We are The voice
Eurozone ‘pop-up branches’
It could take up to a year to secure a license that will allow UK banks to operate in the eurozone post-Brexit, the ECB has warned, prompting concern that they won’t be ready to leave the EU by 2019 (Financial News, p19, £, online). The Times (p. £, online) reports that US banks have proposed ‘pop-up branches’ that will enable them to provide services to the eurozone, while keeping the majority of staff and work in London, as a means to minimise financial disruption. Regulators are concerned that ‘pop-up branches’ will mean banks won’t have a ‘proper presence’ in European countries. In other Brexit news, the EU has ring-fenced UK financial services from a future trade deal to ‘safeguard financial stability in the Union’ (Bloomberg, online).
Election campaigns in the UK and France continue
Sir Keir Starmer, Shadow Brexit Secretary, will reveal the Labour party’s Brexit manifesto today (i paper, p4, online). If elected, the party has pledged to scrap the Great Repeal Bill in favour of legislation that protects EU workers’ rights and environmental standards, and prioritise UK access to the single market during exit negotiations. Meanwhile, the French Presidential contest continues as Macron’s success prompted $290 billion to be added to the global market (City AM, p1, online). His opposition, Marine Le Pen, has stepped down as leader of the National Front in a bid to widen her voter appeal (BBC News, online).
Employment in the financial services sector
City AM reports (p1, online) that the financial services sector employs 7.3% of the UK’s working population, and workers in the sector contribute 1.5 times more to the economy than the average UK employee. In the year to March, financial services salaries rose by 3.5%, four times faster than other professional industries, as employers seek to secure top talent (City AM, p7, online). Meanwhile, a study by Boston Consulting Group has found the most efficient way to achieve workforce gender diversity is to promote women already working in the company, as opposed to relying on a ‘scattergun approach’. Robust flexible working schemes, clear targets and visible role models also help (Financial Times, p17, £, online).
Macron and Le Pen in final round of Presidential race
Centrist Macron will face far right Front Nationale candidate Le Pen in the final round of the French presidential contest, following yesterday’s vote (BBC Radio 4 Today Programme, online). Despite a boom in the value of the euro following the first round result, analysts predict that the future of the French economy remains uncertain, prompting the ECB to confirm it will support national banks with cash if needed (Reuters, online).
The future of Fintech
The future of financial technology or ‘fintech’ requires effective and ‘agile’ regulation that can keep pace with technological developments, BBA Chief Executive Anthony Browne writes in Raconteur (The Sunday Times, Supplement 1, p6). Fintech continues to attract top talent as MBA graduates are increasingly picking jobs at startups as opposed to banks, a Goldman Sachs survey has found (Financial Times, p, £, online). Meanwhile, Barcelona has announced its eligibility as a new location for Fintech companies wishing to leave the UK following Brexit (La Vanguardia, online).
The City backs plans to keep European Court of Justice jurisdiction
A proposal by the UK government to keep the European Court of Justice as the ‘ultimate authority in financials services’ for up to five years after Brexit could maintain UK access to the single market, The Times reports (p39, online). A survey by GW Employment Law, however, has found that 70% of financial services firms in the UK wish to change EU law in regards to employment protections (Independent, online). As Brexit proceedings continue, the US commerce secretary Wilbur Ross has told the Financial Times that the US is willing to strike a deal with the EU, a shift in tone from the Trump administration’s previous attempts to strike bilateral deals with EU members as opposed to the bloc in its entirety (p5, £, online).
Mike Sellberg Executive Vice President and Chief Product Officer at Workiva blogs on how companies can reduce the risk of human error in their reporting.
Government scraps probate plans
Government plans to replace the existing probate scheme with a ‘sliding scale’ based on estate value have been scrapped due to time constraints before the general election, said the Ministry of Justice (BBC News, online). The ‘death-tax’, so-called by critics, would have increased probate fees to as much as £20,000, prompting MPs to question the legality and social consequences of the proposal (Daily Mail, p1, online).
