Senior figures in the City of London have hit back at the European Banking Authority (EBA) for saying that UK lenders are unprepared for Brexit.
In a 25 June opinion, the regulator said that it has been “monitoring the level of contingency planning and other preparations undertaken by [UK] financial institutions”, and is “of the opinion that this planning should advance more rapidly in a number of areas”.
“Where planning is taking place,” it added, some institutions “appear to be delaying triggering the necessary actions. The time for the required actions to be taken is reducing… institutions should not rely on public-sector solutions, as they may not be proposed and/or agreed.”
That rankled with City of London Corporation policy chair Catherine McGuinness, who said: “The Bank of England and HM Treasury understood that firms’ progress on contingency planning would be difficult to complete by the March [2019] deadline. They took the practical and necessary steps to ensure it would be ‘business as usual’ for EU firms operating in the UK until January 2021.
“We have not seen this move reciprocated by European regulators. Institutions such as the EBA could help move this forward, for the benefit of customers across the EU and UK.”
TheCityUK chief executive Miles Celic echoed those remarks, saying: “The single most helpful thing European authorities can do right now is to engage urgently and seriously with the issue of contract continuity. The lack of progress by EU regulators on this vital issue is the most pressing item on the agenda.”
All 10,000 banks in the SWIFT community have agreed to use the network’s global payments innovation (gpi) service for cross-border transactions by the end of 2020, the organisation has announced.
The universal adoption marks a massive rise on the 180 banks that currently use the gpi, which was launched early last year. It already accounts for 25% of SWIFT’s cross-border payments traffic, comprising more than $100bn of transfers per day.
SWIFT chairman Yawar Shah said: “The gpi service has been designed, developed and deployed in record time, and is already radically transforming the cross-border payments experience.
“Unmatched in scale, no other service has been able to safely deliver hundreds of billions of dollars in payments around the world in minutes or seconds. The time is now right to accelerate the adoption of gpi, ensuring that all banks on the network adopt it.”
Chief marketing officer Luc Meurant added: “With gpi, we are rolling out an ambitious global programme involving all the banks, currencies and routes on the network, to ensure global adoption by end 2020.
“This move to accelerate adoption and extend the dramatic improvements being afforded by gpi will be transformative for the industry and its end customers.”
Only 13% of board members give their organisations an above-average grade for absorbing the lessons of past cyber mistakes, according to research from the Economist Intelligence Unit (EIU) on behalf of advisory and broking firm Willis Towers Watson.
In a survey of 450 companies around the world, the EIU detected little consensus among boards and executives on cyber-resilience planning, whether in terms of the deployment of strategies, the allocation of funds or discerning which organisational areas are most vulnerable.
Willis Towers Watson global head of cyber risk Anthony Dagostino said: “It’s important for companies to understand that achieving cyber resiliency is a company-wide imperative – one that shouldn’t be sequestered to certain roles or functions.
“Boards should emphasise the need for a strategic framework, and the C-suite should set the tone within their organisations by empowering stakeholders – such as IT, risk, HR, legal and compliance – to drive an integrated risk management and resiliency strategy.”
He added: “While technology will remain a crucial defence, more than half of cyber incidents are attributable to employee behaviour and talent deficits in cybersecurity roles. So, investing in other areas, such as human capital solutions and cyber insurance, have to become part of regular board and C-suite conversations.”
Minnows of the banking world are making a large, collective splash as lenders, according to new data from Standard & Poor’s (S&P).
In a review of UK banks’ lending strength in the course of 2017, the rating agency found that the aggregate loan books of the country’s 19 smallest lenders – including fast-growing brands such as Metro Bank, Aldermore and Shawbrook – came to around £330bn: 15% of the total market. This means that, together, challenger banks beat Nationwide (9%), Santander (10%) and HSBC (13%) and equalled the 15% contribution of the Royal Bank of Scotland.
“In the years following the financial crisis,” wrote S&P in the July issue of its CreditMatters report, “most small to midsize UK banks and building societies have achieved strong business growth thanks to generally benign economic conditions, low interest rates, cheap central bank funding and the focus on most of the larger lenders on restructuring.”
It pointed out that challenger banks’ 15% share of the lending pie marked a 10% rise on their 2016 share, “reaching an aggregate amount comparable with the biggest banks in the country”.
S&P noted: “Most smaller lenders are still expanding briskly; half of those in our ranking grew by 10% to 20% in 2017… The main outlier is The Co-operative Bank, which continued to de-lever in 2017 and reported a fifth consecutive year of reported losses.”
However, it added: “Operating efficiency still has plenty of scope to improve and we believe smaller lenders could be more efficient, considering their generally branch-light business model.”
Almost six in 10 (57%) senior salespeople in banks spend more than 1.5 days per week – or 27% of their working hours – onboarding new client organisations, according to research from the Global Legal Entity Identifier Foundation (GLEIF). The body also found that 50% of financial institutions use, on average, four different identifiers to help verify interactions with their client firms.
Set up in 2014 by the Financial Stability Board, the GLEIF is tasked with driving and supporting uptake of the Legal Entity Identifier (LEI) as a global standard for frictionless KYC actions between banks and their clients.
The findings support the body’s view that replacing disjointed information with a globally accepted approach, based upon a broad adoption of the LEI, would remove complexity from business transactions – thereby delivering value to stakeholders.
GLEIF CEO Stephan Wolf said: “Our research results show that the onboarding process for new business relationships in financial services is too time-consuming and requires too much administration.
“In a globalised digital economy, verifying the identity of customers, partners and suppliers is becoming an increasingly complex and costly challenge. However, the growth of identifiers is leading to problems that must be resolved to assure their vital place in oiling the wheels of the growing global digital economy.”