Bl***y Banks Again

Bank Of England To Unveil Monetary Policy ShiftThe bank's new governor is expected to announce the most radical shift in Britain's monetary policy for years.9:32pm UK, Tuesday 06 August 2013 Mr Carney took the reins at the Bank of England in July
EmailBy Ed Conway, Economics Editor

The Bank of England is set to unveil the most significant changes to the way it conducts monetary policy since it was granted independence in 1997.

Mark Carney, the bank's new governor, is expected to announce that in future it will follow a policy of "forward guidance" - pre-committing to keeping interest rates low long into the future.

The precise details of the new policy will be laid out at the bank's Inflation Report press conference at 10:30am, but economists say the bank may pledge to leave rates unchanged until the unemployment rate drops beneath a certain threshold.

Allan Monks of JP Morgan said he expected that level to be 7%, but added that the main message will be "that rates are unlikely to rise for the next two years or more - despite the better signs on growth".


The BoE is expected to follow "forward guidance"

The economy has been showing increasingly convincing signs of recovery in recent weeks, with both the services and manufacturing sectors expanding at rapid rates.

The data has led some to suggest that any shift by the Bank of England may risk stimulating the economy too much.

However, Sir John Gieve, former deputy governor, said forward guidance would help improve the bank's communication with the general public.

"The main impact will come through how it affects the economy," he said.

"But Mark Carney is also very keen to reach out beyond the narrow audience of central bank watchers, to ordinary people and companies. I think he can do that if he can keep the message simple and plain

DEXIA,THE FRANCO-BELGIUM HAS DEFICIT OF OVER 700 MILLION POUNDS?

several consortiums ARE LOOKING TO TAKE OVER RBS BRANCHES,WILLIAM AND GLYNS'S MIGHT BE REVIVED.

SOMEONE AT THE BANK SAID SAID IT TAKE A FEW YEARS TO SORT OUT RBS.

THERE HAS BEEN ANOTHER MISSELLING SCANDAL INVOLVING BANKS AND TESCO INVOLVING IDENTIFY THEFT FRAUD.

Banking: UK throws out EU guidelines



27 August 2013

Presseurop
Financial Times


The UK’s new markets watchdog has for the first time formally rejected EU financial regulation guidance, instead approving looser restrictions on bankers and brokers, as part of a government-backed “tougher stance on Europe”, writes the Financial Times.

The Financial Conduct Authority (FCA), which launched in April, had already indicated it disagreed with two parts of the EU’s banking guidance. In May, it announced it did not agree with the European Securities & Markets Authority’s (Esma) rules on short selling stocks – a clause that Germany, Denmark, France and Sweden also threw out. On August 15, the FCA said it disagreed with a clause that would have forbidden bankers from offering both Alternative Investment Fund Management services and brokerage services.

It is the latest in a series of spats between Brussels and the City, London’s banking centre, over regulation of the financial services sector, a key element of the UK economy.

The economic daily said both the FCA and the UK’s finance ministry, the Treasury, “downplayed a possible split with Europe on financial regulation”, adding that Esma said member states were entitled to disagree with guidance. The newspaper continues —


Several London bankers and investment managers linked the FCA’s changed attitude to the government’s tougher stance on Europe. [...] Some in the City say they hope the UK will also reject other EU guidance, including the European Banking Authority’s tougher than expected rules on new EU bonus restrictions.

Currency Spikes at 4 P.M. in London Provide Rigging Clues

By Liam Vaughan & Gavin Finch - Aug 28, 2013 12:01 AM GMT+0100.
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In the space of 20 minutes on the last Friday in June, the value of the U.S. dollar jumped 0.57 percent against its Canadian counterpart, the biggest move in a month. Within an hour, two-thirds of that gain had melted away.

The same pattern -- a sudden surge minutes before 4 p.m. in London on the last trading day of the month, followed by a quick reversal -- occurred 31 percent of the time across 14 currency pairs over two years, according to data compiled by Bloomberg. For the most frequently traded pairs, such as euro-dollar, it happened about half the time, the data show.





