief”.

    RBS prepares to sell shares

    The Times (£, p1) has learnt that the sale of RBS shares is to begin “within days”, and reports that bankers acting for the Government began to contact potential investors this week in preparation for a sell-off, that could come “as early as Tuesday”. The paper adds that Chancellor George Osborne has pledged to sell three quarters of the UK’s 70% holding in RBS within this parliament.

30th Jul 2015 Back to top
  • BBA Brief – 30 July 2015

    Mortgage and SME lending on the rise

    Bank of England data released yesterday reveals that net lending for mortgages in June rose to its highest level since mid-2008 whilst mortgage approvals for new house purchases increased to 66,582. The FT (£, p4) notes that households are currently paying “record low mortgage rates”, with the average quoted rate on new mortgages falling to 2.56%. In addition, lending to SMEs rose by £353 million in the same month (Telegraph, p29).

    Although lending to non-financial businesses fell, BBA Statistics Director David Dooks told the FT and Times (£, p37) that this was down to “good housekeeping by large corporates”, and that a number of bigger firms had turned to equity and bond markets rather than banks for lending. Repaying debt in the expectation of a rise in interest rates may also have been a factor.

    Call for bank capital ratios to be audited

    The Times (£, p43) reports that the ICAEW is calling for banks’ capital ratios to be audited in order to “improve the credibility” of the figures. PRA chief executive Andrew Bailey said that introducing an audit check could strengthen trust in the banking industry, adding “we need capital ratios to be credible”. The paper notes that giving responsibility to accountants to check banks’ capital ratios “could prove controversial” given erroneous audits of institutions in the run up to the financial crisis.

    Fed still set for rate rise

    The FT (£) leads with the US Federal Reserve’s statement which signals that it remains “on course to lift interest rates this year”. Following its latest policy meeting, the central bank stated that there had been “solid” growth in the jobs market alongside “moderately” expanding activity with “nearly balanced” risks to the economic outlook. However, Fed Chair Janet Yellen did not give exact timings on the rise. The Times (£, p42) notes that policymakers are seeking “further improvement in the labour market” and signals that inflation will rise towards its 2% target.

29th Jul 2015 Back to top
  • BBA Brief – 29 July 2015

    Bank deputy warns on deregulation

    Sir Jon Cunliffe, the deputy governor of the Bank of England, has warned against cutting back on financial services regulation to boost growth, but conceded that some of the regulation put in after the financial crisis needed “fine tuning”. He said: “Where it is justified we will need to revisit issues. But we should be careful about turning back the overall regulatory dial or trying to trade off the risk of financial instability for short-term growth.”  Sir Jon also said that annual stress tests could be adjusted to become more countercyclical, and that the Bank’s Financial Policy Committee – on which he sits – is weighing up whether to introduce tests that would be more rigorous during good economic times than bad (FT, £, p2).

    Bank surcharge will hit a range of firms

    The Telegraph (p26) looks at the “ripple effect” of the new banking tax surcharge introduced by the Chancellor in his July Budget. The paper report that a range of firms that wouldn’t be considered to be “traditional banks” stand to face to the new levy – including the Ford car company’s financing arm, FCE Bank. The article quotes PwC automotive partner Philip Harrold, who describes this as “a classic example of the law of unintended consequences” and warns that “with most other other big car manufacturers running their finances out of Germany, this will only increase pressure on Ford to shift its 700-strong British operations to the continent”.

    Polling suggests young prefer online banking

    A survey of more than 1,000 adults for uSwitch.com revealed that more than half of all 18 to 34-year-olds have not set foot in a branch in the last three months, while more than three quarters had logged into their online banking account (Telegraph, p2). The same survey revealed that more than one fifth had never deposited a cheque.

  • Broader funding options for businesses are on the horizon

    Simon Hills, the BBA’s Executive Director for Prudential Capital and Risk, discusses what’s next for the development of simple, transparent, comparable (STC) securitisations.

28th Jul 2015 Back to top
  • BBA Brief – 28 July 2015

    Prime Minister calls for action to fight corruption

    In a speech later today Prime Minister David Cameron will promise a crackdown on corruption to prevent the UK from becoming “a safe haven for corrupt money from around the world”. Describing corruption as “the enemy of progress”, the Prime Minister will call for a “global effort” to tackle the issue, saying the world has “looked the other way for too long” (BBC News). For the first time, this autumn the Land Registry will publish information on property owned by foreign companies. The Times(£, p1) reports comments from Donald Toon, Director of the National Crime Agency saying that he believed money laundering had “skewed” property prices in London.

    Government to consult on interchange fees

    The UK Government yesterday launched a consultation on the proposed approach to implementing the EU’s Interchange Fee Regulation which will regulate the credit and debit card fees charged by banks. The new EU regulations are due to come into force in December and will cap credit and debit card fees at 0.3% and 0.2%. Commenting on the proposals the Chancellor, George Osborne, said that he “expected businesses to pass on these savings to consumers in the form of lower prices”.  Commissioner Hill said that the reforms would help “pave the way” for more competition in online and mobile payments (FT, £, p4). Commenting on the proposals, the UK Cards Association warned that the reforms could see the end of reward schemes and new fees could be introduced to reduce the impact of the changes. The Association also raised concern that the proposals could mean card providers had less to invest in fraud prevention (Telegraph, £, p4).

    Blueprint for EU reform agenda expected in October

    Speaking at a joint press conference with the Chancellor, France’s economy minister Emmanuel Macron recognised the need for the EU to look at the “fair treatment of the [non-euro] countries” (FT, £, p2). However, the Times (£, p4) reports that the French minister also voiced frustration that the UK Government has still not set out detailed demands, commenting that “we need to understand what the UK wants”. The Prime Minister suggested on Monday that technical talks between the UK and the EU will continue until October when officials are expected to have the first blueprint of the reform agenda.

