The BBA is now integrated into UK Finance. Please go to www.ukfinance.org.uk for new content and updates from UK Finance.
Material published by BBA prior to 1st July 2017 is still available on this website.
From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.x
BBA brief is a round up of each morning’s banking policy news prepared by the BBA’s media team. It is a selection of the articles in the papers and broadcast stories. The content does not reflect the views of the BBA.
City Minister and FCA CEO speak at BBA Retail Banking Conference
City Minister Stephen Barclay said that the government is committed to, “support the industry as it adapts to open banking, technology, new entrants – in ways that deliver better services to customers” and wanted to ensure that the sector’s needs are understood across Whitehall. FCA CEO Andrew Bailey noted that the regulator will focus on current account provision as part of its strategic review of retail banks business models. The conference was covered by a range of publications, including: the Financial Times, (£, p2), Politico (£ online), Daily Mail (p77), The Daily Telegraph (£, B3), The Independent (p50), Evening Standard (p45) and City AM (p3).
Bank of England publishes consumer credit data
The Bank of England’s latest monthly data shows consumer borrowing rose by 10.3% in the year to May (The Guardian, p24). The Daily Telegraph (£, B1) reports that 121,464 mortgages were approved last month, with total mortgage debt rising by £3.5 billion. Howard Archer, Chief Economic Advisor to EY’s Item Club said, “the housing market is being pressurised by weakened consumer purchasing power and increased consumer wariness over engaging in major transactions”. The BBA’s most recent High Street Lending data is available here.
NAO warns on cyber risk
The National Audit Office has called on the government to do more to address the risk of cybercrime, estimating that nearly two million cyber-related fraud cases took place last year (BBC News, online). The Times (£, p7) reports that the economic costs of cyber fraud is over £144 billion, £20 billion more than the NHS budget. Head of the National Audit Office, Sir Amyas Morse said, “for too long, as a low-value but high-volume crime, online fraud has been overlooked by government, law enforcement and industry. It is now the most commonly experienced crime in England and Wales and demands an urgent response”.
Today marks the final BBA Brief, and the last day of the BBA before it joins with five other trade associations to become UK Finance next week, after 98 years as the voice of banking. From 1 July 2017, the finance and banking industry operating in the UK will be represented by a new trade association, UK Finance. It will represent around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.
Your daily financial and banking news brief will be back in your inbox in September. You’ll still receive the brief if you’re currently on the distribution list, but please feel free to drop us a line if you have any questions.Read more
BBA – 30 banking app transactions per second
The BBA’s latest Way We Bank Now report has found that more customers are using banking apps to manage their money than ever before, with a 57% increase in app transactions last year. A number of papers covered the report, including The Daily Telegraph, The Mirror, The Independent, Daily Mail and City AM. Eric Leenders, BBA Managing Director, Retail and Commercial Banking, said: “More and more people are moving beyond payments, increasingly using apps to access a broader range of banking services, such as savings, credit cards, mortgage and investment accounts. Whether we want to visit our local bank branch, use a mobile or internet-bank, there are more ways we can choose to access and manage our money than ever before.” The full report is available here.
Carney hints rate rise may be on the horizon
Sterling rose by almost 1% yesterday, following remarks by Bank of England Governor Mark Carney suggesting that interest rates could rise if business investment increases (BBC News, online). Sky News (online) reports that analysts remain divided over the speed of a potential rate rise, noting that Howard Archer, Chief Economic Adviser to EY Item Club, does not expect to see a rate rise this year, while Neil Wilson, Senior Market Analyst at ETX Capital, said “there is a sense the MPC may wish to ‘correct’ its rate cut last summer in light of a surprisingly resilient UK economy and rising inflation, which is accelerating quicker than the Bank expected”.Read more
Bank of England revises stress tests and capital requirements
The Bank of England has asked lenders to set aside a total of £11.4bn of extra capital in the next 18 months and will bring forward annual stress testing on consumer credit amid concerns over rising consumer borrowing (The Guardian p22). The Financial Times (£, p1) notes that, “while such consumer credit in the UK is just one-seventh of the size of the mortgage lending market, BoE and UK regulators are nevertheless concerned because write-offs are much more common in the sector than in mortgage lending, where customers tend to keep up with repayments”.
Brexit Secretary to consult business on views
The government will create a new forum of consulting with business groups to help shape the eventual Brexit deal (The Times, £, p39). Brexit Secretary David Davis said, “we need a regular and open dialogue with businesses up and down the country. As the negotiations intensify, there is clear need to equally intensify the dialogue with business”. The group will meet fortnightly and is to be led by the Chancellor and Business Secretary, with the Prime Minister expected to attend a number of the meetings.
