19th November 2015

BBA Brief – 19 November 2015

Banking sector recognises achievements and challenges on diversity and inclusion

The BBA released its first report on diversity highlighting the current successes and the challenges that remain (FT, £, p4). Anthony Browne, Chief Executive of the BBA, said: “Our ‘Diversity and inclusion in banking’ report shows that progress on diversity can, and is, being made on a voluntary basis in the banking sector. And by voluntary, you should not read half-hearted effort – the report’s findings show that the days of the old boys club in banking are numbered.” Commenting on the report, Minister for “Women and Equalities, Nicky Morgan, said: “I’m pleased to see the banking sector has followed the recommendations in Lord Davies’ report and increased female representation at board level to 31 per cent. As a country we cannot afford to waste the talents of a single person, let alone half our population, and that is why women everywhere should be given the opportunity to fulfil their potential. We must continue to increase women’s representation in UK boardrooms and secure lasting change for the benefit of women, business and the economy.”

Read the BBA report “Diversity and Inclusion in Banking” here.

The World Economic Forum also released a report today showing that the economic gender gap has closed just three per cent in the last decade saying that progress has stalled in the last decade (FT, £, p6). Writing in the FT (£, p13), Chris Giles criticises the statistics used to analyse the gender pay gap and points to the difference in the gap between generations.

FCA to investigate the asset management industry

There is wide coverage of the competition review detailed yesterday by the Financial Conduct Authority into fees charged by the asset management industry (Daily Telegraph, B3). The review will look at how costs are controlled and the role of consultants (FT, £, p17). Calling the UK a world leader in asset management, Christopher Woolard, Director of Strategy at the FCA, said “our market study aims to ensure that both retail and institutional investors can get value for money when purchasing these services”.  Several commentators have forecast a cut to industry margins as a result of boosted competition coming from the investigation (FT, £, p23).

The announcement comes as data from TheCityUK shows that the value of UK assets under management has hit an all-time high of £7.4 trillion (City A.M., p3).

European Central Bank considers further drop in rates

The FT (£, p6) covers speculation that the European Central Bank (ECB) may be considering lowering interest rates further, possibly by 10 basis points. The current rate is minus 0.2 per cent, but some cite Germany’s current government debt rate as showing that further monetary easing is already priced in (FT, £, p32). Analysts are questioning the credibility of the ECB as its forecasts continue to miss the “more stagnant reality of the data” (FT, £, p34). Lowering the rate again will further weaken the Euro and possibly boost European trade. Mr Valli, Chief Eurozone Economist for UniCredit said: “when you are in a low global growth environment, the support coming from the currency can be very important”.

Today’s Diary

Review of HBOS failure

House of Lords: debate on foreign national asset ownership and revising laws for corporate governance

Bank of England: capital issuance October

ONS: monthly retail figures

CML: monthly lending figures

CBI: monthly trends in industrial

Economist Intelligence Unit: monthly global forecasting

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Stat of the day

31% – the percentage of board directors on FTSE 100 banks who are women, compared to 26.1 per cent for the FTSE 100 as a whole (BBA Report: “Diversity and Inclusion in Banking”).

In brief

The HBOS report is published today (Daily Telegraph, B1).

The Banking Standards Board’s Chairwoman, Dame Colette Bowe, has signalled that it will take a tougher stance on banks by pushing for more bank regulation (CityAM, p4). Commenting, Chris Skinner, Chairman of the Financial Services Club, said “the real question is how this works alongside the FCA, PRA, the Chartered Banker Institute, the British Bankers Association and other key trade bodies”.

Minutes from the latest US Federal Reserve meeting released yesterday showed that barring any shocks to the economy members thought it would be appropriate to raise rates in December (FT, £, p1). Such a move is expected to hit emerging market currencies hard (FT, £, p32).

Business Secretary Sajid Javid is expected to call for the European Union to move “further and faster” towards single market reform (CityAM, p2). His speech will also contain a “staunch defence” of the Transatlantic Trade and Investment Partnership (The Times, p53).

Stuart Rose, Chair of the Britain Stronger in Europe campaign, has written to FTSE 350 board directors encouraging them to find their voice over Europe (FT, £, p2). His comments come in opposition to the Vote Leave campaign which has been threatening businesses with bad publicity if they speak out about a possible Brexit.

The German Magazine Der Spiegel reported yesterday that G7 countries are expected to crack down on digital currencies which they suspect are being used by ISIS to move funds (CityAM, p16, paper only).

The Independent (online only) reports that in Wednesday’s PMQ’s Jeremy Corbyn called for economic sanctions against banks and countries supporting ISIS.

ISC, the security certification and industry body, has warned of a shortage of cyber security experts with the shortfall in supply expected to reach 1.5 million by 2019 (FT, £, p18)

The Basel Committee on Banking Supervision released an estimate of the amount of capital banks will be forced to set aside to guard against market risk on their trading books. The estimate of the overall increase to banks’ minimum capital requirements was 4.7 per cent (FT, £, p20).

What the commentators are saying

Stuart Rose, Chair of the Britain Stronger in Europe campaign, writes in the FT (£, p13) that British business must not be afraid to weigh in on the Brexit debate.

Sarah Gordon argues that investment appetite in Europe may be picking up despite the dampening effect of uncertainty and political risk (FT, £, p18).

In CityAM’s leader takes a look at mental health in the City and says that it is a “particular problem in the City, where a competitive, past-paced environment can exacerbate underlying issues or bring about their onset”.

Writing in the FT (£, p32) Huw van Steenis, Managing Director at Morgan Stanley, sets out his practical steps forward in shoring up trust in Europe’s bond markets including calling for stress tests of European bond funds.

The Daily Mail (p81) features an interview with Lord Turner, former Chairman of the Financial Services Authority, covering his views on bank lending, quantitative easing and China.

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