27th Jul 2015 Back to top
  • BBA Brief – 27 July 2015

    BBA warns on proposed Basel rules

    The BBA has written to the Chancellor over concerns that new Basel rules on capital will hit small businesses and first-time buyers, reports the Sunday Telegraph (B1). The proposals would see banks having to hold capital worth three-times a business loan’s value and reassessing the riskiness of mortgages, “even when borrowers pay down the debt or move into better jobs”. In a joint letter with a number of trade associations including the FSB and Association of Residential Letting Agents, the BBA called on George Osborne to encourage the Basel Committee to “rapidly rethink” the plans. BBA Chief Executive Anthony Browne told the Telegraph: “These new measures could mean that many lenders would have to significantly increase the cost of lending to key groups like small businesses and first-time buyers… The effect may well be to lock another generation out of our housing market”.

    PM hopes for early EU vote

    According to the Independent on Sunday, Prime Minister David Cameron will hold the EU referendum in June 2016 and will “announce the fast-tracked date as the centrepiece of his party’s annual conference in October”. The article stated that Mr Cameron believes that this timing will give a “better chance” of promoting his EU reforms and of “highlighting the economic risks Britain could face if it left the EU”. The paper also suggested that advisors have encouraged the PM to use a unionist vow – similar to that which preceded the Scottish independence referendum – in which Mr Cameron will “tell British voters that the EU will make good on reforms and exemptions if there is a vote to remain in the EU”.

    Today’s FT (£, p2) reports that the Chancellor is in Paris to discuss Britain’s reform proposals. The paper reports that Mr Osborne has “told friends it may be possible to complete the EU renegotiation by December”, and that both he and Mr Cameron are “hoping to get an agreement” at the December European Council in Brussels. The Times (£, p2) notes that some senior Conservatives view an early vote as beneficial as it would avoid a clash with French presidential elections in spring of 2017 and German federal elections that September.

    CMA unlikely to act on free current accounts

    The Times (£, p41) reports that the Competition and Markets Authority (CMA) is “likely to refuse to insist that banks charge for accounts” when it completes its review of the current account market. According to sources involved in the evidence-gathering process, the CMA believes that it is “too complicated to stop free current accounts”. The article also notes that account number portability is “another area that the authority may find difficult to implement”.

    Standards board to questions banks

    CityAM leads with the news that the Banking Standards Board is to write to the chairmen of the seven largest banks and building societies seeking details on “ethical policies, cultural standards and how the pay of top bosses is set”. The questionnaire is the first major initiative by the body, and will form part of an overall assessment of the lenders to be published early next year. The article also notes that Hermes boss Saker Nusseibeh will become the first fund management member of the board in September.

  • Navigating the Future Collateral Roadmap

    Mark Jennis, Managing Director at post-trade market infrastructure provider DTCC, discusses how collateral is effectively managed by financial firms as regulation continues to evolve.

  • Appeals process has improved bank/business relationships, report finds

    Did you know that £50 million has been unlocked for small businesses in the last four years? BBA Executive Director for Business Finance Irene Graham considers the finding of Professor Russel Griggs’ Annual Appeals Process Report.

24th Jul 2015 Back to top
  • QE could fuel housing bubbles in Europe

    Ultra-low interest rates have sent house prices soaring in Germany, the UK and Norway, writes Anna Zabrodzka, an economist at Moody’s Analytics in Prague.

  • Extending the CHAPS/CREST settlement day

    The Bank of England has announced that the settlement day for CHAPS, the UK’s high-value payment system, and CREST, the UK’s securities settlement system, will be extended by one hour and forty minutes from summer 2016. The Bank’s Market Services Division explains more about the change.

  • BBA Brief – 24 July 2015

    Housing market “hotting up”

    BBA High Street Banking Statistics out today show that home loan approvals are 8% higher than in June last year following the effects of changes to mortgage rules. Within that, remortgaging was some 20% higher – probably reflecting borrowers’ appetite to lock into current fixed-rates and gain certainty over their future outgoings. Richard Woolhouse, Chief Economist at the BBA, said: “The housing market is beginning to hot up again, as we’ve seen a pick-up in the number of mortgage approvals for the last month. Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed-rate mortgages ahead of a possible rise in interest rates.”

    You can find the BBA High Street Banking statistics for June here.

    Banks told to be clearer on interest rates

    The Mail (p4) reports proposals from the Financial Conduct Authority that will oblige banks and building societies to give clear warnings to customers about when “teaser rates” end and to clearly state what interest rates are being paid on all communications to savers. The paper cites the BBA’s response pointing out that members’ rates reflect the Bank of England’s base rate.

    The FT (£, p4) reports that the FCA also intends to work with the industry to make sure that by January 2017 people can switch their ISAs within seven days.

    Small banks warn on competition

    Paul Pester, the chief executive of “challenger” bank TSB, is the latest figure to warn about the potential impact of the bank surcharge announced in this month’s Budget. He has said that the 8% tax should kick in when a lender’s profits reach £250 million, not £25 million (Times, £, p45). Speaking of the difficulties the change stands to create at his own bank, he commented that it would “make it more difficult for us to grow and bring more competition to the UK market”.

    In the Telegraph (B4) Chris Pilling from the Yorkshire Building Society commented on the potential knock-on effect for mortgage lending: “This level of lending can only continue if we can retain our profits and reinvest them back into our business…As the six largest building societies were responsible for 50% of the UK’s net mortgage lending in 2014, a tax which could impact our ability to fund growth in lending could have significant consequences for the mortgage market.”

  • June 2015 figures for the high street banks

    Richard Woolhouse, Chief Economist at the BBA, said:

    “The housing market is beginning to hot up again, as we’ve seen a pick-up in the number of mortgage approvals for the last month. Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed rate mortgages ahead of a possible rise in interest rates.