Election manifestos outline key policies
Theresa May has pledged to reduce net migration in the Conservative party’s manifesto in an attempt to appeal to Northern Labour voters, The Daily Telegraph (p1) reports.Meanwhile, the Guardian writes that ‘the most important election for Britain is the presidential contest in France’, the first round of which takes place on Sunday. The result may ‘put Brexit in the shade’ or impact our own election result (The Guardian, p30, online).
Brexit negotiation guidelines revealed
Leaked European Commission negotiating guidelines reveal Brussels’ requirement that the UK remain subject to European Court of Justice laws post-Brexit (The Times, p1, £, online). Any exit deal that does not uphold EU citizen rights will be vetoed as part of this ‘hard line approach’, warned European parliament chief Antonio Tajani (Financial Times, £, online). The guidelines also say the UK must pay all Brexit costs and ‘bear the currency risk’ (Politico, online). Tajani added, however, that Britain would be welcomed back if a new UK government reversed Brexit after the general election (The Guardian, p1, online).
EU “administrative chill”
An internal memo sent by senior European Commission officials to all EU staff highlights a growing “administrative chill” ahead of Brexit proceedings (Financial Times, £, online). Staff were told to prepare for UK agencies to be disconnected from “sensitive databases” and reminded staff that legally, contracts can only be awarded to parties established in the EU. The memo follows a statement from Margaritis Schinas, spokesperson for the European Commission, who said the UK will have “no say” in the relocation of the European Banking Authority (Bloomberg, online).
Fintech growth continues
UK fintech startups received £177 million in investment during the first three months of 2017, confirming the UK as the European Fintech capital (CityAM, p11). The Telegraph reports (B1, £, online), however, that the UK faces growing competition from China due to their looser regulation standards and the $7.1billion rise in funding for Asian fintech companies last year. Similarly, Level39, a fintech accelerator, urges banks to invest in startups that offer the technology they need or else they may face a ‘cliff-edge’ (The Times, p50).
General election campaigns gather pace
MPs backed Theresa May’s proposal for a general election on June 8 by a 509 majority. The Daily Mail reports that the conservative manifesto will commit the party to ending EU free movement and leaving the single market and European Court of Justice (p1, online). Jeremy Corbyn is expected to announce a manifesto that is “heavy” on big businesses that act “in an irresponsible way” (The Times, online).
Rob Driver, BBA Policy Director, Capital Markets and Infrastructure, blogs on how the BBA’s transaction reporting working group is helping solve the problem of identify short selling transactions in real time.
Theresa May calls for a snap election
Theresa May has announced plans for a general election on June 8, providing the proposal receives a two thirds majority vote today in the House of Commons. The announcement was met with optimism by the business community who see the election as an opportunity to ensure certainty during Brexit talks and consequently, a smoother exit (Telegraph, B1). The announcement also caused sterling to rise to its highest level in six months (i, p38).
Financial services firms are discussing a ‘metered, pay as you go approach’ to research analyst charges in compliance with MiFID regulation. Although estimated to save European and U.S asset managers more than $300 million (Bloomberg, online), there are concerns that this regulation will mean smaller firms struggle to cope with research costs (Financial Times, £, online).
IMF forecasts UK growth
The International Monetary Fund (IMF) has recognised UK growth performance as ‘stronger than expected’ and increased its growth forecast to 2% from 1.5% in January 2017. The UK is now the second fastest growing G7 economy, with the US taking first place (The Times, £, p39). Theresa May said this increase proved the ‘economic resilience’ of the UK, and ‘gave her the confidence’ to pursue a snap election (The Telegraph, B1).
Breaking news: election announcement
UK Prime Minister Theresa May has called for a snap election on June 8 2017 to secure ‘strong and stable leadership’ to see the UK through ‘Brexit and beyond’ (BBC News, online).
Labour oppose high street bank closures
Labour will oppose the ‘epidemic’ of high street bank branch closures by introducing ‘legal obligations’, The Shadow Chancellor John McDonnell has said (The Independent, online). New bank laws will ensure banks retain a high street presence to help small businesses and customers in vulnerable circumstances. BBA’s Managing Director for Retail Eric Leenders said there has been a ‘digital revolution’ in the way we bank, however the decision to close a bank branch is ‘never taken lightly’ and banks are working in partnership with the Post Office to ‘make face-to-face banking available.’
