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.
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.”
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.”
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).
It’s welcome news that CMU will be visible and measurable, writes Conor Lawlor, the BBA’s Policy Director, Capital Markets.
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.
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.
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.
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.
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.
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.
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.
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.
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.”
Janet Kerr from PwC blogs about a new report on the total tax contribution of the banking sector.
BBA CEO Anthony Browne blogs about how the industry is crucial for jobs and growth right across the country.
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.
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.”
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.
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.
New figures published today show that the tax contribution of the UK banking sector climbed to £31.3 billion in 2014.
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”.
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.”
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.
(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.
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.
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.”
BBA Chief Executive Anthony Browne talks through the glittering line-up for next month’s BBA International Banking Conference.
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.
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)
Simon Hills, BBA Executive Director of Prudential Capital and Risk, writes about a PRA consultation designed to clarify lines of responsibility at board level.
Simon Hills, BBA Executive Director of Prudential Capital and Risk, highlights industry concerns over the Basel Committee’s consultation on interest rate risk in the banking book.
Chairman of the Treasury Select Committee criticises bank surcharge
Andrew Tyrie, chairman of the Treasury Select Committee, has criticised the bank tax surcharge, warning that it could have a negative impact on competition in the sector and suggesting that the Competition and Markets Authority should look at its impact (Guardian, p33). Paul Lynam, chief executive of Secure Trust Bank and chairman of the BBA’s Challenger Bank Panel, was interviewed on the issue by BBC Radio 4’s Today programme this morning (7.20am). Defending the government’s position, a Treasury spokesperson is quoted in City AM (p1) stating: “We have introduced a range of measures to support challenger banks: we’ve put competition at the heart of the regulatory system, significantly reduced barriers to new banks entering the market, and made sure that all banks – big or small – can access the payments system.”
New BBA Chair appointed
There is widespread coverage of the appointment of Noreen Doyle as the new BBA Chair. The FT (online only) states that the appointment reflects “the predominantly international profile” of the BBA’s membership. City AM (p9) notes that Ms Doyle is the first woman to chair the organisation. Commenting on her new role, she said: “Rebuilding the trust of customers, driving up standards in the industry and working with government and regulators to ensure our banks remain globally competitive are some of the issues I look forward to working on with Anthony Browne and his team.”
BBA appoints new chair
Noreen Doyle has today been appointed as the new BBA Chair. She is the first woman to chair the BBA and the first to come from the wholesale banking side of the membership. Ms Doyle is currently Chair of the Board of Credit Suisse International and Credit Suisse Securities (Europe) Ltd, and Vice Chair of Credit Suisse Group. BBA Chief Executive Anthony Browne said: “I am delighted that Noreen has agreed to become the new Chair of the British Bankers’ Association. She brings a wealth of experience to the role which will help our industry navigate the challenges ahead.” The appointment takes effect from 17th October this year. Read the BBA’s press release here.
Chancellor seeks EU treaty change to safeguard the City
The FT (p1) writes that George Osborne is determined to ensure any renegotiation of Britain’s relationship with the European Union ensures eurozone members cannot “gang up” on the UK and undermine the City of London. Speaking to the House of Lords’ economic affairs committee the Chancellor said that “non-discrimination” against EU states outside the single currency area would need to be written into the EU treaty. The British Government has objected to several recent EU proposals that may have undermined the City, including a ban on clearing houses based outside the eurozone from trading in euro-denominated products.
Bank of England Court pledges to look again at appointments process
There is widespread reporting of the Treasury Select Committee’s evidence session with Sir Anthony Habgood, the chairman of the Bank of England’s Court of Directors. City AM quotes Sir Anthony saying that he will “give more consideration” to the way appointments are made to the MPC after concerns were voiced about the external interests of one MPC member. However, the chairman also suggested that allowing the National Audit Office to inspect the Bank’s operations may undermine independence, the FT (p3) writes.
House Price Calculator (HPC) can provide only a broad brush valuation at individual property level. See link below. House price calculator - Acadametrics website (External Link)
Noreen Doyle has today been appointed as the new BBA Chair. She is the first woman to chair the BBA and the first to come from the wholesale banking side of the membership. The appointment takes effect from 17th October, 2015. Ms Doyle is currently Chair of the Board of Credit Suisse International and Credit Suisse Securities (Europe) Ltd, and…
LSL Property Services/Acadametrics House Price Index National and Regional formatted data from 1995. See the link below. House index - Excel file (External Link)
Anders Bouvin, UK Chief Executive of Handelsbanken, talks about how its 200th British branch symbolises its approach to local banking and serving customers.
Big lenders win change to rules
The FT (£, p18) and others report on the decision of the Financial Stability Board that groups organised as subsidiaries should face the same standards as globally organised groups. The rule change addresses Total Loss Absorbing Capacity (TLAC) and caps the amount that banks with subsidiaries are required to hold so that the total is not greater than the total required for banks that consolidate their TLAC into a single point of entry.
Fed urged to hold fire on rates or risk sparking emerging market ‘panic’
TheFT (£, p8) reports that the World Bank has warned the US Federal Reserve against raising interest rates this year. Kaushik Basu, Senior Vice-President and Chief Economist at the Bank, told the FT that a US rate rise could create a “shock and a new crisis in emerging markets”. The main concern continues to be the slowdown in China with the combination of a US rate rise seen as threatening global growth prospects.
M&A shows no sign of slowdown
City AM (p1) and others report on the M&A figures released by Dealogic. The figures show $3.2 trillion in deals so far this year, the highest levels of action since 2007. There have been £260 billion worth of deals involving UK firms in 2015. The FT (£,p17) writes market volatility had no effect on deal making as companies looked to protect shareholders and create growth by purchasing competitors.