    “Lending to some business sectors continues to show good results, although in the case of real estate banks are being cautious as they try to refinance bad loans.

    “It’s good news that savings deposits are also up this month, as consumers put away a little something extra for a rainy day.”

23rd Jul 2015 Back to top
  • Osborne holds his ground on bank taxes

    BBA Government Affairs Advisor Jonny Suart examines where the banking industry stands in the wake of the Chancellor’s Summer Budget.

  • BBA responds to FCA consultation on new measures for cash savings account holders

    Consultation launched on new measures for cash savings account holders

    The Financial Conduct Authority has launched a consultation on new measures for cash savings account holders.

    Responding to the announcement, a spokesman for the BBA said:

    “These have been frustrating years for savers. More than five years of the Bank of England’s base rate at a record low has fostered a low interest rate environment and that has not been easy for many customers to bear.

    “During this period banks have made it easier for customers to find the right savings product for them. The electronic Cash ISA Transfer Service has helped to significantly reduce switching times, interest rate disclosure on savings accounts has improved and a number of providers have recently streamlined their savings ranges to help customers to navigate the market. We’re now working to deliver 7 day switching for the vast majority of Cash ISA transfers.

    “We always encourage customers to review their savings regularly and to shop around for a better deal. We will look at these suggestions from the FCA with great interest.”

  • BBA Brief – 23 July 2015

    Greek MPs vote through reforms

    The Greek parliament has voted through a second set of reforms, which means that negotiations on an €86 billion EU bailout can begin, BBC News reports. The measures – which include changes to Greek banking and an overhaul of the judiciary system – received 230 votes in favour and 63 against with five abstentions. BBC News quotes Prime Minister Alexis Tsipras saying: “We chose a difficult compromise to avert the most extreme plans by the most extreme circles in Europe”. Among the banking measures set out in the reforms are plans to adopt an EU directive to bolster banks and protect savers’ deposits of less than €100,000, and the introduction of rules that would see bank shareholders and creditors – not taxpayers – cover costs of a failed bank.

    BoE director calls for tougher guidelines for traders

    In an interview with the Telegraph (B4) Chris Salmon, the Bank of England’s executive director for markets, has said he is planning tougher guidelines for traders in the wake of rate manipulation scandals. Mr Salmon told the paper: “When you go and talk to people who run the FICC (fixed income, currency and commodities) trading teams, you get the impression the psychology has changed, there is greater caution within firms and within individual traders as a result of the crisis and some of the scandals which have followed it. But we can’t just rely upon the immediate psychological reaction to the crisis, because memories are short.” In response to this, the Bank has developed a new code of conduct for traders in foreign exchange markets. The new code aims to provide “more granular guidance to traders,” the paper writes.

    Volcker rule arrives on Wall Street

    The so-called “Volcker rule”, the regulation banning taxpayer-insured banks from making bets with their own money, came into force in the US yesterday, reports the Wall Street Journal. The paper says that the fact the regulation arrived “with little fanfare” shows how much Wall Street has changed since Congress ordered regulators to write the rule as part of the Dodd-Frank financial law five years ago. It adds that much remains uncertain about how the rule will work, and regulators will carry out their first compliance audits later this summer. Robert Maxant, a partner at consultancy Deloitte & Touche LLP, is quoted saying: “No one has experienced what life [under the rule] is going to be like, because they haven’t had to comply and they haven’t been examined yet.”

22nd Jul 2015 Back to top
  • BBA Brief – 22 July 2015

    Osborne defends bank taxes

    Chancellor George Osborne gave evidence to the Treasury Select Committee on his Summer Budget yesterday. The Telegraph (B1) quotes the Chancellor defending his recent changes to the bank tax regime, says he insisted that he had “got the balance right when it comes to [bank] taxation”. Mr Osborne also said that it would be difficult to tax banks and building societies differently, adding: “You have to tax banking institutions as banking institutions. The regulatory regime makes a distinction… I think some mutuals are very large, and in size at least are similar to banks.”

    Elsewhere, challenger bank Arbuthnot Banking Group – the parent of Secure Trust Bank – yesterday warned that higher taxes on bank profits will hurt lending to the real economy, City AM reports. James Cobb, Arbuthnot’s group finance director, is quoted saying that the Chancellor’s 8% Corporation Tax surcharge on bank profits will “slow our growth as a direct consequence” and “act as a brake on the challenger bank sector”.

    Mr Osborne also told the Committee that he will not backtrack on plans to separate the retails arms of banks from their investment banking operations. He described the ringfencing as an “important step” towards making banks safer. The FT (£, p1p3) adds that the Chancellor has ordered Whitehall departments to demonstrate how they would cut 40% off their budgets to “finish the job of repairing Britain’s finances”. He has launched a technical consultation on the “Bank of England Bill” to increase transparency and accountability at the Bank. Under the plans, the Bank will be brought under the purview of the National Audit Office and the number of meetings of the Monetary Policy Committee would be cut from 12 to eight. The Prudential Regulation Authority will also be brought within the Bank, ending its role as a subsidiary.

    Greek Parliament to vote on reforms

    Greek MPs will today vote on banking reform law and an overhaul of Greece’s civil code, the Guardian (p23) reports. The legislation is a condition of Greece’s creditors before they will begin negotiations on a proposed €86 billion bailout. A Greek government spokesman said negotiations would start immediately after the vote, with talks set to conclude by 20 August. This is the same day that Greece is due to repay €3.2bn to the European Central Bank. The paper adds that today’s vote will be a test for the Syriza government, and Prime Minister Alexis Tsipras is expected to rely on the support of three opposition parties to get the measures passed.

