15th February 2016

BBA Brief – 15 February 2016

Sir John Vickers criticises Bank of England capital proposals

Sir John Vickers, who led the Independent Commission on Banking (ICB) has warned that the Bank of England’s reforms are not robust enough to prevent a future crisis (FT, £, p4). He expressed concern that the ICB’s proposals had not been implemented in full, in particular on capital requirements for the banking sector.  BBC News quotes Sir John saying: “If banks run out of capital, all sorts of havoc could ensue. We want to be in a position where there’s enough of a buffer to take any losses that might occur.” He has also expressed a preference for high-quality equity capital rather than untested alternatives such as contingent convertible bonds. Sir John was interviewed on Radio 4’s Today Programme at 8.10am.

HSBC decides to remain headquartered in London

There is widespread coverage of HSBC’s announcement last night that it has decided to remain domiciled in the UK. The Times (£, p37) reports that the decision was reached unanimously after a board meeting yesterday. Welcoming the announcement, the Treasury said: “They’ve [HSBC] looked carefully and dispassionately at the facts and confirmed that the UK is the best place to base a global business.” BBC News notes that HSBC also declared that it will only review its domicile again in the event of a “material change in circumstances.” HSBC Chairman Douglas Flint was interviewed on Radio 4’s Today Programme at 7.10am.

Latest from the BBA

On 15th March, the BBA is again running its popular one day workshop on ‘Enhancing Your Sanctions Compliance Programme’. Fully updated to incorporate the recent lifting of sanctions on Iran, this workshop will provide you and your team with a solid knowledge and understanding of sanctions. Click here to register.

Richard Koch, Head of Policy at The UK Cards Association, blogs about the tenth anniversary of the UK moving over to a Chip & PIN-based card payments.

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Today’s diary

European Parliament: ECON meeting

European Parliament: First exchange of views on Prospectus

Stat of the day

11 per cent – the Bank of England’s view of the total aggregate capital requirement needed for the UK banking system.  (Source: Bank of England).

In brief

The Chief Executive of Royal Bank of Scotland says he believes the UK financial sector would be better off inside the European Union (BBC News). Speaking to BBC Newsnight on Friday night, Ross McEwan said the uncertainty caused by the EU vote could “slow down banking”.

Credit and debit card details stolen from over 100,000 people are being sold on a new illegal website (Times Saturday, £, p1).

The Sunday Times (£, B1) reports that European banks could face a funding crisis as recent market volatility has prevented them from raising billions in new long-term loans.

The Sunday Times (£, B2) states that the Government is launching a crackdown on claims management companies, with new plans from the Ministry of Justice introducing a £300 fee ceiling.

The EY Item Club has forecast that net business lending will increase by an average of 5 per cent a year between 2016-19, compared with an average fall of 6 per cent between 2009-14 (Times, £, p44).

Reuters reports that almost three out of four bank employees said they experienced workplace stress manifested by anxiety attacks, insomnia, headaches and depression, according to a survey. The BBA is quoted saying that protecting staff’s physical and mental wellbeing is “a top priority” for the industry.

The Times (£, p38) speculates that the Treasury could appoint John Kingman as CEO of the Prudential Regulation Authority.

Iranian businesses are still struggling to secure funding to expand their operations due to the continuation of many US sanctions (FT, £, p7).

The Economist (£) looks at the recent turmoil experienced by European banks and argues that there are too many banks in Europe and that may are underperforming because they have stuck to a flawed business model.

What the commentators say

A leader column in the Times (Saturday, £, p27) criticises the industry for underreporting fraud, stating “it is self-serving because it prevents customers from seeing which institutions are most vulnerable to fraud.”

Jeremy Warner argues that the true centre of the recent European banking downturn is in Italy (Sunday Telegraph, B2). He highlights the uncertainty for retail investors caused by new bail-in rules.

Sir John Vickers, who chaired the Independent Commission on Banking, calls on the Bank of England to rethink its proposals for a systemic risk buffer (FT, £, p11). He says much tougher capital requirements should be placed on banks.

Writing in the Daily Mail (p61), London Stock Exchange Group Chief Executive Xavier Rolet argues that more needs to be done to help SMEs secure equity finance.

In his regular column in City AM (p20), Lord Mayor of London Jeffrey Mountevans writes about the launch of the Joint Fraud Taskforce last week and what the City is doing to tackle the threat of financial crime.

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