The Financial Services Club's Blog

Fixing our banks: now we know the answer

We had another round of debate about fixing the banking system at the Financial Services Club this week (read Part One here).  This time it was the turn of the shareholder, media and industry to air their views, ably represented by:

• David O'Hara, Shareholder and Activist Investor, Blackthorn Focus;
• Nick Kochan, Author and Journalist; and
• Brian Mairs, Strategic Communications, the British Banker's Association.

David kicked things off with a palpable sense of anger at the losses he and other shareholders suffered at the hands of RBS and Lloyds.

Four out of five corporates are not ready for SEPA end-dates

For the fifth year, the Financial Services Club ran a survey of payments professionals worldwide to see how successfully regulations and technologies are changing the European payments landscape, sponsored by CGI and EBA CLEARING.

   

 

  

 

The survey ran during the spring of 2013, and was completed by 422 participants across over forty countries.  

Released in time for EBA Day in Berlin, here are the basic results.  If you would like a FREE copy of the full 40-page survey report, please email our administration.

The UK's new bank regulator: Andrew Bailey

For the second time recently, I got to hear the thoughts of Andrew Bailey, CEO of the new Prudential Regulation Authority (PRA) and Deputy Governor for Prudential Regulation at the Bank of England.

This time was at the annual dinner for the Chartered Institute of Bankers in Edinburgh. 

If you thought PPI was costly, wait till you see the price of this scandal

We had a fascinating insight into the issue of swaps mis-selling from Jeremy Roe last night at the Financial Services Club.

Jeremy was a victim of the process and has been championing the cause ever since.  He now counts 1,200 companies in his group, Bully Banks, out of the 40,000 cases that have been identified so far.

It does not sound like much, but if each case averages £2.5 million compensation, this is a £100 billion exposure and is far bigger than the PPI mis-selling scandal we all know about already.

Why would it be so much?

Our financial future and the implications of European regulatory change

As mentioned yesterday, we finished the debate at the CAS-WG Plenary with a panel discussion about the future for the City and the UK financial system in light of European regulatory change.

The panel consisted of (from left to right):

• Bob Fuller, Director at Fixnetix;
• Andrew Simpson, Market Structure Consultant; and
• Martin Watkins Director, Market Infrastructures, Ernst and Young.

It was a fascinating 45 minute discussion of the negative position the UK sits in today, from a regulatory perspective in Europe. The Banking Union, Transaction Tax, Bonus Cap and more, has all hit London hard so, unsurprisingly, this was a pretty negative debate about where the regulators have got to in Brussels.

Here is a short synopsis of what was said ...

The Fifth Clearing & Settlement Plenary Meeting

We had our fifth plenary meeting of the Clearing & Settlement Working Group (CAS-WG) in March.

The meeting covered all the latest issues, news and views, and was kicked off by Greg Caldwell, Chair of the Regulations Subject Group, who outlined the complexity of European and Global Regulations through this slide outlining the Rubik’s Cube of Regulations.

 

UK Regulators crucify UK Banks

In case you missed it, there have been THREE substantial and major regulatory changes announced in the last two days:

1. More Competition in Banking
2. More Competition in Payments
3. More Capital in Reserve

These announcements precede the introduction of the new regulators as the Financial Services Authority (FSA) will be replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) from 1^st April 2013.

Probably an April Fool but, just in case, here are the three announcements:

Over half of corporates have no SEPA idea

It’s interesting that we’re now less than a year away from SEPA’s end date for the Eurozone and so people are saying to me that SEPA doesn’t matter so much as a discussion point anymore.

This is because the banks have got it nailed.

Really?

What about the corporate customers of the banks?

SEPA Infographic

I just got this infographic on SEPA from Misys and thought it worth sharing (doubleclick for larger version). 

Nice!

UK Banking Reform Bill: George Osborne's speech in full

UK Chancellor George Osborne gave a speech yesterday on banking reform in Britain.  Widely quoted extracts from the speech have been posted in today's news headlines but, for those who like to make their own mind up, it's worth reading the whole speech in full.  So, here it is:

Banks only survive because of regulations

We recently celebrated the two hundredth birthday of Charles Darwin. 