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Fund managers and scholars say the patterns look like an attempt by currency dealers to manipulate the rates, distorting the value of trillions of dollars of investments in funds that track global indexes. Photographer: Scott Eells/Bloomberg
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The recurring spikes take place at the same time financial benchmarks known as the WM/Reuters (TRI) rates are set based on those trades. Now fund managers and scholars say the patterns look like an attempt by currency dealers to manipulate the rates, distorting the value of trillions of dollars of investments in funds that track global indexes. Bloomberg News reported in June that dealers shared information and used client orders to move the rates to boost trading profit. The U.K. Financial Conduct Authority is reviewing the allegations, a spokesman said.

“We see enormous spikes,” said Michael DuCharme, head of foreign exchange at Seattle-based Russell Investments, which traded $420 billion of foreign currency last year for its own funds and institutional investors. “Then, shortly after 4 p.m., it just reverts back to what seems to have been the market rate. It adds to the suspicion that things aren’t right.”

Global Probes

Authorities around the world are investigating the abuse of financial benchmarks by large banks that play a central role in setting them.

Barclays Plc (BARC), Royal Bank of Scotland Group Plc and UBS AG (UBSN) were fined a combined $2.5 billion for rigging the London interbank offered rate, or Libor, used to price $300 trillion of securities from student loans to mortgages. More than a dozen banks have been subpoenaed by the U.S. Commodity Futures Trading Commission over allegations traders worked with brokers at ICAP Plc (IAP) to manipulate ISDAfix, a benchmark used in interest-rate derivatives. ICAP Chief Executive Officer Michael Spencer said in May that an internal probe found no evidence of wrongdoing.

By Harry Wilson, Banking Editor
5:59PM BST 02 Sep 2013
6 Comments
The struggling lender downgraded the “fair value” of its loan book by £4.2bn between the end of last year and June, wiping nearly 13pc off the value of its £29bn portfolio.

Cutting the value of its loans means the difference between the assumed market price of the loans and the “carrying value” of what the bank reckons them to be worth has reversed from a £37m credit to a £3.6bn deficit in just six months.

In the notes to its latest accounts, the Co-op said the change came after the bank “reviewed and improved the methods used to calculate the fair values”.

“That is an enormous change in value and raises serious questions about the way the bank previously accounted for the book’s value,” said one banks analyst.

In the same accounts last week, the Co-op Bank revealed a £496m write down of its assets. However, the lender has warned that further provisions for bad debts are likely.

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Co-op Bank bondholders have become concerned in the deterioration in the lender’s business, pointing out that large new losses on the loan book could destroy large amounts of the new capital it is attempting to raise.

The bank is trying to raise £1.5bn to recapitalise itself with an “exchange offer” that will see bondholders contribute £500m through haircuts in the value of their investments.

Co-op said in a statement: "At the time of the interim results announcement last week, The Co-operative Bank underlined the need for the £1.5bn Capital Action Plan, announced in June to stabilise the Bank, which we reaffirmed and which remains on track."

TSB BRAND IS TO BE REVIVED TOMORROW

9 September 2013 Last updated at 14:33 Share this pageEmail Print Share this page

ShareFacebookTwitter.What's behind the new TSB logo?
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TSB has been relaunched as a stand-alone brand. But why is the logo so similar to the previous incarnation, asks Kathryn Westcott.

Nearly two decades ago, the bank that liked "to say... YES" disappeared when it merged with Lloyds.

Now it's back with a logo featuring white lettering on blue circles, evoking, well, the white lettering on blue circles of the original logo. It's a touch of nostalgia on the High Street.

But wouldn't it be wiser to try and make some waves? No, says David Airey, graphic designer and author of Logo Design Love. "Where a logo already exists, you rarely need a completely new design," he says. "More often than not, a subtle refinement will bring the logo up-to-date while keeping the equity that's already there. Familiarity breeds trust, and trust wins custom.

More blue
"Logos should be appropriate for the companies they identify, and flashy isn't a term you'd want to associate with a bank. Secure, safe, reliable. That's what banks should be about."

The logo has moved from a serif to sans serif font and has a vague air of a Venn diagram with its overlapping dark sections. Airey says it has added a little depth and visual interest.

But why do so many banks favour blue? It's clean - "a common colour for bathroom detergents and hand gels", notes Airey. And that suggests safety.

"Blue is also visible to those with colour blindness (as opposed to reds and greens)."

Psychedelic rock
But Airey said that there is a need to balance the clean, safe approach with the need to stand out. Northern Rock went a tad neon in what Airey describes as a "bold move". "Unfortunately, things didn't work out as planned, but ultimately it was the people who were at fault, and that's what builds iconic brands - people."

