Community

I fear that many of the analysts at the CRAs are former analysts at banks who handled the files that later were assigned to the internal Special Credit Department. So their inventory will include Mirror Group, Polly Peck, Bear Stearns, Global Crossing, Refco et al.

You are so right there, Ketharaman. I get the LinkedIn feed from one of them and it is a mixture of superficiality and sycophancy, swallowing whatever line is fed them by the company CFO or by a finance minister.

Then you have the prize sycophants at industry magazines and awards bodies.

Dear Kannan - thank you very much for your comment. You and I are swimming against the tide though, and the tide has become a tsunami because you have to add in the IT industry, Fintech, Regtech and all the charlatans getting into the banking business on the back of disruption (i.e. amateurish punting into an industry you know nothing about).

I have mainly been focussing on the problems in the Eurozone so I am sorry that the same has happened in India. I attribute it in part to credit scoring methodologies, where the same vandors sell the methodology to the bank and then sell a service to the applicants for improving their scores i.e. how to bamboozle the lender. Regulators seem blind to that practice.

Then it is the banks who rely wholly on such methodologies and on security, not on the ability of the borrower to pay.

Then there is the ongoing soft treatment for capital adequacy of any loan with real estate security or which has some tenuous connection to being public sector. Such loans, as long as they were to OECD-based borrowers, already had soft treatment under Basel 1, and this was softened even further under Basel 2, leading directly to both the sub-prime and Eurozone sovereign risk crises.

But it isn't just the bankers who never learn (and why would they if they are a good earner?), it's the politicians and regulators - those who are supposed to be protecting the taxpayer.

Dear Daniel - then you will have no problem in publishing the Competition Law advice that has been taken. The aspects mentioned by Mr Richter are ingredients in a customer proposition, and so these are - prima facie - business and commercial aspects.

I really would like to see the Competition Law advice that allows an organisation - whose membership counts competitors of one another amongst its number - to set up a Working Group outside its own designated space (which is payments clearing) and in a space which is a prime area of competition between its members (corporate liquidity management services) and which is not terribly closely connected with payments clearing.

Revelation of information about the differences between member banks' implementations of Basel III must have occurred, as the speaker says that there are major differences: he would not be able to conclude that unless there had been disclosure of information that would normally be both proprietary and confidential, and a proprietary component in the design of products for customers.

The speaker refers to the need for greater alignment between banks, presumably of their interpretations of regulation: why is such an alignment needed? Who would that benefit? How will that alignment translate into the feature and function in the range of offerings proposed to customers? Surely it will tend towards harmonisation of the feature and function if the design component "Impact of Applicable Regulation" comes up the same across all competitors.

The speaker also says that the technology impact on banks will be discussed and what the technology needs are within the banks to handle corporates' liquidity management needs in the future: technology is a prime driver of achieving competitive advantage. What is the potential benefit to customers of this being discussed between competitors?

So let's either see the Competition Law advice and make sure that there are no possible detriments to the marketplace deriving from competitors comparing notes on the in-scope matters, or if there are potential detriments, what benefits to customers will arise from this collaboration taking place that justify and outweigh the detriments.

Or else this Working Group should be shut down.

Have been away for a while so looking at this with fresh eyes. Is this a satisfactory explanation? For a critical national system? "It fell over because something went wrong that we didn't expect". That might satisfy Nicky Morgan, expectations of whom need to be set at a suitably subterranean level, but does it satisfy the trade?

On further reflection, Ketharaman, I suppose that does give a licence to those who have never made a profit, cannot make a profit, have no idea how to generate revenues, or make an assessment of creditworthiness. These would be those who have only ever worked in IT and Ops, or at most Product Managament, and particularly those who went through a specific Dutch bank where the Global Transaction Services division was perenially projecting impressive future revenues and profits, but never actually achieving them. There's skill in that as well.

Yes and that has to end in tears sooner or later.

I do struggle to see where the margin is in this business. SEPA has killed the economics in Euro payments and, together with ECB interest rates, has destroyed the revenue streams in retail banking as a whole.

There is something to be made in the cards business still as the EU Interchange Fee Regulation has backfired (the PSR again is the "competent authority" for this regulation and so their MD will have to answer for the increases in card fees in due course).

A new bank that lends at a 2.5% negative spread and is offering mortage loan terms like Northern Rock must surely hit the rocks, and sooner rather than later, although I read that BBVA has taken a big share in it (probably playing follow-my-leader against Santander and Sabadell, the latter with its No Nines-Offline acquisition TSB).

The TSB CEO was up before the Treasury Select Committee today, and they suggested he collect his P45 and go forth and multiply.

Thank you Ketharaman - I'm afraid it is wider society that will pay for the New Entrants, particularly those that have banking licences and whose deposits are insured by taxpayer-backed compensation schemes. That is licence for them to behave in an economically illiterate manner (we have one here that pays 4% on deposits and charges 1.5% on loans = 2.5% negative Net Interest Income).

I have passed on to my MP here that Charlotte Hogg should be asked about The Nines, and also that a letter should be sent to Hannah Nixon at the Payment Systems Regulator. Visa is a regulated system. Did the PSR know of Visa's reduction in availability targets? If so, what did they do about it? If not, have they not failed in their role as regulator?