Change in direction for regulators
The Financial Times (£, online) writes that the focus of global financial regulation is set to shift from financial stability to growth as a number of key policy-makers, including Jaime Caruana, BIS General Manager, Mark Carney, Financial Stability Board chairman and Stefan Ingves, chair of the Basel Committee on Banking Supervision are set to step-down this year. The FT writes that, “with the firefighting days of the crisis over and political emphasis shifting to economic growth, governments have little appetite for further regulatory reform”.Read more
IRSG warns on Great Repeal Bill
The International Regulatory Strategy Group (IRSG) has warned that the government should adopt a principles-based approach to transposing EU law into UK legislation, and cautioned against using the Bill to, “make policy changes which could risk turning it into a legislative Pandora’s Box” Politico (£, online). IRSG Chair Mark Hoban said, “Given the complexity and scale of the task, the Repeal Bill should only be used to provide stability and continuity for business and its customers. Policy changes should be in separate legislation and be subject to proper consultation and planning.”
Consumer confidence falls – Centre for Economics and Business Research and YouGov
Data from the Centre for Economics and Business Research and YouGov suggests that consumer confidence has fallen to its lowest level for 12 months, due to political uncertainty and a slow down in the housing market. Stephen Harmston, Head of YouGov, noted that, “the property market [has been] one of the key things that has propped up consumer confidence over the past few years”. The BBA’s latest High Street Banking data shows that lenders approved 40,347 residential mortgages in May (Sky News, online).
ATMs Turn 50 today
The first ATM was opened 50 years ago today at a Barclays Branch in North London. Sky News (online) reports that in 2015 there were 70,270 cash machines dispensing an average of £7,576 per day. The Financial Times (£, p17) reports that cardless ATMs are the latest innovation in dispensing cash, reducing the time that customers spend queuing at machines.Read more
BBA publishes May High Street Banking data
The BBA’s latest high street banking data shows that consumer credit growth was 5.1% in May, compared with 6.4% in April (ForexLive, online). Gross mortgage borrowing totalled £13.3 billion last month, with net mortgage borrowing 2.4% higher than a year ago. Commenting on the data, Eric Leenders, BBA Managing Director for Retail Banking said, “this month’s figures show that in the run up to the General Election, credit growth in personal loans, cards and overdrafts has slowed, which was reflected in lower spending; with increased household costs affecting growth in deposits and saving”.
EU Money Laundering Regulations come into force today
City AM (p8) reports the Fourth Anti-Money Laundering Directive comes into force today, introducing new measures to combat terrorist funding and organised crime. The new rules apply to a wide range of firms, including banks, estate agents and accountants. City Minister Stephen Barclay said, “these new rules will tighten our defences, protect the integrity of our financial system and help protect the British public from terror attacks and criminal activities”.
BIS warns on economic risk
The global economy is stuck in a “boom-bust” cycle, with unsustainable levels of debt, according to the Bank of International Settlements (The Daily Telegraph, B1). G20 countries have debt with 220% of their combined economic output, almost 40% higher than the level in 2007 (The Times, p40). BIS Chief Economist Claudio Borio said, “high debt might become a significant drag on demand as interest rates normalise”.Read more
ECB to set up Eurozone instant payment system
The ECB is to create a 24 hour instant payment system for Eurozone consumers and businesses called TIPS (Target Instant Payment Settlement) to launch in November (Financial Times, £, online). Commenting on the announcement, the ECB said the system will “help facilitate instant money transfers, offered via banks, so that citizens and firms can make instant retail payments across Europe”.
US banks pass latest round of stress testing
The US Fed has announced that the 34 largest US banks have passed the latest round of stress testing, designed to test the impact of a global recession with a 10% increase in unemployment and significant falls in property values (BBC News, online). Reuters (online) reports that a number of commentators have said the results should prompt regulators to relax regulatory standards, “we see today’s…stress test results as a positive for Trump administration efforts to deregulate the banks,” said Jaret Seiberg, a policy analyst with Cowen & Co.