Brexit discussions continue
The location of the London-based European Banking Authority post-Brexit remains undecided and will be ‘subject to exit negotiations’, the UK government has said (Reuters, online). Meanwhile, the German Chamber of Commerce and Industry has warned German companies located in the UK that they may be required to ‘make back’ tax payments after Brexit (FAZ, online). Despite skepticism from members of the European Parliament’s trade committee during ongoing discussions, International Trade Secretary Dr. Liam Fox has insisted that the UK will participate fully in EU talks up until such point that the UK’s membership ends (The Sun, online).
Glass-Steagall Act 2.0
Thomas Hoenig, vice-chairman of the Federal Deposit Insurance Corporation, has proposed a ‘third way compromise’ in an effort to restore the Glass-Steagall law and financial deregulation (Financial Times, £, p4). Hoenig has proposed a ‘watered down version’ of the law inspired by UK ringfencing rules due to come into effect in 2019, that separate retail and investment banking activities.
Bank of England warns on Fintech financial stability risks
Bank of England Governor Mark Carney has said that policy-makers must balance the social and financial stability risks posed by Fintech and the benefits it offers to customers (The Times, £, p46). Speaking at a Fintech summit yesterday, Carney said that, “there was no need to toughen up regulation for the sector as it has so far, ‘avoided undertaking traditional banking activities’”, however regulators may step in if it finds evidence of risks to banks’ funding (The Daily Telegraph, £, B5) .
EU securitisation talks stall
Politico (£, online) reports that negotiations over the EU’s proposed securitisation rules remain deadlocked after five trilogue meetings. Rapporteur for the securitization file Paul Tang MEP highlighted slow progress on the risk retention rate and third country access which would allow the UK to operate under the new framework after Brexit. Tang sad, “We’ve made some progress on technical issues … But it’s very clear the Council doesn’t want to touch upon third-country equivalence”, conceding that talks are likely to extend into June.
Fears over consumer debt
4 in 10 adults in the UK say they are concerned about their personal debts, according to a survey by insolvency practitioner R3, with 49% worried about their credit card debt (The Times, £, p44). The Wall Street Journal Europe (£, B8) reports that policymakers on both sides of the Atlantic have highlighted concerns over rising levels of household borrowing, noting US Fed data that suggests a quarter of US banks expect customers will struggle to meet debt repayments this year.
Matthew Herbert, BBA Director of Strategy and Digital, blogs on what makes good Fintech, and how industry and regulators can measure it.
Cybercrime linked to fall in share prices
The share prices of firms affected by cyber attacks fall by an average of 1.8% after news of the breach is reported, with global investors losing a total of £42 billion in value from cyber-related share prices falls since 2013 (City AM, p1). Research by Oxford Economics has found that investors in a typical FTSE100 firm would lose an average of £120 million following news of a cyber incident (The Daily Telegraph, £, B3).
European regulators to issues Brexit guidance
ESMA will issue guidance for EU27 regulators to avoid a regulatory race to the bottom from jurisdictions seeking to attract UK banking operations to the EU after Brexit (Reuters, online). The ECB has said that banks should allow up to six months to apply for new EU licences to transfer operations out of the UK after Brexit (Bloomberg, online).
MasterCard acquisition of Vocalink approved
The CMA has approved MasterCard’s acquisition of Vocalink, after agreeing measures to address concerns over competition. MasterCard and Vocalink will, “open up Vocalink’s existing network to a new services supplier, and contribute to the costs of those Link members that want to change to a new supplier” Financial Times (£, p20). Vocalink facilitates payments worth £6 trillion a year and owns the BACS system, Link and mobile payments app Zapp (The Times, £ p50).
Firms consider alternatives to secure EU access
The Financial Times (£, p3) writes that financial services firms are investigating whether volunteering to adhere to EU regulations would allow them to retain access to EU markets, allowing them to “strike trading deals on a firm-by-firm basis or even for individual lines of business”.
