12th November 2015

BBA Brief – 12 November 2015

Chancellor sets out fintech vision at Bank of England Open Forum

There is widespread coverage of the Bank of England’s Open Forum, which took place yesterday. The Daily Mail (p10) leads with the Chancellor’s comments that rogue bankers should be treated like shoplifters and thrown into jail. Bank of England Governor, Mark Carney, also vowed that the age of “heads-I-win, tails-you-lose capitalism” was coming to an end, promising to root out the “bad apples” still working in the financial services industry. Tracey McDermott, acting Chief Executive of the FCA added: “I am not going soft on the banks… if we take the stick away the carrot won’t be useful.” (Guardian, p34)

The Chancellor also outlined his plan to ensure that the UK leads the world in fintech (The Times, £, p54). He told the audience at the Guildhall that: “I want the UK to be the global centre of fintech. We will go out of our way to do that. The race is on but we are determined to win it.”

New European rules on capital requirements and deposit insurance unveiled

The European Central Bank has outlined a new proposal to harmonise banking rules across the Eurozone’s 19 member states (FT, £, p8).  Ignazio Angeloni, a member of the ECB’s supervisory board, unveiled the proposals yesterday and stated that a lack of integration was “affecting banks’ ability to compete across Europe.” Aligning capital requirements across the single currency area will be a major focus of the initiative, with the intention of boosting cross-border lending.

Meanwhile, Brussels is also planning to introduce a new Eurozone-wide deposit insurance system over the next decade (FT, £, p8). The article reports that the proposed European Deposit Insurance Scheme would initially serve as a back-up for national guarantee funds before replacing them by 2024. Germany has previously lobbied against the plans due to concerns over their impact on its own fully-funded national deposit guarantee scheme.

Indian PM begins visit to UK

The Indian Prime Minster, Narendra Modi, will today begin a three-day visit to the UK (BBC News). Trade deals of up to £10 billion are expected to be announced during the trip, which comes shortly after a recent visit by the Chinese President. Mr Modi is expected to have lunch with the Queen, deliver an address to Parliament and hold a rally at a packed Wembley Stadium. The FT (£, p2) highlights that India accounts for only £2.2 billion of British exports, lagging far below countries such as Belgium, the Netherlands and Switzerland.

Today’s diary

Indian Prime Minister Narendra Modi begins UK visit

ONS: annual business survey 2014 provisional reports

ONS: annual labour market stats for households

ONS: Profitability of UK companies April – June 2015

Department of Communities and Local Government: net supply of housing in the UK

Lord Hill Commences Hong Kong visit

Latest from the BBA

Michael Cole-Fontayn, EMEA Chairman at BNY Mellon, blogged last month at the BBA’s Annual International Banking Conference on why culture is very important, and why the banking industry needs to get it right.

SMR Responsibility Mapping Workshop, 17 November. Under the new accountability regime, the regulator requires each bank to maintain and update a document that describes each bank’s management and governance arrangements. This workshop shows you how to understand, apportion and map your responsibilities. To register your place, click here.

Latest from our Sponsor – Jaywing

Ben O’Brien, Risk Practice Director at Jaywing, writes about the annual cyclical stress test by the Bank of England.

Stat of the Day

33,600 – the number of new mortgages taken out between July and September, the biggest quarter since the end of 2007 (Council of Mortgage Lenders).

In brief

Chief executives must work more closely with regulators to move on from an era of financial scandals and multi-billion-dollar fines, according to the new head of enforcement at the UK’s Financial Conduct Authority (FT, online only).

Graduates from the world’s leading business schools are 40 per cent less likely to choose a career in banking than in 2008, according to analysis by the FT (£, p1 and p21).

Buy-to-let borrowing jumped almost 10 per cent in September and is now nearly 40 per cent higher than a year ago, according to figures from the Council of Mortgage Lenders (Times, p18).

The Guardian (p21) reports ONS statistics released yesterday showing pay growth for British workers is slowing despite the employment rate hitting a record high of 73.7% in the three months to September.

Labour MP Chuka Umunna has warned that cuts to the “growth inducing budget” of the Department for Business, Innovation and Skills would set back the recovery (Guardian, p35).

Vice-Chancellors under Universities UK have warned that Brexit presents “a clear and present danger” to the quality of UK teaching and research (Guardian, p1).

A leading Chinese official is stepping down from the World Bank, raising concerns at the country’s lack of representation at the organisation’s senior leadership (FT, £, p5).

What the commentators say

John Reed, former Chairman and Chief Executive of Citigroup, questions the merits of universal banking, stating that “few cost efficiencies come from the merger of functions – indeed, there may be none at all.”  (FT, £, p13)

Writing in the Guardian (p36), Nils Pratley says that strong financial markets require greater competition – not just better regulation.

Jeremy Warner welcomes Mark Carney’s comments yesterday highlighting the scope for the financial sector expanding (Daily Telegraph, B5).

Writing in the Evening Standard (p13), Lord Mandelson discusses the Prime Minister’s speech on EU reform and the forthcoming EU referendum.

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