Some fondly recall Bradford and Bingley's bowler hat and Midland's griffin. And we still have Lloyd's black horse. "There's something about a rearing horse that I don't trust, so I've never thought the Lloyds' horse was an appropriate symbol for a bank," says Airey.

Two banks face fines for PPI rejections
The head of the City regulator today disclosed that two investigations into PPI complaint mis-handling are under way.

Martin Wheatley said the number of legitimate PPI complaints rejected was "outrageous" Photo: Bloomberg News
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By Dan Hyde
11:03AM BST 10 Sep 2013
1 Comment
Two banks face fines for fobbing off an "outrageous” proportion of PPI complaints, the head of the City regulator disclosed today.

Martin Wheatley, chief executive of the Financial Conduct Authority, said the number of legitimate payment protection insurance (PPI) cases rejected by banks was “absolutely not accetable”.

He told the a committee of MPs that the watchdog “will take more enforcement actions" to combat complaint mis-handling. Such action typically results in a fine. He said two "large" investigations are under way, but did not name the banks in question.

PPI was an insurance sold alongside loans and credit cards. Many customers have only later discovered they did not need the cover, or would have been unable to claim on it.

Banks have been ordered to pay back premiums to anyone mis-sold and have put aside more than £18bn for compensation - double the cost of the Olympic games.

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However, the Financial Ombudsman Service, which takes on complaints rejected by banks, has reported a huge rise in the number of complaints wrongly rejected by banks.

It received a total of 266,228 new PPI cases in the first half of the year - a 26pc increase on the figure for the previous six months The Ombudsman upheld more than eight in ten complaints made against some institutions, the data showed, showing that banks routinely fob off legitimate cases.

Mr Wheatley called these figures “outrageous” and referred to strong action already taken against Lloyds Banking Group, which was fined £4.3m in February for delaying PPI compensation to 140,000 customers. Further fines against two institutions are now expected.

Lloyds appears to be struggling under the weight of complaints. The Ombudsman was deluged with cases against Halifax Bank of Scotland, the state-backed bank owned by Lloyds Banking Group, throughout the first half of 2013.

In total, the bank accounted for 61,664 complaints – a 57pc increase on the previous six month period. A total of 80pc were upheld in the customer’s favour.

An investigation by The Times newspaper, published in June, exposed Lloyds for failures in its PPI complaints handling. Mr Wheatley said that it “had not gone unnoticed”.

In defence, Martin Dodd, head of customer services at Lloyds Banking Group, has said: "The commitment to do a better job for our customers is focused on delivering outstanding customer service. Over the last three years we've seen a considerable drop in the number of complaints we receive, to a point where, on a like for like basis, our brands now receive fewer banking complaints than any other major bank."

money@telegraph.co.uk

OFT Verdict Paves Way For Osborne Banks SaleA competition verdict is likely to pave the way for a sale of the Government's bank stakes, Sky News learns.10:13pm UK, Tuesday 10 September 2013 A deal could be announced as soon as Wednesday afternoon
EmailBy Mark Kleinman, City Editor

Competition regulators are expected to deliver a massive boost to George Osborne on Wednesday when they rule that branch disposals by Britain's two big state-backed banks are broadly sufficient to enhance competition.

Sky News has learnt that the Office of Fair Trading (OFT) is likely to say that plans for Lloyds Banking Group and Royal Bank of Scotland (RBS) to offload almost 1000 branches between them do not require significant augmentation.

The move will pave the way for the Chancellor to declare another milestone in his reform of the British banking system and begin the sale of the taxpayer's 39% stake in Lloyds.

Treasury insiders confirmed a Sky News report last weekend that said Mr Osborne was actively looking to commence the sale process this week.

The OFT is expected to have taken soundings from Brussels before declaring its satisfaction with the size of the disposals by Lloyds and RBS, which is expected to sell more than 315 branches primarily serving small and medium-sized companies (SMEs).

Dubbed 'Project Rainbow', RBS has lined up three rival bidders for its network and is expected to decide on a preferred offer this month.

In a speech in June, Mr Osborne said he had asked the OFT to conduct a review of the SME banking market, which is expected to report its full findings later in the year.

"As part of this work, I have asked the OFT to review the impact that new challenger banks created by Lloyds and RBS will have on strengthening competition in small business banking, and to identify what more can be done," Mr Osborne said.