Compliance is a hot topic for banks right across the globe. Philip Allen, Director of Training at BBA Enterprises, discusses the challenges facing compliance officers ahead of a BBA workshop.
Commenting on the latest Bank of England’s Mortgage Lenders and Administrators Statistics 2015 Q2, BBA Chief Economist Richard Woolhouse said:
“The property market is hotting up. These figures show that savvy consumers are rushing to snap up ultra-competitive deals from lenders at a time when mortgage rates have hit record lows.
“Nearly four-fifths of lending is now on fixed-rate deals. Consumers are increasingly aware of the prospect of an interest rate rise on the horizon and are looking to lock in while they can.
“It’s interesting that the number of new arrears is also at its lowest on record. This suggests that lenders are ensuring that customers take out loans that they can afford to repay.”
Bank tax could raise up to double Treasury estimates
The Times and several other papers have reported widely that George Osborne’s proposed 8% bank surcharge tax is expected to raise twice as much as official Treasury estimates – with the likely tax-take closer to £12bn, according to a report by professional services firm EY. The BBA is quoted as saying that: “Introducing yet another new bank-specific tax will reinforce fears that Britain is becoming a less attractive place for banks to do business.”
Subprime repackaged as investors feel ready to embrace risky borrowers again
The FT splashes on reports that the subprime market is back, rebranded as a less toxic “non-prime” mortgages. The move is seen as a sign that yield-hungry investors are more confident taking on riskier borrowers, against a backdrop of tighter regulatory guidelines. Brad Friedlander, managing partner at Angel Oak Capital, said: “These are deserving borrowers that might be a 705, but not a 770 credit score. There’s no reason they shouldn’t have some type of access to credit. Lenders are still in a very restrictive mode, but I think we will see that pick up over time.”
Drop in euro banker million pay packets in 2013
The Guardian and other papers widely report the publication of European bankers pay data by the European Banking Authority. It shows that the number of bankers taking home €1m fell from 3,530 in 2012 to 3,178 in 2013. The report also shows that British bankers top the list of highest paid bankers in Europe with more bankers earning in excess of €1m than the rest of Europe combined in 2013.
PM loses key Commons vote over EU referendum rules
The FT and other papers report David Cameron’s first defeat as Prime Minister in a majority Tory Government yesterday night over the rules governing the upcoming EU referendum. Opposition parties joined together to force the Government to change the rules covering next year’s proposed referendum on Britain’s EU membership. The Government will now be forced to apply similar rules during the run-up to the referendum as those applying before general elections, barring ministers from using the civil service machinery to make any pronouncements that might influence the way people vote.
Welcome to my newsletter
Welcome back, I hope you’ve enjoyed the recent summer break.
New bank tax threatens competitiveness
London is one of the leading global financial centres, which is why I decided to write to the Chancellor last month about his latest plans for taxing the banking industry. Many of my members fear that the introduction of a Bank Corporation Tax Surcharge – announced in the Summer Budget – may affect the competitiveness of the UK as a centre for banking. It’s vital that the UK is seen as a stable and welcoming place to do business.
Dates for this years upcoming high street banking statistical releases.
Growing challenges for the Government on the proposed corporation tax surcharge
The FT (£, p22) writes that some challenger banks are warning that the surcharge could mean payday lenders and peer to peer lenders are at an advantage over challenger banks. Commenting on the proposals, chief executive of Secure Trust Paul Lynam said “all of these entities are much less heavily regulated and now also have a huge tax advantage”.
Ahead of Tuesday’s parliamentary debate on the budget the Sunday Times (£, B1) writes that Labour and the SNP are looking to “scupper” the Chancellor’s new bank tax as amendments have been put forward that would spare small challenger banks and building societies from having to pay the 8% surcharge. Commenting on the proposed 8% surcharge and its impact on challenger banks Chris Leslie the Shadow Chancellor said “Osborne’s current proposals could harm competition and diversity in the sector — the very things he once briefly claimed to champion”. The Sunday Times (£, p6) also looks at the growing competition coming from the challengers.
Chancellor: The City has made progress now for the next ten years
The Chancellor George Osborne writes in City AM (p5) about his ambition for the UK’s financial services industry. Looking at the Government’s reforms and priorities for the future he writes: “I want Britain to have the best and most competitive financial services in the world. Part of this is making sure that we have the best regulated industry, with the highest standards of conduct. There is no trade-off between high standards of individual conduct and the City’s competitiveness.”
Commenting on the UK’s renegotiation with Brussels the Chancellor places financial services at the centre of the discussions noting that “one of the greatest threats to the City’s competitiveness comes from misguided European legislation, so a central demand in our renegotiation will be that Europe reins in costly and damaging regulation”.
No.10 calls on businesses to remain quiet on EU referendum
As the UK Parliament is set to consider the remaining stages of the EU Referendum Bill today, the FT (£, p1) reports that Prime Minister David Cameron and his closest aides are calling on businesses who support Britain remaining in the EU to stay silent until after the renegotiation discussions have been completed. This warning follows a new poll by Survation published on Sunday which suggests the public is becoming increasingly Eurosceptic with 51% saying they would vote to leave the EU (Daily Mail, p1).
The Sunday Times also reports that there are growing concerns amongst “No” campaigners that the Government will try bring in new rules to enable the referendum campaign to be kept to just a four week short campaign.
Financing Growth has been produced to help small to medium-sized businesses identify some of the different finance options that may be available to expand their business, including information, tips and Read More
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 Read More
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 Read More