17th March 2017

BBA Brief – 17 March 2017

Bank of England holds interest rates but decision was split

Interest rates were held again yesterday after the Bank of England’s Monetary Policy Committee (MPC) voted to keep interest rates at 0.25pc (The FT, £, p3). However, the decision was split for the first time in eight months, with Kristin Forbes the only one of the nine members voting to raise rates (The Guardian, p31). Forbes, pens an op-ed in The Daily Telegraph (£, online, p2) explaining her contrarian view: “Monetary policy will continue to be set to keep inflation at around 2pc on a sustainable basis, taking into account our assessments of any trade-off with growth and unemployment. And, in my personal assessment, this trade-off has fundamentally changed. […] the inflation side of the trade-off has worsened.”

German Finance Minister calls for London to remain strong financial centre

Wolfgang Schauble, the German Finance Minister, delivered a keynote speech at the International Finance Conference in Frankfurt yesterday and indicated his hopes for negotiating a Brexit deal that keeps the UK’s key global role in financial services (Telegraph Business, p1, paper only). He said: “I am convinced that for Europe as a whole – and I’m not sure this will be very beloved in Paris – it’s in our own interest to have a strong financial centre in London” (City AM, p3). Downing Street stated that it had taken “great interest” in Schauble’s comments (Daily Mail, p10).

Treasury Select Committee Chair raises concern to FCA Chief about potential ONS data leaks

Andrew Tyrie MP has written a letter to Andrew Bailey, FCA Chief Executive, urging the regulator to examine whether “ONS statistics may be being leaked prior to their official release, and that this information is being used for inappropriate gain in financial markets” (The Daily Telegraph Business, p5, paper only). Tyrie’s request follows analysis conducted for the Wall Street Journal which showed that UK government-bond futures often rise and fall as would be expected if some traders were in possession of economic data in the 24 hours before the public release of sensitive ONS data. Bernard Jenkin MP, Chair of the Public Administration and Constitutional Affairs Select Committee, has also said his committee will discuss this issue and that “even circumstantial evidence of the breach of pre-release access undermines faith in the whole system.”

Latest from the BBA

Claude-Vincent Gillard, Chief Production Officer at Bureau van Dijk, blogs on how analysts can enhance stress testing analysis with wider data sets to evaluate banks’ performance.

Theano Advisors’ Benoît Barrière and Laurent Coulon blog on the non-finance firms with the capital and systems to move into markets traditionally dominated by banks.

Mark Daws, Managing Director, Navigant blogs on six key questions that firms have to address when implementing the FCA’s new financial crime reporting requirements.

Simon Hills, BBA Executive Director of Prudential Regulation and Risk, blogs on the PRA’s proposed changes to the Pillar 2 framework.

Ariane Poulain, BBA Government Affairs Manager, writes on banks’ contribution to local communities and employment.

6 April 2017 BBA Workshop: Risk Governance – the perspective of smaller banks and subsidiaries
Small bank boards and their risk committees (BRCs) have seen their regulatory responsibilities increase significantly in the area of risk governance. In this interactive half-day workshop BBA associate members Nestor Advisors discuss governance responsibilities and organisational imperatives from the perspective of smaller firms and introduce practical ideas and best practice for addressing the challenges at hand including the risk appetite framework and statement, ICAAP, ILAAP, the recovery plan and more recently the IT strategy and cyber security policy of the firm. For more details click here

29 June 2017 BBA Annual Retail Banking Conference
Join us for this year’s flagship Retail Banking Conference and hear from industry leaders and subject matter experts on the biggest topics affecting the retail banking sector. To see the full agenda and speaker line-up, and to book your place, visit our website.

Today’s diary

G20 Finance Ministers and Central Bank Governors meet in Baden-Baden, Germany.

Prime Minister Theresa May addresses the Conservative Spring Forum in Cardiff .

President Donald Trump meets Angela Merkel at the White House.

The BoE published its Quarterly Bulletin, and statistics on UK banks’ external claims.

ICAEW publishes its UK economic forecast.

Latest from our sponsor Jaywing

Ben O’Brien, Jaywing Managing Director, blogs on the benefits of developing integrated modelling programmes for IFRS 9 and stress testing.

Stat of the day

18 – number of organisations joining the Bank of England’s Fintech Accelerator programme.

News in brief

The Financial Times (£, online) reports research by Moody’s which suggests that IFRS 9, a new international standard on how banks account for bad loans, will have less of an adverse effect on banks’ core capital ratios than originally feared.

Banks are helping the fights against human trafficking gangs as they are now using digital technology to detect payments being made by sex slave gangs, according to a new report by The Royal United Services Institute (The Times, £, p2).

Emmanuel Macron, an independent candidate and the polls’ favourite to win the French Presidential Election, met German Chancellor Angela Merkel in Berlin, pledging domestic economic reform to “restore his country’s credibility” and drive the EU forward. (Reuters, online)

In an interview with The Financial Times (£, online) Alex Salmond, former leader of the SNP and one of the party’s most senior MPs, hinted that an independent Scotland might withdraw from the currency union with the UK, but ruled out joining the Euro.

What the commentators say

Anthony Hilton (London Evening Standard) defends Phillip Hammond’s original Spring Budget policy of raising National Insurance contributions for the self-employed – a policy the Chancellor has since abandoned, under pressure from his own backbench MPs. He describes most self-employed people in the UK as making a “lifestyle choice rather than the first step in a globe-conquering business career”, and argues that the NICs raise would have been both fair and economically sensible.

Writing from Amsterdam, Peter Foster (Daily Telegraph, p16, paper only) argues that “establishment” relief at PVV’s (led by Geert WIlders) 13% at the Dutch General election is a clear indication that the wave of political populism is still on the rise. On the other hand, Denis MacShane of The Independent (online) interprets the result as the beginning of the “the end of Brexit-supporting populism in Europe”. He added, however, that the Dutch left-wing’s slump should be seen as warning for the UK Labour Party.

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