    Overdraft charges

    Moneyfacts has released data revealing that two-thirds of current accounts charge customers for an arranged overdraft, the Mail (p18) reports. Responding to the news, a BBA spokesman said:

    “Across the board overdraft charges have plummeted by nearly £1 billion recent years, and a number of products now offer a fee and interest free facility within an approved overdraft limit.

    “Banks are keen to help customers compare account charges in a variety of ways, from making charges easier to understand to providing useful online calculators and mobile apps. They also itemise charges on bank statements and use text alerts to communicate important account information instantly.”

21st Jul 2015 Back to top
  • What’s next for FEMR?

    Andrew Rogan, Senior Policy Director at the BBA, considers how the Government and regulators might work with other players to implement the recommendations of the Fair and Effective Markets Review.

  • BBA Brief – 21 July 2015

    US and Australian banks told to raise more capital

    The biggest US banks have been instructed to set aside a further $200 billion in capital according to the Telegraph (B5). They are to be subject to a capital surcharge based on the size of their group. Janet Yellan, chair of the Federal Reserve said: “A key purpose of the capital surcharge is to require the firms themselves to bear the costs that their failure would impose on others. In practice, this final rule will confront these firms with a choice: they must either hold substantially more capital, reducing the likelihood that they will fail, or else they must shrink their systemic footprint, reducing the harm that their failure would do to our financial system.” Another of the Fed’s board of governors, Daniel Tarullo, said that the new method “calibrates surcharge levels so that they will generally be higher than those required by the Basel method, and meaningfully higher for some of the firms. As we noted in considering the proposed rulemaking last year, the calibration adopted in the Basel Committee was towards the low end of the reasonable range suggested by economic analysis.”

    The FT (£, p22) reports that Australian lenders will have to raise an extra $9 billion in capital as they are ordered to hold more against home mortgage lending.

    LSE raises fears over risk modelling

    Researchers from the Systemic Research Centre (SRC) at the London School of Economics have warned that if all banks adopt the same risk models that this could make the financial system more vulnerable to the next crisis. In a report the centre said:  “If the authorities pick one modelling approach over another, they may just as easily be backing the wrong horse, a model that is less accurate.” Its analysis found that models introduced under Basel III “less accurately measured and forecast” risk than under the previous Basel II regime. The Telegraph (B3) reports that the SRC pointed to the fallout from the removal of the Swiss National Bank’s ceiling on the franc against the euro as an example of a shock which “demonstrates the inherent weaknesses of the regulator-approved standard risk models”.

20th Jul 2015 Back to top
  • Creating a data protection law fit for the 21st century

    In a world of rapid technological change, what is being done to make sure our information is safe? BBA Policy Advisor Walter McCahon looks at the steps the EU is taking to update its 20-year-old data protection law.

  • BBA Brief – 20 July 2015

    Discussions over ringfencing details rumble on

    The Sunday Times (£, B1) reported that the Bank of England and the Treasury are looking at relaxing restrictions around the independence of new ringfenced entities being created by the biggest UK banks.  It quotes a banker saying: “There are ways of making [this] easier. The question is, what is the definition of independence? Is it the ability to be independent on some decisions or all decisions? I do think the regulators will be flexible on that. The regulator has no interest in creating an unlevel playing field for British banks.” It also quotes Treasury sources saying: “You have to think very carefully about how all this would work and where the responsibility really lies.” The article suggests that there could be some flexibility found, with banks’ main boards allowed to make decisions on all parts of their operations, but with retail boards being given the final say.

    The Guardian (p19) reports that Bill Michael from KPMG has warned that some banks might not be able to implement all the changes demanded by the new ring-fencing rules by the 2019 deadline. He said: “The task is so enormous that some of these banks face an uphill battle to be fully compliant. For some of the very large complex banks preparing for recovery and resolution and the ringfence, they are going to be pushing against [the deadline].”

    Conservative MP calls for higher surcharge threshold

    The Times (£, p38) reports that Conservative member of the Treasury Select Committee

    Mark Garnier has called on the Government to lift the allowance for the new Bank Corporation Tax Surcharge from £25 million to £200 million so that it excludes most challenger banks. Paul Lynam, chief executive of Secure Trust Bank and chairman of the challenger bank panel within the BBA, said: “While large banks pulled back sharply following the financial crisis, challengers expanded their lending, particularly to SMEs and for housing construction, helping push forward the recovery.”

    Wheatley resigns from FCA

    The weekend papers all ran with the news that Martin Wheatley resigned as chief executive of the Financial Conduct Authority (FCA) on Friday. This was interpreted by many as a sign that  George Osborne is attempting to appease the City.  The Weekend FT (£, p2) quoted BBA Chief Executive Anthony Browne saying: “Martin Wheatley has played a big part in rebuilding confidence in financial services that was badly lost during the events of the last decade. We believed him to be firm, fair and sensible — always rightly putting the interests of customers first.”  The Sunday Times (B6) reported that “Andy Haldane, the Bank of England’s chief economist, has been mooted as a strong contender” to replace him. The Independent (p52) reports that the FCA is set to have a renewed focus on dawn raids under its next chief executive.