Mr Osborne had asked for a review of the SME banking market

Lloyds is in the process of carving out more than 630 branches as a standalone network using the TSB brand, which it relaunched on Monday. The network has a relatively small presence in small business banking.

Insiders said the fact that Lloyds would not be forced to sell a much larger number of branches would fuel further momentum in the bank's share price.

The stock touched a 12-month high on Tuesday and closed in excess of the level paid by the last Labour government to rescue the bank in 2008.

"The [Lloyds share] price is very attractive now," said a person close to a prospective sale of part of the Government's Lloyds stock.

The exact size or terms of the shareholding likely to be offloaded were unclear on Tuesday night although insiders said it was unlikely that Mr Osborne would want to sell less than £5bn, or about 10% of Lloyds’ equity.

They said a deal could be announced as soon as Wednesday afternoon.

Such a deal would possess huge symbolic significance as the Government seeks to shed the legacy of the 2008 bail-outs, having sold Northern Rock to Sir Richard Branson’s Virgin Money in 2011.

A sale of the Government's shares in RBS will take much longer as Mr Osborne considers a more fundamental overhaul of the bank.

Lloyds and RBS declined to comment.

YESTERDAY AND TODAY,A TSB TWITTER FEED APPEARED ON MY DO YOU WANT TO FOLLOW SOMEONE TWITTER ACCOUNT.

Badboy wrote:YESTERDAY AND TODAY,A TSB TWITTER FEED APPEARED ON MY DO YOU WANT TO FOLLOW SOMEONE TWITTER ACCOUNT.

What does that mean Badboy?

WHEN YOU SIGN INTO TWITTER,ON THE LEFT SIDE,IT HAS 3 TWITTER ACCOUNTS EG TOURISM FIJI,TSB AND PRIVATE INDIVIDUALS ETC ASKING YOU IF YOU WANT TO FOLLOW THEM.

Badboy wrote:WHEN YOU SIGN INTO TWITTER,ON THE LEFT SIDE,IT HAS 3 TWITTER ACCOUNTS EG TOURISM FIJI,TSB AND PRIVATE INDIVIDUALS ETC ASKING YOU IF YOU WANT TO FOLLOW THEM.

I am not a member of twitter, facebook or the other one and have no wish to be.

SOME SCAMMERS TRIED TO INSTALL A DEVICE TO TAKE ILLIONS OF SANTANDER BANK CUSTOMER DETAILS.

Badboy wrote:SOME SCAMMERS TRIED TO INSTALL A DEVICE TO TAKE ILLIONS OF SANTANDER BANK CUSTOMER DETAILS.

A gang tried the same thing a couple of years ago in a NatWest AMT near where I live. They built a mock front and when someone put their card in and pressed the number buttons details were recorded and stored to be used by the fraudsters. Luckily the Bank picked up on it before any damage was done but you have to wonder at the ingenuity of the gang .

Portrait: Michel Barnier, financial regulator for Europe



13 September 2013
Les Echos Paris

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Michel Barnier during a press conference in Brussels in July 2011
AFP

Five years after the collapse of Lehman Brothers, the man who has been on the front line of financial regulation in Europe is assessing his performance. Now that his mandate is drawing to a close, Michel Barnier has set his sights on another role in the Commission. Excerpts.

Renaud Honoré

In Brussels, Michel Barnier’s recap chart is almost as well known as Michel Barnier himself. When the European Commissioner responsible for financial services goes to meetings, he always brings an A4 print-out of his legendary chart. The more philistine among us might mistake it for an Excel spreadsheet filled with highly coloured boxes and impenetrable technical jargon.

But the big man from Savoie with the impeccably coiffed silver hair is there to explain. On close inspection, the chart shows all of the measures, which were demanded by G20 leaders in 2009, to rein in a financial services industry that had brought the world to brink of disaster. Whenever one of these measures was launched on the level of Europe, Michel Barnier coloured in one of his boxes. And the Commissioner is at pains to point out with typical seriousness that none of the boxes on the chart are unfilled.