Darwin, the man who broke through the prejudiced views of the religious world of the Victorian era by being brave enough to say we were descended from apes and not created by God.

Regulators are cutting their nose off to spite their face

In another conversation, I gained a new dimension as to how the regulatory and governmental influence is changing a bank’s outlook.

I was talking with a very senior manager in a bank.  This person heads up risk, audit and compliance.  He is a member of the bank’s executive board.  A heavy hitting player.

He had been with the bank for a long time and had experience of every aspect of the bank’s business.  He knew the key people in every part of the bank, the foibles and fundamentals of all aspects of the business.

But he told me it meant nothing, was worth nothing and was no longer relevant.

All that experience, knowledge, understanding … for nought.

Fifty Shades of Law: America, Banking and World War III

No, it’s not about flagellation and sado-masochism, although the current regulatory regime is not far off that.  It’s also true that the regulatory regime is pretty mind-boggling these days, with fifty shades of interpretation of fifty shades of law.   This was made clear to me in dialogue with a group of European banks involved in the LIBOR fixing program last week. 

We were talking about the likely implications of American regulatory retaliation, and they made it clear to me that the United States is using LIBOR and money laundering as pure extortion from foreign banks to bolster their political coffers.

That sounds a bit extreme, but it made some sense as the conversation developed.

LIBOR - the future

I just updated the LIBOR timeline with what's happening this year when five currencies are discontinued from LIBOR publications.

In case you missed it, here's what's happening.

LIBOR fixing - the timeline

It’s the end of the first week of January and we want to end on an upbeat note.  So what do we get as this morning’s headlines?  A whole heap of dross about LIBOR, a sprinkling of stuff about mis-selling insurances and illegal mortgage foreclosures (read things worth reading every day if you want to keep up with these headlines).

Oh shoot.

That’s not a great way to start the year but then you have to remember that this is nothing to do with 2013 or the future, except in the way in which regulators will want to change the way they regulate the markets.  No, the daily headlines all relate to issues raised before 2010.

The most heinous of these issues that will dog the industry deadlines for most of this year will be LIBOR fixing.

2013: Five Key Banking Bets

After discussing the economic backdrop, with a hot South America countering a consumerising Asia, it’s time to move on to looking specifically at the banking outlook, which is grim.

Or is it?

Were Skinner’s 2012 predictions correct?

At the start of the year, I always make a few predictions about what will happen in the following year.  Watch this blog in January for 2013’s predictions.  But what were the predictions for 2012?

Well Economically, I made the following forecasts:

1. Asia’s light continues to shine, but not quite as bright
2. American equities is the place to invest
3. There will be a major European bank failure
4. A country will leave the Eurozone

Risk is a many splendored thing

I was asked to give a pre-dinner speech by SAS for a group of Chief Risk Officers (CRO’s) in Amsterdam recently. Here’s the speech.

Good evening ladies and gentlemen. 

I wasn’t sure how to start this evening, and decided to begin with the collective noun for a group of CRO’s.  You are collectively known as a murder.

Now I hope you won’t murder me for telling you that as a murder of CRO’s you are a collective failure. 

Oh dear, that’s not a good start, is it? 

Regulatory nightmares and technology dreams

We had the final 2012 plenary meeting of the Financial Services Club Clearing & Settlement Working Group (CAS-WG) yesterday.

Well attended by industry luminaries, the debate was all about the usual stuff: regulations, standards, risk, issues, frustrations and opportunities.

What was particularly interesting for me is that we now have three subject groups working in unison to solve many of the issues and frustrations in order to identify and leverage the opportunities.

A wave of regulatory change

How the USA can make bankers feel like Guantanamo Bay

David Bermingham was another recent guest at the Financial Services Club. 

David was one of the NatWest Three, the three bankers who worked for NatWest in the 1990s and got caught up in the Enron scandal.

What happened and how come David ended up in an American jail when he's a British citizen?

Well, after presenting at the Club, I interviewed David to capture his story.

Here it is ...

Q: What’s the background to what happened to you and your colleagues?