EU leaders are expected to approve Tusk’s negotiation guidelines in Brussels today, before they are formally adopted on April 29 (Financial Times, £, online). No substantive revisions are expected to be made to the proposals set out in March, but there may be an attempt to strengthen the language regarding the rights of EU citizens.
UK Fintech growth continues
The FCA has published a discussion paper inviting views on how distributed ledger technology, which underpins blockchain and bitcoin, can be applied in regulated markets. Speaking at Innovate Finance Global Summit, Executive Director of Strategy and Competition at the Financial Conduct Authority Chris Woolard said the regulator was “committed to supporting innovation” (Reuters, online). His speech and the FCA discussion paper on blockchain are available online.
May supports use of sanctions against Russia
Prime Minister Theresa May has backed the potential application of further sanctions against Russia (Reuters, online). G7 leaders meet today to discuss potential sanctions, which could include travel bans and asset freezes against Russian officials, as well as measures targeting the financial, energy and defence industries (The Times, £, p6).
Alex Grimm & Mark Shead, Co-Head at RegTech Solutions UK blog on the potential for adopting an industry-wide reporting utility in the UK.
FCA provides more insight on forthcoming review
The FCA is reviewing the way banks apply unauthorised overdraft charges, and will consider, “taking action to cut fees charged to customers who go overdrawn without approval and to ensure they are given clearer warnings of imminent charges” (Mail on Sunday, online). FCA Chief Executive Andrew Bailey has warned that this review, alongside potential changes to credit card charges, will place downward pressure on banks’ margins (The Daily Telegraph, £, B1).
UK Fintech finds global success
City AM (p11) writes that the UK has been ranked as the top global fintech hub by Deloitte, beating Silicon Valley and Tokyo. Ellen Burbidge, HM Treasury special envoy for fintech, has said that the UK must focus on three areas in order to retain pole position and encourage further growth; customer experience, financial inclusion and cyber security (City AM, p17).
Millennial attitudes to saving revealed
Research conducted by FT Money and BritainThinks has found that millennials prioritise saving for property over pensions, yet are unable to evaluate the benefits of different savings vehicles (FT Money, £, p8). The Financial Times notes that, “nearly half thought that higher-rate taxpayers would be better off saving in a Lifetime Isa than a pension, reflecting a lack of understanding over how pensions tax relief works”. Commenting on the findings Deborah Mattinson, BritainThinks founder, said that there is a clear ‘pecking order of priorities’ for millennials; lifestyle choices come first, followed by property and lastly, pensions.(FT Money, £, p9).
With Spring finally in the air, it’s been another busy month at the BBA – and there’s certainly no sign that the pace of political and policy changes shaping the sector will slow down as we move into Q2.
IMF speculates on end to free in credit banking model
Banks may need to change their business model in response to persistent low interest rates says the International Monetary Fund (The Daily Telegraph, £, B1). Reduced demand for credit by households and businesses, driven by weaker growth rates and demographic change, could increase the need for easy-access accounts and payment products (The Times, p.40). The IMF suggests that banks will need to adopt a more “fee based and utility services” to remain profitable in future.
Bank of England consults on sharia-compliant deposit facility
The Bank of England has proposed creating a sharia-compliant deposit facility for retail lenders, reflecting efforts to attract business from the Middle East and South-East Asia (The Daily Telegraph, £, p4). Reuters (online) reports that the proposed model would be priced in a similar way to conventional tools, making it attractive for Islamic banks, while the Financial Times (£, online) notes that the Bank may also launch a sharia-compliant insurance facility in the future.
Gary Cohn backs restoration of Glass-Steagall Act
Gary Cohn, Director of the White House National Economic Council, has backed plans to restore the Glass-Steagall law and break up the investment and retail banking operations of the largest US banks (Wall Street Journal Europe, £, p1). Meanwhile, the ECB has called for tighter rules and higher capital requirements to be imposed on foreign bank branches including US and Asian banks (Reuters, online). UK banks operating in Europe may also be subject to these rules after Brexit.