Increase in first-time buyer activity
Data from the CML suggests a recovery in activity by first-time buyers, with a slow-down in buy-to-let purchases which averaged at 6000 per month, nearly 50% lower than last year (The Times, £, p40). Commenting on the data, Alastair McKee, Managing Director of broker One 77 Mortgages, said: “Buy-to-let remains on the back foot while first-time buyers are very much on the front. It’s a narrative that has been consistent throughout 2017 and is likely to continue for some time yet”.Read more
BoE’s Haldane favours higher rates
The Bank of England’s Chief Economist Andy Haldane has indicated that he might support an increase in interest rates later this year, warning that “leaving a rate hike until too late risks steeper rate rises in the future” (BBC News, online). The Guardian (p23) reports that his comment prompted sterling to rise, reaching $1.27 before falling back before markets closed.
FESE publishes report on capital markets
The Federation of European Securities Exchanges (FESE) has published a report with Oliver Wyman, calling for European capital markets to be accessible to all market participants regardless of location (Politico, £, online). Commenting on the report, Deirdre Somers, FESE President, said, “exchanges are a key solution for European companies seeking to improve financing and risk management, providing them with the tools to manage their risks and access to capital in order to grow, scale and deliver the jobs, brands and economic multiplier Europe needs”. The report is available here.Read more
Queen’s speech to set out legislative priorities
The Queen will set out the Government’s priorities over the next two years at today’s State Opening of Parliament at 11:30. The main item will be the Great Repeal Bill, which will copy EU legislation into UK law, with other measures to include banning landlords from charging “letting fees” and reducing motor insurance premiums (BBC News, online). Commenting ahead of the speech, Prime Minister Theresa May said: “…this is a Government with purpose. Determined to deliver the best Brexit deal. Intent on building a stronger economy and a fairer society”.
Carney: ‘too soon’ for rate rise
Speaking at Mansion House yesterday, Bank of England Governor Mark Carney warned that falling wage growth and the impact of Brexit mean that it is too early to increase interest rates (BBC News, online). Carney said, “from my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment [rate rises]”. The full text of his speech is available here.Read more
Chancellor and Bank of England set out Brexit priorities
Speaking at Mansion House this morning, Chancellor Philip Hammond identified four priorities for Brexit negotiations: a comprehensive agreement on trade and services, a mutually beneficial transitional arrangement, frictionless customs arrangements and an implementation period (The Guardian, online). Bank of England Governor Mark Carney warned that, “splitting Europe’s market for clearing euro-denominated derivatives would bump up costs for users and do little to improve financial stability” (Reuters, online).
Formal negotiations over the UK’s exit from the EU began yesterday. BBC News reports that early discussions will focus on citizens’ rights, the UK’s financial settlement and the EU/Northern Ireland land border, while The Daily Telegraph (£, p1) notes that Brexit secretary David Davis reaffirmed the UK’s commitment to leaving the single market and customs union.
ECB to mandate cyber-attack reporting
Banks supervised by the ECB will be required to disclose all major cybersecurity breaches to the central bank from this summer. City AM (p10) reports that the ECB will also review cyber security at banks, noting that this issue remains high on regulators’ agendas following a series of high profile attacks. ECB Executive Board member, Sabine Lautenschlaeger, said the measures, “will help us to assess more objectively how many incidents there are, how cyber threats evolve [and] help us to identify vulnerabilities and common pitfalls”.Read more
Brexit negotiations begin today
UK and EU officials will meet today to begin formal talks to agree the terms of the UK’s departure from the EU. BBC News (online) reports that early discussions will include, “the status of expats, the UK’s ‘divorce bill’ and the Northern Ireland border”.
A number of papers report comments made by Chancellor Philip Hammond this weekend on the importance of securing a good deal for businesses as part of the negotiations, including his argument that the final deal should include a lengthy transition period (The Times, £, p1).
The Financial Times, (£, p6) includes a guide to the EU and UK negotiating teams, and The Guardian (p11) sets out a guide to the main treaties to be discussed.
BCBS fails to agree new Basel standards
Talks to agree new capital standards for banks have broken down after EU and US regulators were unable to agree on an ‘output floor’. Politico (£, online) writes that while BCBS Chairman Stefan Ingves and US regulators are said to have been prepared to endorse a 75% limit, however EU regulators were unable to agree a floor above 70%.
Bank of England sets out ring-fencing challenges
The Bank of England has set out further detail on its requirements for implementing ring fencing legislation. Speaking at a BBA event on Friday, James Proudman, Executive Director for UK Deposit Takers Supervision, said: “against the back-drop of other regulatory, accounting and business model changes – not the least of which is Brexit – it is easy to see that the banks in scope of ring-fencing are facing significant restructuring challenges”. The Financial Times (£, online) highlights that that the changes will mean nearly a million retail customers may be given new sort codes.Read more