17th Jul 2015 Back to top
  • BBA Brief – 17 July 2015

    Carney hints at rate rise

    The FT (£) leads with Bank of England Governor Mark Carney yesterday suggesting that interest rates could rise “around the turn of this year”. Dr Carney noted that historic short-term interest rates have averaged out at 4.5%, but added “it would not seem unreasonable to me to expect that once normalisation begins, interest rate increases would proceed slowly and rise to a level in the medium term that is perhaps about half as high as historic averages” (Times, £, p1-2). The BBC reports that any increase in rates are likely to be one quarter of a percentage point rather than a half. The Telegraph (p1) suggests that this will be “long-awaited relief” for savers and could also slow down house price inflation. However, Dr Carney stressed that any action to cool the economy would take 18 months to take effect

    Greece given cash injection

    The European Central Bank raised its limit on emergency loans to Greek banks by €900 million, which the FT (£, p1) describes as a mark of “faith in Greece staying in the euro”. However, ECB President Mario Draghi echoed the recent report by the International Monetary Fund, stating: “It’s uncontroversial that debt relief is necessary and I think that nobody has ever disputed that. The issue is what is the best form of debt relief within our framework, within our legal institutional framework” (Guardian, p18). The announcement of emergency funding resulted in Athens suggesting that its banks would reopen on Monday for the first time in three weeks, although capital controls will still remain in place. Meanwhile, the Times (£, p2) reports that Chancellor George Osborne has “claimed victory” over protecting the use of UK funds as part of the Greece rescue package.

    HMRC powers to access bank accounts against Magna Carta principles

    Dia Chakravarty, political director at the TaxPayers’ Alliance, writes in CityAM (p23) that the Government’s plan to give HMRC powers to remove money directly from people’s bank accounts “flies in the face of long standing property rights”. She argues that Magna Carta was created to make the Crown subject to the same laws as ordinary citizens. However, the current draft legislation “puts the Crown in a superior position in recovering debts over ordinary individuals and businesses, and denies taxpayers access to courts and judicial remedy for an indeterminate period while their accounts remain frozen”.

  • Chief Executive’s newsletter – July 2015

    Chancellor announces further bank tax in Summer Budget

    There was disappointment felt across the City and beyond last week when the Chancellor used his Summer Budget to announce a new bank-specific tax, the fifth to be introduced in as many years.  Banks will face a new Corporation Tax surcharge of 8% – that means that the Government is taking another £1.7 billion from the banks over the next six years. All in all, we have worked out that banks in the UK have been singled out for an additional £40 billion of taxes over a decade.

16th Jul 2015 Back to top
  • Changing the banking conversation through customer experience design

    Amy Thom, experience strategist at Household Design, discusses the ways that banks are working hard to improve their customers’ experience.

  • BBA Brief – 16 July 2015

    Chancellor urged to rethink new bank profits tax

    George Osborne is facing calls to increase the £25 million threshold for the new 8% profits tax he announced in last week’s Budget, the Times (£, p43) reports. The BBA’s Chief Executive Anthony Browne is quoted in the article warning that that the new surcharge unveiled by the Chancellor will harm competition. Writing in City AM (p8) Sky’s City Editor Mark Kleinman says that smaller banks should have been exempted from the charge and that it could reduce lending into the economy from these players by £10 billion.

    Meanwhile, ReutersHerald Scotland, the Daily Star and the Express and Star report research by the BBA that shows that banks face paying an extra £40 billion of taxes between 2010/11 and 2020/21 that other industries do not pay. This research can be read here.

    City warned to prepare for Russian cyber attacks

    Banks and other finance firms should be braced for more cyber attacks from Russia, a former GCHQ director has said. Sir David Oman is quoted in the Telegraph (B1) warning that if the West increases sanctions against Moscow in response to the U crisis banks may fall victim to more state-led retaliation targeting IT systems. US admiral Michael Rogers is also quoted in the article, raising concerns that UK banks are ill-prepared for such attacks.

    Brussels poised to review capital requirement rules

    Senior European officials are considering lowering capital requirement rules they have imposed on banks, the Times (£, 43) reports. Lord Hill, the European commissioner for financial stability, has said that the commission would look again at the amount of capital held by banks in a bid to boost lending and thereby improve economic growth across the EU. The commissioner said that lending to small and medium-sized enterprises had been particularly badly hit by rules which had aimed to make banks safer in the wake of the financial crisis.

    UK households risk balance transfer “debt bubble”

    The Telegraph (B3) reports a study by credit ratings agency Moody’s which raises concerns about growing numbers of customers who transfer debts to different credit cards to avoid paying down what they owe. The study argues that amid years of meagre wage growth many consumers have only managed to maintain their standard of living by taking advantage of low-cost credit. The report emerges the day after the Bank of England urged households to begin “managing their finances” in expectation of an interest rate rise.

15th Jul 2015 Back to top
  • 112th Brussels for Breakfast

    (Hosted by the BBA and organised by the CSFI – with Graham Bishop and Hans Hack of FTI Consulting)

    Main topics included: Grexit, BRRD, Five Presidents Report, Instant Payments, Target2 and “29th Regime”

  • BBA Brief – 15 July 2015

    Banks pay additional £40 billion in taxes

    The Telegraph (B1) cites BBA research which reveals that banks are facing a £40 billion tax bill over this decade due to bank-specific taxes imposed by the Government. Last week’s Summer Budget saw the fifth tax imposed solely on the banking industry in as many years, with lenders paying an 8% surcharge on their profits above £25 million. This will generate £6.5 billion of revenue, whilst the Bank Levy will raise £25 billion for the government over this decade. BBA Chief Executive Anthony Browne told the Telegraph: “Banks expect to pay their fair share of tax. But they do not expect to be be singled out by the Chancellor for repeated raids which make it harder to lend to businesses and create jobs. The danger of these charges is that Britain has become seen as a less and less attractive place for banks to do business.” The full BBA press release can be read here.

    Carney: rate rise “getting closer”

    Bank of England Governor Mark Carney told the Treasury Select Committee that above-normal growth, rising costs and higher wages would force the Bank to act on interest rates, and “dismissed suggestions” that inflation returning to zero would prevent a rate rise (FT, £, p6). Although he gave no precise timing of a tightening of monetary policy, markets reacted by pushing the sterling higher and the price of UK Government bonds down.

