27th October 2015

BBA Brief – 27 October 2015

French regulator warns on Capital Markets Union proposals

The Managing Director of France’s markets regulator the AMF, Guillaume Eliet, has warned that the EU’s Capital Markets Union proposals aimed at setting standard criteria for the securitisation market “lacks a crucial element” that could hold back the market (FT, £, p32). Mr Eliet has said the proposals lack a regulatory authority to decide on whether a securitisation meets the criteria set out by the new rules.  Commenting on the proposals, Mr Eliet said: “There should be a regulated entity to manage the vehicle in the interest of investors at every step and to make sure there is no conflict of interest.”

Commenting on Lord Hill’s horizontal review of EU financial regulation, Mr Eliet cautioned: “It is not the right time to say that we have gone too far, but it is the right time to correct inconsistencies, gaps and overlaps.”

BBA: Borrowers benefiting from cheap mortgage deals

The BBA’s September High Street Banking Statistics are widely reported in today’s papers.CityAM (p6) says that while the figures showed that the number of approvals dipped slightly in September from the previous month, borrowing numbers were 24% higher than a year ago as buyers try to secure mortgages before a possible interest rate rise. Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics, is quoted saying: “Mortgage rates are still close to record lows, banks are becoming more willing to lend and consumer confidence is still high by past standards. Meanwhile, the macroprudential safeguards introduced by the Financial Policy Committee in June 2014, which limit the number of mortgages banks can underwrite at a loan-to-income ratio of more than 4.5 times to 15 per cent of all new loans, are still not close to biting.”

Elsewhere theGuardian (p26), which describes the BBA’s figures as a “good guide” to trends in the Bank of England’s lending data due on Thursday, says the lack of homes on the market is being blamed for the fall in the number of mortgages approved by British banks in September. It quotes BBA Chief Economist Richard Woolhouse saying: “Borrowing figures in the mortgage market remain strong as customers take advantage of record low interest rates. In particular, remortgaging remains high as savvy customers secure attractive deals ahead of a possible rate rise.”

TalkTalk cyberattack triggers ministerial and parliamentary scrutiny of companies’ cyberrisks

According to theFT (£, p1) Telecoms Minister Ed Vaizey has said he will write to all FTSE 350 companies to ensure they have ‘robust procedures’ in place as a result of the attack. Speaking in Parliament yesterday, Mr Vaizey said the Financial Conduct Authority was not “aware of any unusual activity” caused by the TalkTalk attack but that he would meet the Information Commissioner about compensation and issues around customer protection. Mr Vaizey also said that: “companies should encrypt their information” and suggested a kitemark could be used to highlight those with good privacy practices.The Guardian (p1, p4) also reports that an inquiry into the hack will be launched by Jesse Norman MP, Chair of the Culture, Media and Sport Select Committee.

TalkTalk has insisted hackers could not access bank account details but legal experts have warned that customers could seek compensation. The group is still assessing how many of its past and present customers were affected. The latest customer advice for TalkTalk customers is here.

Today’s Diary

Treasury Select Committee: economic and financial costs of EU membership

Science and Technology Committee: evidence session on big data

House of Commons: oral questions to the Treasury

House of Lords: Grand Committee draft Financial Services and Markets Act 2000

ONS: UK Q3 growth figures

ONS: UK monthly service sector figures

ONS: preliminary GDP estimate

Spectator: Ben Bernanke speaking on the crisis and its aftermath

Latest from the BBA

BBA Policy Advisor Ariane Poulain discusses the rise of digital innovation across the banking sector.

Watch a video recapping some of the highlights from our Annual International Banking Conference last week here.

BBA’s next webinar on SMR: Where are you now and where do you need to be? will run on Monday 16 November 2015 click here to register.

On Monday 2nd November we will be running our very popular Advanced Liquidity workshop again that provides a practical understanding of how to tackle, measure and control liquidity risk management. Click here for further information or to book your place.

Stat of the day

0.5% – the UK Q3 GDP growth estimate, down from 0.7% in Q2 but up 2.3% from Q3 2014 (Office of National Statistics).

News in brief

The FT (£, p8) reports that Greece’s largest banks are pre-emptively raising capital ahead of the ECB publishing results of stress tests at the end of October. Industry sources are confident that collectively the institutions will be able to raise about €5bn, provided that any capital shortfall identified by the ECB does not greatly exceed that amount.

The Times (£, p39) reports that Citigroup is testing an ATM that enables customers to order their cash through an app on their smartphone and verifies their identity by using biometric technology.

The FT (£, p19) reports that a study from Accenture has found that only 6% of the directors in charge of the world’s largest banks have technology experience, despite increasing concerns over cybersecurity.

CityAM (p3) reports that of the €3 bn in European venture capital investment in Q3, €947 million went to the UK.

The FT (£, p30) reports that Angola is poised to begin issuing sovereign debt on global debt markets for the first time.

The Government is due to sell off Ministry of Defence frequencies that could be used to boost 4G networks in early 2016. The amount of spectrum to be sold will be equivalent to three quarters of the auction that took place in 2013 (Times, £, p39).

New ISA rules set to come into effect in April 2016 will result in many new accounts being opened and a move toward investment in alternative lending, according to a new report from Yorkshire Building Society (CityAM, p15).

One of the biggest payday lenders in the UK has been ordered to refund £15.4m to thousands of borrowers after the FCA found evidence of poor lending practices (FT, £, p4).

The CBI releases itsQuarterly Industrial Trends Survey of 463 companies showing a slowdown in the UK economy, with manufacturing production dipping in the last three months (Guardian, p22).

UKTI and the Department for Business, Innovation and Skills launched a Cyber Development Centre designed to promote products and skills to tackle cyber-security issues (Daily Mail, p62).

What the commentators say

Writing in the Times (£, p28) European Commission President Jean-Claude Juncker sets out his priorities for 2016:  “I don’t want a Europe that regulates every aspect of people’s lives — national governments are perfectly capable and better placed to deal with many issues affecting their nations”. On Britain’s relationship with the EU he also states: “I believe that the EU is better with Britain in it and that Britain is better within the EU.”

Writing in the Times (£, p29) Economics Editor Ed Conway writes about the Chancellor George Osborne’s economic plan ahead of the publication of the new GDP figures. He highlights structural issues such as household debt and low productivity levels that continue to hinder the UK economy.

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