28th June 2017

BBA Brief – 28 June 2017

Bank of England revises stress tests and capital requirements

The Bank of England has asked lenders to set aside a total of £11.4bn of extra capital in the next 18 months and will bring forward annual stress testing on consumer credit amid concerns over rising consumer borrowing (The Guardian p22). The Financial Times (£, p1) notes that, “while such consumer credit in the UK is just one-seventh of the size of the mortgage lending market, BoE and UK regulators are nevertheless concerned because write-offs are much more common in the sector than in mortgage lending, where customers tend to keep up with repayments”.

Brexit Secretary to consult business on views

The government will create a new forum of consulting with business groups to help shape the eventual Brexit deal (The Times, £, p39). Brexit Secretary David Davis said, “we need a regular and open dialogue with businesses up and down the country. As the negotiations intensify, there is clear need to equally intensify the dialogue with business”. The group will meet fortnightly and is to be led by the Chancellor and Business Secretary, with the Prime Minister expected to attend a number of the meetings.

Change in direction for regulators

The Financial Times (£, online) writes that the focus of global financial regulation is set to shift from financial stability to growth as a number of key policy-makers, including Jaime Caruana, BIS General Manager, Mark Carney, Financial Stability Board chairman and Stefan Ingves, chair of the Basel Committee on Banking Supervision are set to step-down this year. The FT writes that, “with the firefighting days of the crisis over and political emphasis shifting to economic growth, governments have little appetite for further regulatory reform”.

Latest from the BBA

A message from the BBA Brief team: the BBA Brief will be taking a well-earned summer break next week,  starting again in September as the UK Finance Brief. Launching on 1 July, UK Finance is a new trade association, representing over 300 UK firms that provide credit, banking, markets and payment-related services.

The new organisation will take on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.

You’ll still receive the Brief if you’re currently on the distribution list, please feel free to drop us a line at press@bba.org.uk if you have any questions.

Aneta Dyakova, BBA Economic Analyst, sets out a snapshot of the UK’s key economic indicators.

Avoka asks how banks can respond to customers’ desire to apply for products and services at point of need, rather than in branches

Thursday 29 June BBA Annual Retail Banking Conference 2017

With 37 speakers in 22 sessions, the full speaker line-up is now confirmed for the biggest ever Retail Banking Conference, taking place this Thursday in central London. With a small number of tickets still available, it’s not too late to book. To register, or for more information, click here.

Tuesday 4 July MIFID II Conference

With only six months to go, there are still implementation obstacles to be overcome with MiFID II, from updating legacy systems, to understanding the finer details of the transaction reporting framework and implementing investor protection rules.  To register, click here.

Tuesday 4 July  Risk Governance – the perspective of smaller banks and subsidiaries

In this half-day workshop we will discuss governance responsibilities of the Senior Managers Regime from the perspective of smaller firms, UK firms that are parts of international groups and UK “ring-fenced” entities. To register, click here.

Latest from our sponsor Jaywing

IRB or not to be

With multiple pressures already bearing down on capital, how does a smaller bank cope with the dichotomy of having to lend to support the SME and mortgage market at a time when CRD IV combined capital buffers are increasing in time for 2019? Is now the time to be considering IRB as a means of optimising capital? Read our latest blog to find out more.

Stat of the day

£6,400: the average annual gap between male and female retirement incomes for people retiring this year (Prudential).

News in brief

The FCA has called for fund managers to change their charging structures and governance standards following a near two-year investigation into competition issues in the sector (Financial Times, £, online).

City AM (p11) reports that 77% of homes sold below the asking price in May, up from 72% in April, according to the National Association of Estate Agents.

Bloomberg (online) reports that a cyberattack similar to WannaCry has affected businesses, port operators and government systems in Europe, the US, Asia and South America.

Data from Nationwide Building Society shows that UK house prices rose by 1.1% in June,  after falling 0.2 percent in May (Reuters).

Diary

FCA publishes its final report into the asset management market.

Prime Minister’s Questions.

The European Central Bank’s Investment Forum in Portugal.

What the commentators say

Tim Wallace comments that the Bank of England faces a difficult balancing act between supporting the economy and ensuring that inflation does not erode living standards (The Daily Telegraph, £, B5). He notes many commentators have interpreted the FPC’s decision to increase the counter cyclical buffers as a sign that interest rates won’t be increased in the short term.

Writing in City Am (p19) Andrew Steadman welcomes new EU legislation of payment services, arguing that this creates new opportunities for collaboration between banks and fintech start-ups. He highlights ‘smart’ savings apps that can identify an affordable contribution, with automated payments linked to a savings product provided by a bank.

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