Ian Jordan, Chair of the BBA’s Northern Ireland committee, said of the latest data:
“The partly seasonal, lower volume of SME loan applications in the second half of last year reflected reduced demand for finance as firms addressed higher running costs resulting from sterling’s depreciation. Export activity may be expanding in some sectors, but inflationary pressures will feed through to prices, potentially reducing economic activity.”
European Parliament agrees Brexit redlines
The European Parliament has approved Brexit negotiation guidelines, including a potential association agreement with the UK that would require close co-operation on tax and trade in exchange for retaining “close ties” with the EU. It rules out parallel talks on new trade and an exit agreement (Financial Times, £, online). Valdis Dombrovskis, Vice-President of the European Commission, has warned against a regulatory “race to the bottom” among the remaining EU27 members, highlighting the need for a, “level playing field across the EU” (Reuters, online).
Lifetime ISA launched today
BBC News (online) reports concerns by banks and building societies over the complexity of the new Lifetime ISA (Lisa), launched today, noting that in some cases savers could lose money in the short-term if they want to withdraw their cash. The product allows savers between the ages of 18 and 39 to save for their first home, or their retirement, in the same pot. However, a poll by the Financial Times (£, online) has found that this cohort of customers were, “unable to judge whether a Lisa was a better prospect than a pension”.
House prices to rise 25% by 2021
Average house prices are set to rise by a quarter in the next four years, according to data from the Centre for Economics and Business Research (CEBR) driven by, “a shortage of housing, better mortgage deals and the low value of sterling” (Daily Express, p1). The Daily Telegraph (£, online) reports the average UK home is expected to be worth £220,000 this year, rising to £272,000 by 2021. Commenting on the report, CEBR Economist Kay Daniel Neufeld said, “mortgage approvals, while still low by historical standards, are nearing post-crisis heights, boosted by low interest rates and favourable borrowing conditions”.
Simon Hills, BBA Executive Director, Prudential Regulation and Risk, blogs on the PRA’s proposal to allow banks to use external data to model loss given default.
Latest Northern Ireland borrowing details for individuals and businesses are available for more than 9,000 postcode sectors. 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. Participating lenders also publish their own figures on their websites.
Latest GB borrowing details for individuals and businesses are available for more than 9,000 postcode sectors. 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.
Women overlooked for senior finance jobs
Men in senior banking positions outnumber women by three to one, according to analysis by the Financial Times (£, p1). Commenting on the findings, the paper cites unconscious bias and a perception that promoting women is considered riskier by senior executives. Commenting on the findings, BBA Chair Noreen Doyle said that, “women drop out mid-career because, ‘they look up and see no opportunity’”.
May: UK should have implementation phase after Brexit
Prime Minister Theresa May has said that there will be an implementation phase once the UK and EU have agreed an exit deal, recognising that, “business and governments need a ‘period of time’ to adjust to any new restrictions” (BBC News, online). Her comments have been interpreted as an indication that freedom of movement might continue after the UK has formally left the EU. Speaking on a trade mission to India, Chancellor Philip Hammond has said that he expects banks will retain the bulk of their operations in the UK, noting that, “our job is to make sure that objective is delivered, so the banks are able to continue to operate with the critical mass of their business based in the U.K.” (Bloomberg, online).
Bank of England warns on rising debt
The Bank of England has cautioned that a rapid rise in the level of consumer credit poses a significant risk to the banking sector if accompanied by a fall in underwriting standards (The Daily Telegraph, £, B1). Minutes of the Bank’s latest Financial Policy Committee noted that, “Consumer credit had been growing particularly rapidly. It had reached an annual growth rate of 10.9% in November 2016 – the fastest rate of expansion since 2005 – before easing back somewhat in subsequent months” (The Guardian, p18). The BBA’s latest data on high street lending is available here.
Germany warns on Brexit timetable and City jobs
German Foreign Minister Sigmar Gabriel has warned that the UK and EU may be unable to reach an exit deal and agree new trade arrangements within two years (The Independent, online), while a committee of MPs has called for the Government to publish an assessment of leaving the EU without securing a new trade agreement (Bloomberg, online).