    The Governor also told the Committee that “considerable progress” had been made to end too big to fail, and that “the implicit subsidy in both ratings and in markets has gone down”, writes the FT (£, p6). Dr Carney added that the Bank is examining the buy-to-let market to “ensure that underwriting standards don’t drift from being responsible to becoming reckless”.

    Greece deal hangs in the balance

    The FT (£, p8) reports that the International Monetary Fund has sent its “strongest signal” that it may reject the new Greek bailout programme. A confidential memo sent to EU authorities argues that the “country’s debt is rocketing and the budget surplus targets set by Athens cannot be achieved”. The Times (£, p34) quotes the report: “The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date”. The FT notes that under the IMF’s rules, it cannot participate in a bailout programme if a country’s debt is “deemed unsustainable and there is no prospect of it returning to private bonds markets for financing”.

    Greek MPs are voting on the bailout measures today, however the Times suggests that the leaked IMF report “could topple” Greek prime minister Alexis Tsipras, who is facing a rebellion from the far-left of his Syriza party. Meanwhile, the Guardian (p13) reports that Chancellor George Osborne has won the support of his German and Czech counterparts in arguing against the use of the European Financial Stability Mechanism – which could expose the UK to £850 million of losses – to bailout Greece. However, the European Council is said to be keen on the idea, which only needs a qualified majority vote to unlock the funds.

14th Jul 2015 Back to top
  • Banks pay additional £40 billion in taxes

    The UK Government has introduced £40 billion in additional bank-only taxation over a period of a decade.  From 2010-2020 banks will have faced an additional £4 billion a year in taxes on top of the tens of billions of other taxes that they already pay such as Corporation Tax, employment taxes, irrecoverable VAT and business rates.

  • BBA Brief – 14 July 2015

    New bank technology – “snap to switch” and “wave to pay”

    ApplePay has launched in the UK today, allowing customers to pay with their iPhone6 or Apple Watch in shops and to travel around London (Telegraph, B3).  Halifax has launched a new “snap to switch” service which allows customers to take a picture of their debit card. They can then upload this to their computer which will then automatically populate their details on the system reducing the time the switching process takes (Guardian, p22).

    Read more about the BBA’s Way We Bank Now work on how technology is changing the customer’s banking behaviour.

    Challenger banks write to the Chancellor over tax increases

    The Times (£, p39) reports that a group of challenger banks has written to the Chancellor to warn that the imposition of a new corporation tax surcharge will lead to a reduction in lending by the group by £10 billion. According to the article the group will ask George Osborne to raise the threshold from £25 million a year to £200 million a year. It quotes Andy Golding from OneSavings Bank saying: “This seems like a measure to push us backwards”. The Telegraph (B5) reports that the crack-down on buy-to-let landlords’ profits in the budget could also hit smaller, specialist lenders.

    ECB unlikely to raise liquidity for Greek banks this week

    Greek Prime Minister Alexis Tsipras looks set to be forced to rely on opposition support to pass EU imposed reforms by Wednesday’s deadline, according to the front page of the FT (£). A separate article in the paper (£, p3) looks at how the European Central Bank will try to keep Greece’s banks afloat. It has asked eurozone governments to provide financial guarantees that would enable the ECB to sustain or increase the €89 billion in emergency funding it has already provided to Greek banks. This will enable Greek banks to re-open but with restrictions still in place. The article goes on: “The eurozone responded on Monday by making €10 billion available through its bailout fund, the European Stability Mechanism, which could be deployed if and when a third Greek bailout package is agreed — a process that could still take several weeks to complete…officials familiar with the ECB’s internal debate said it was unlikely to raise its cap on emergency liquidity to Greece this week. Before it can act, the ECB also needs assurance that Athens will make a €3.5 billion bond repayment to the central bank that falls due on July 20. It must also cover arrears totalling €1.5 billion to the International Monetary Fund.” In the Mail (p67) Alex Brummer warns that “of the four major banks in Greece, it looks as if at least two may be beyond redemption.” The Independent (p49) reports that “the Greek banking system is now also acknowledged to have a solvency as well as a liquidity crisis.”

    The Telegraph (p1) reports that Britain could have to contribute £1 billion in emergency loans to Greece. The proposal goes against a previous EU agreement that the UK would not be asked to bail out Eurozone members. Asked about the British deal, a senior EU official said: “The council decision is a political agreement, and it can be argued that it does not prevent the activation of mechanism.”

    Borrowing demand increases

    The Bank of England’s Credit Conditions Survey has found a rising appetite for borrowing among UK households and businesses. City AM (p12) quotes BBA Chief Economist Richard Woolhouse saying: “It’s heartening to see that demand for lending from small businesses has increased significantly as this is a clear, positive sign that firms have the confidence to take on borrowing to invest and expand. At the same time we’re seeing demand for mortgages increase, as consumers take advantage of some of the extremely competitive mortgage deals that are available from banks at the moment. This – coupled with the increase in demand for personal loans – shows that people are starting to feel more financially secure and ready to commit to making bigger purchases.”

13th Jul 2015 Back to top
  • BBA responds to today’s BoE Credit Conditions Survey

    Demand for lending from small businesses significantly increases

    Commenting on today’s Credit Conditions Survey from the Bank of England, BBA Chief Economist Richard Woolhouse said:

    “It’s heartening to see that demand for lending from small businesses has increased significantly as this is a clear, positive sign that firms have the confidence to take on borrowing to invest and expand.

    “At the same time we’re seeing demand for mortgages increase, as consumers take advantage of some of the extremely competitive mortgage deals that are available from banks at the moment. This – coupled with the increase in demand for personal loans – shows that people are starting to feel more financially secure and ready to commit to making bigger purchases.”