Speaking on BBC Radio 4’s Today Programme, Huburtus Vaeth, Head of Frankfurt Main Finance said that, “we expect almost a thousand jobs to move into Frankfurt – either being moved from London or newly set up in Frankfurt, and within a five year period of time, we expect 10,000 additional jobs to be created.”
Mixed reaction to FCA consumer credit proposals
The Times (£, p39) reports that the FCA’s proposals to limit credit card debt have been cautiously welcomed by City analysts and reflect regulators’ concerns over the pace of consumer credit growth and borrowers’ ability to repay their debts in an economic downturn. However, the proposals have been criticized as offering, “too little, too late” by consumer bodies (Daily Mail, p2). The Daily Telegraph (£, B4) summarises the impact of the proposed changes, noting that over 75% of credit card borrowers are not classed as “problem” debtors. The BBA’s latest data on high street lending, including credit card balances, is available here.
IMF highlights poor productivity as top risk to living standards
Christine Lagarde, IMF Managing Director, has called for urgent measures to increase productivity, noting that another decade of weak growth would undermine financial stability by making it more difficult to sustain private debt and public obligations (The Guardian, p18). Speaking at an event in Washington she warned that “leaning back and waiting for artificial intelligence or other technologies to trigger a productivity revival is simply not an option.”
FCA consults on new credit card rules
The FCA has proposed new rules to address persistent credit card debt, requiring firms to prompt customers to make faster payments and propose a repayment plan to help customers settle their balances faster (Financial Times, £, online). Commenting on the consultation, FCA Chief Executive Andrew Bailey said, “We expect our proposals to reduce the number of customers in problem credit card debt, as well as putting customers in greater control of their borrowing.” The consultation is available here.
UK and Luxembourg oppose creation of intermediate parent undertakings
Bloomberg (online) reports that the UK and Luxembourg have opposed a European recommendation for foreign banks to create an intermediate parent undertaking, arguing that this would, “needlessly add to costs and complexity without enhancing the effectiveness of resolution strategies”. The proposal is supported by the European Central Bank and the Single Resolution Board, as a means of addressing legal and reputational risks created by complex cross-border structures
Central banks favour Sterling over Euros
The Financial Times (£, p6) reports that central banks are buying sterling-denominated reserve investments in favour of Euros, amid concerns over political instability in the Eurozone. The Daily Telegraph (£, B1) reports redirections that sterling will continue to rise if the “positive tone” adopted by the UK and Brussels over Brexit continues, and if proposed US banking reforms are delayed or partially implemented.
Jonathan Greenstein, BBA Relationship Manager, blogs on the BBA’s latest Blockchain training workshop.
European Council issues Brexit blueprint
Donald Tusk, President of the European Council, has set out details on how the EU intends to negotiate the UK’s departure from the bloc to EU 27 Member States today, with EU 27 leaders to meet on 29 April to agree priorities. (Reuters, online). The full text is available here, and states that transitional arrangements may be necessary.
Analysis by the Financial Times (£, online) suggests that, “before EU leaders will authorise talks about a future trade relationship, Britain must satisfy them that “sufficient progress” has been made on the issue of a financial exit settlement and on the rights of citizens.”
FCA proposes measures to tackle card fraud
The Guardian, (p19) reports that the FCA has set out measures to address fraudulent payments made on lost or stolen contactless cards. In a letter to the Treasury Select Committee the regulator noted that contactless transactions account for only 0.5% of overall card fraud The Times (£, p52) writes that banks and card companies prevented £1.4 billion of fraud last year, or £6.40 in every £10 of attempted fraud being stopped.
Basel consults on changes to G-SIB assessments
The Basel Committee has proposed a number of changes to its methodology for assessing global systemically important banks (Law360, online). Changes include revisions to disclosure requirements and changes to the definition of cross-jurisdictional activity. The consultation is available here, and closes on June 30 2017.
PM triggers Article 50
The Prime Minister has triggered Article 50, which formerly starts the two year period for the UK’s exit from the EU. Reuters (online only) reports that the PM has said she aims to reach a deal on the future UK-EU relationship within the 2 year period, which would then be followed by a “phased process of implementation” in which both sides prepare for the new arrangements.
BBC News (online only) reported that the reaction from European leaders had been one of sadness, although full of warnings. French President Francois Hollande said while Brexit was “sentimentally painful” for Europe it would be “economically painful” for Britain, and German Chancellor Angela Merkel commented that “Britain’s commitments to the EU had to be dismantled before talks could move on to the future relationship”.
With Article 50 now triggered, BBC News (online only) reports that the Government is today expected to set out how it plans to remove EU law from the statute book when it publishes details of its Great Repeal Bill. Writing in the Daily Telegraph (£, B, P2), BBA CEO Anthony Browne describes this challenge as “almost certainly the most formidable legislative challenge that Whitehall and Parliament has ever faced”, and argues that what is needed now is certainty as opposed to deregulation.
Banks must act on contactless fraud, says TSC
The Times (£, p42) reports that the Treasury Select Committee has expressed concern that the majority of banks are not telling their customers when stolen cards are still being used and rely instead on customers picking up rogue transactions from statements. The committee has put pressure on the FCA to close a security loophole which allows criminals to make ‘tap and go’ payments on contactless cards months after they have been cancelled (Daily Mail, p29) City AM (p12) adds that FCA Chairman John Griffith-Jones has written to Treasury Select Committee Chair Andrew Tyrie and Payment Systems Regulator (PSR) on the issue, including a proposal that the onus should be removed from customers to identify fraudulent transactions.
The UK Cards Association has commented on the matter, saying: “The industry is not complacent and measures to address issues affecting a small number of contactless cards will be implemented by the end of June.”
Basel committee gives banks five years to adjust to loan rules
Reuters (online only) has reported that the Basel Committee is to give Banks up to five years to comply with new accounting rules that will force them to provision upfront for possible defaults on loans. The Committee has said it will retain the current accounting treatment of provisions for an interim period because applying the new rules in full from day one could trigger a “capital shock” for some lenders. The article adds that this is the latest sign the Basel Committee has become more accommodative in the face of pushback from European and U.S. governments over new capital requirements designed to avoid harming lending by banks.
Article 50 triggered today
Prime Minister Theresa May will today formally trigger Article 50 , and outline her Brexit negotiation strategy in a statement to the House of Commons (The Times, £, p1). She will urge leave and remain voters to come together, and is expected to say that she will, “represent every person in the United Kingdom” (The Guardian, p1).
The Financial Times (£, p1) notes speculation that the Prime Minister has acknowledged the need for transitional arrangements to bridge the gap between the UK leaving the EU and agreeing a new trade deal. Speaking on BBC Radio 4’s Today programme Chancellor Philip Hammond said that he was confident that a deal would be reached, and noted that the letter triggering Article 50 will set out further detail on the UK’s negotiating priorities.
EU blocks Deutsche Boerse and London Stock Exchange merger
The European Commission has blocked the proposed merger between Deutsche Boerse and the London Stock Exchange (Bloomberg, online). Margrethe Vestager, the EU’s Antitrust Commissioner, commented that this $14 billion deal would create Europe’s biggest exchange and harm competition in the soon to be 27 nation EU by creating a, “de facto monopoly for clearing bonds and repurchase agreements.” (FT, £, online).
Banking productivity grew by 1% per year since 2008
ONS data shows that productivity growth in banking, telecoms, electricity and gas supplies, management consultancy, and legal and accounting services have slowed considerably since 2008. The Financial Times (£, p3) notes that banking productivity has grown at 1% every year since 2008, driven by increased regulatory requirements and compliance costs. Commenting on the figures, the BBA said it is, “unsurprising that banking sector productivity growth has yet to return to pre-crisis levels, though we have seen an improvement in recent years.”
Mike Conroy, BBA Executive Director, Corporate and Commercial Banking blogs on SMEs applications for bank finance, and why some firms prefer to defer growth rather than borrow.
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
Eurozone ‘pop-up branches’ It could take up to a year to secure a license that will allow UK banks to operate in the eurozone post-Brexit, the ECB has warned, prompting Read More
Macron and Le Pen in final round of Presidential race Centrist Macron will face far right Front Nationale candidate Le Pen in the final round of the French presidential contest, Read More