  • BBA Brief – 13 July 2015

    EU reaches Greek deal

    EU leaders have reached a “unanimous” deal on providing Greece with a third bailout in return for sweeping reforms that need to be passed by Wednesday. Prime Minister Alexis Tsipras said that after a “tough battle”, Greece had secured a “growth package” of €35 billion (£25 billion), and won debt restructuring. “There will not be a “Grexit”, said European Commission president Jean-Claude Juncker (BBC).

    Commentators criticise Government’s new bank tax raid

    James Quinn questions the wisdom of the Government’s new 8% corporation tax surcharge and worries that it might unduly hurt Britain’s smaller banks.  He writes:

    “If [George Osborne] is as intent on increasing competition as he says he is, then he should rethink this policy. To the casual observer, it would appear badly formulated and designed as much for political reasons as for economic ones. The BBA, the banking industry lobby group, has called for a strategic review of the way in which banks are taxed. Although the conclusions of any such review might leave Osborne wiping egg off his face, better that than stifling the very sector he has long craved to promote” (Telegraph, B2). In the Mail on Sunday (p92) Simon Watkins criticised the new corporation tax surcharge for banks. He wrote that it “makes no sense, either as a measure to improve banking behaviour, or as sensible economic policy… The extra tax is a cheap shot and the Chancellor needs to think again.”

    Barclays prepares for ringfencing

    The FT (£, p17) reports that Barclays is considering buying another retail bank in order to acquire another banking licence for when it splits its retail and investment banking arms to comply with the new ring-fencing rules.  It quotes Barclays chairman John MacFarlane saying: “If we need another bank, I’ve told the guys to go and get another one… to either get permission to get one or go and get one so we [can] back into that” (FT, £, p17).

10th Jul 2015 Back to top
  • BBA Brief – 10 July 2015

    Budget reaction day two: New bank tax comes under fire

    Smaller banks have expressed their “intense frustration” with the Government’s decision to apply a new 8% Corporation Tax surcharge on all profits over £25 million. Analyst Gary Greenwood from Shore Capital told the Telegraph (B4): “It is completely counter-productive – the Government has been encouraging banks to grow and compete so they can act as appropriate challengers. This tax effectively impairs their ability to do that. Banks can lever up their equity by 10- to 20-times, so for every £1 of tax you take off them, you rip £10 to £20 of lending capacity out of the market. It is crazy. It will have a very negative impact on lending and on investor sentiment in the sector.”

    The FT (£, p25) reports that “A number of small lenders are to hold a meeting on Friday morning with the British Bankers’ Association to air their concerns”.  It quotes OneSavings Bank CEO Andy Golding saying: “We are trying to grow, invest, create jobs and provide consumer and SME choice — but an additional tax dilutes earnings and gets in the way of all these things.”

    Writing in the Telegraph (B4), Paul Lynam, Secure Trust CEO and Chairman of the BBA’s Challenger Bank Panel, argues: “I share Mr Osborne’s desire to see a more competitive banking market in Britain. Challenger banks have helped to drive up standards of service across the board and have provided a key lifeline for businesses struggling to get finance from our larger rivals; which is why I find this surcharge so distressing.”

    The Telegraph (B1) quotes Stuart Adam, an economist at the IFS, saying: “It’s a little hard to see exactly what the rationale is for a higher corporation tax rate on banks, other than a general principle that we want to tax banks heavily in some way. Why design it like this? The Bank Levy was designed based on an International Monetary Fund (IMF) model with a specific attempt to discourage risky leverage among banks. It has had mixed success in doing that. It doesn’t look like it’s well targeted either at those that got the biggest bail-outs in the crisis, or those that pose the highest risk in the future.”

    Business groups oppose new HMRC powers

    Business groups have criticised the Government’s decision to give HMRC powers to take money directly out of people’s bank accounts. The move is expected to raise hundreds of millions of pounds. John Allan, national chairman at the Federation of Small Businesses, told the Telegraph (p4): “We need an open debate about whether citizens are comfortable with such powers being in the hands of the UK tax authorities. In our view this undermines due process without independent, judicial oversight and is a step too far.”

  • Four million vote for a €20,000 gift

    Graham Bishop, consultant on European integration, shares his views on the economic crisis in Greece in the wake of the country’s ‘No’ vote on a deal with its creditors.

9th Jul 2015 Back to top
  • BBA Brief – 9 July 2015

    Chancellor’s “bold” Budget lowers Bank Levy but introduces new profits tax

    George Osborne unveiled an unexpected shake-up of the way banks are taxed in his seventh Budget, announcing a gradual reduction of the Bank Levy and a new profits tax for the sector.

    The Guardian (Budget special, p4) writes that the “surprise” cut in the levy will help some larger players, but that the new 8% profit tax will undermine the industry’s smaller banks.

    Responding to the Chancellor’s Budget the BBA’s Chief Executive Anthony Browne welcomed the reform of the levy, but also said that introducing “yet another bank-specific tax will reinforce fears that Britain is become a less attractive place for banks to do business”.

    Mr Browne said: “This is the fifth new bank-specific tax measure in as many years following fast on the heels of the big rise in March and will increase banks’ tax burden by nearly £2 billion. We still believe that the Government should conduct a strategic review of the way banks are taxed to ensure that the UK remains a competitive place for banks to do business.”

    Writing in this morning’s CityAM (p24), Mr Browne said that yesterday’s changes will create more “losers than winners” for the banking industry.

    “Around 30 banks pay the levy at the moment – hundreds may be liable for the new charge,” he wrote. “In particular, it will disproportionately affect challenger banks in our industry – smaller players that do not threaten the UK’s financial stability.”

    Yahoo Finance reported that shares in some challenger banks tumbled after the Budget.

    Other major elements of the Chancellor’s statement included:

    • Corporation Tax to fall from 20% to 19% in 2017 and again to 18% by 2017 (CityAM, p1).
    • A National Living Wage of £9 an hour by 2020. (Telegraph, p5).
    • An overhaul of the way 1.4 million buy-to-let landlords will be taxed, costing these investors as much as £2 billion. (Telegraph, p3).
    • Changes to non-dom status including moves to tax those in Britain for 15 out of the last 20 years on their global income as if they were ordinary UK taxpayers. (Guardian).
    • Properties worth up to £1million to be exempt from Inheritance Tax from 2017. (BBC).
    • A Government review of claims management companies. (Mortgage Strategy).

  • Lenders to Northern Ireland customers set out levels of borrowing

    Lenders today publish borrowing by individuals and businesses in Northern Ireland across more than 200 postcode sectors at the end of 2014.

    The industry-wide data is compiled jointly by the BBA and the Council for Mortgage Lenders and complements existing publication of data for postcode sectors in Great Britain.

    BBA Chief Economist Richard Woolhouse said:

    “We’re delighted to have another layer of detail in our picture of bank lending in Northern Ireland. This data transparency shows just how much local SME and personal borrowing there is, right across the region.

    “This data underlines how banks are in the business of lending to companies and people wherever they are based.”

  • Lenders set out levels of borrowing from across the country

    Major lenders today publish details of borrowing to individuals and businesses classified by more than 9,000 postcode sectors at the end of 2014.

    The industry-wide data is compiled jointly by the BBA and the Council for Mortgage Lenders.  Participating lenders also publish their own figures on their websites.

    BBA Chief Economist Richard Woolhouse said:

    “This data shows that there’s a good spread of lending, and that up and down the country businesses and families are borrowing from banks.

    “The industry provides these figures on a regular basis as part of their commitment to transparency. Now anyone with an interest can  look up how much SME or personal borrowing goes on where they live.”

  • A bigger tax burden that falls on more shoulders

    BBA chief executive Anthony Browne explains what yesterday’s Budget means for the banking industry.

8th Jul 2015 Back to top
  • BBA response to the Summer Budget

    Responding to the Chancellor’s Summer Budget, BBA Chief Executive Anthony Browne said:

    “We welcome the Chancellor’s decision to amend the Bank Levy to reduce the damage it does to Britain’s biggest export industry.

    “But introducing yet another new bank-specific tax will reinforce fears that Britain is becoming a less attractive place for banks to do business. This is the fifth new bank-specific tax measure in as many years following fast on the heels of the big rise in March and will increase banks’ tax burden by nearly £2 billion.  We believe these moves will also undermine competition in the industry by making it harder for smaller players to break through and challenge larger banks.

    “We still believe that the Government should conduct a strategic review of the way banks are taxed to ensure that the UK remains a competitive place for banks to do business.”

  • BBA Brief – 8 July 2015

    BBA begins work on new service for grieving families

    The BBA is working with the Building Societies Association and the Daily Mail to investigate how to set up a new service to make it easier for grieving relatives and friends handling a deceased individual’s estate. Writing in the Mail (p44), BBA Chief Executive Anthony Browne says the paper’s campaign to improve the service banks offer to bereaved people deserves to bring about “lasting change” in the way banks and other major companies treat customers at the very hardest of times.

    He writes: “We want customers who have suffered a bereavement to be able to handle the financial implications of the death with the minimum of bureaucracy. But at the same time it’s vital that the right checks are in place. Any changes will need to fit in with the existing system of wills to make sure that only the right people get access to the deceased’s money. It’s also vital that fraudsters posing as next of kin can’t close down accounts and steal the money of someone who has not died.”

    Other supporters of the campaign include Ross McEwan, chief executive of Royal Bank of Scotland, Francesca McDonagh, head of retail banking and wealth management for HSBC in the UK and Jeroen Hoencamp, chief executive of Vodafone UK, the paper adds (p35).

    Chancellor to deliver his seventh Budget

    Middle-class workers are to benefit from tax giveaways in today’s Budget, the Times (£, p1) reports. The paper says chancellor George Osborne is likely to raise the threshold at which workers start paying the 40p tax rate, and take-home pay for all taxpayers will rise due to a faster increase to the personal tax allowance. Continuing its analysis on p6, the Times suggests that Mr Osborne is unlikely to abolish the Bank Levy, but may alter the burden of payment by charging the Levy on UK rather than global balance sheets. Elsewhere, the FT (£, p1) reports that government insiders have described this Budget as “massive” in its scope. The paper adds that the chancellor will promise to be “bold in transforming education, bold in reforming welfare, bold in delivering infrastructure, bold in building the northern powerhouse, bold in backing the aspirations of working people”.

    Regulators announce stricter rules for financial staff

    Yesterday the Financial Conduct Authority published the final rules for the new Senior Managers Regime, which is designed to improve accountability in the City. The FT (£) reports that the rules will come into force next year, following the recommendations of the Parliamentary Commission on Banking Standards. The paper adds that the FCA is consulting on adding algorithmic traders to the new regime. Commenting on the plans, BBA Executive Director Simon Hills said: “This new framework will help to restore trust and confidence in the banking industry damaged by the events of the last decade. A banking industry that sets the gold standard for accountability is good for customers and investors as well as those serving in it.”

    China’s steep equity decline continues

    More than two thirds of all listed companies on the Shanghai and Shenzhen markets have halted trading in their shares, as Beijing struggles to insulate China’s economy from a steep equity decline, the FT (£, p1) reports. Commodities were also hit hard yesterday, with the price of copper futures on the London Metal Exchange dropped to its lowest level since 2009, falling 8.4% in two days, the paper adds.

  • The Great Business Debate

    What’s the value of British business to the UK? How do large and small businesses work together? BBA Publications Executive Emily Hoquee listened to the “Great Business Debate”, hosted by the CBI and FSB, to find out more.