Journalists, bankers, lawyers and, not so long ago, none other than François Hollande have all been on the receiving end of a presentation of the chart, which has recently been printed up as a more aesthetically pleasing brochure. Even Pope Benedict XVI was given a quick look on the occasion of a meeting that took place last February, three days before he resigned from the papacy. A photo of this particular moment occupies pride of place on the Commissioner’s desk…

Very few industry players escaped unscathed: auditors, ratings agencies, stock markets, hedge funds, banks…

When the former French minister looks at this document, what he sees is proof of his success. “We covered all of the fields which had to be regulated,” he explains. Appointed more than a year after the collapse of Lehman Brothers, he had a clear road-map to build a new framework for a finance industry, which had attracted the ire of all of the world’s leaders. He set about this task with voracious enthusiasm, drafting close to 30 legislative texts, all of which have either been presented or adopted. “It was a regulatory tidal wave,” complains a City lobbyist. Very few industry players escaped unscathed: auditors, ratings agencies, stock markets, hedge funds, banks… At the height of the crisis, in 2011 and 2012, approximately one third of the texts presented by the Commission came from Michel Barnier’s service.

‘Go skiing or go home!’

This legislative frenzy stood out in contrast to the recent past. Before the collapse of Lehman, the Commission had been an ardent proponent of deregulation. Some civil servants in Brussels still remember the enraged reaction of Charlie McCreevy, Michel Barnier predecessor, when they dared to suggest legislating. “There is no need for legislation on finance. Go skiing or go home!”.

Evidently, in 2009, at the time of the change of Commission, it was no longer a question of holding such a conversation. The man who came into the scene amidst the post-Lehman rubble knew almost nothing of worldwide trading and derivatives. And so he got the idea of compressing his agenda into one sentence, which he has drummed in almost every week in the many conferences he gives all over Europe: “No financial player, no financial product will escape regulation." This was not chosen by chance: a few days before his official appointment at the end of 2009, Michel Barnier heard it spoken by Angela Merkel. If one wants to survive in Brussels, best to follow in the footsteps of the real boss...

Symbolically, Barnier also decided to dedicate his first official visit outside Brussels early in 2010 to London. It would be an understatement to say that the British government had absolutely no desire to have the City carefully scrutinised and regulated by a Frenchman, which was seen as letting the fox into the henhouse. "The most dangerous man in Europe," ran the headline at the time over at The Daily Telegraph, a major Eurosceptic newspaper.

Barnier always tried to keep London from feeling isolated and put in a minority situation in the negotiations around the different legislative texts he put forward. And, in fact, this has happened only once in four years – on the cap on banker’s bonuses. "I have no problem with the British, and I think that they grasped that I am not an ideologue," he says. His relations with George Osborne, the Chancellor of the Exchequer, remain touch and go, according to several diplomats. The City continues to mistrust this overly French commissioner.

Mistrust is irrelevant

For the other Europeans, the mistrust is irrelevant. The time to assess his record is drawing close, and five years after Lehman Brothers, it’s looked on favourably in community circles. In a Commission where the irresolute and the ditherers abound, he has cut a swathe with his activism. “Overall, he has managed to carry out rather ambitious reforms in a field where the pressures are very strong," is the assessment of one great connoisseur of the more arcane community matters. To take two important examples, the Basel III prudential rules will apply to the banking sector, and trade in derivative products is to be made more transparent. Some of the most spectacular innovations have not come from him – like the cap on bonuses or the prohibition on selling uncovered sovereign CDS (credit default swaps) – but he has skilfully taken advantage of these demands from Parliament.

Thus does one leave one’s mark on the map. But this success could also be his biggest failure. "This spreadsheet, it’s equivalent to ticking off checkboxes. It has no strategy behind it, and he has been unable to provide a vision in terms of the architecture of financial services", is the judgement of one manager. The main structure Europe is building on the subject, the banking union, was after all launched by Mario Draghi and certain national leaders.

Michel Barnier tenaciously defends his record, which will be his best ally when he tries to climb the last step remaining

Michel Barnier tenaciously defends his record, which will be his best ally when he tries to climb the last step remaining. The former Minister still clings to his European dream: and if he were to take the place of José Manuel Barroso at the head of the Commission? His name does come up regularly, although the pundits consider his chances limited. He still refuses to talk about it, no doubt feeling that he could be a compromise candidate if the European elections lead to a hung Parliament. "I am ready to go where it may be deemed that I will be useful", he contents himself with answering. There will always be time to consider drawing up a new map

Barclays' £322m of hidden fees for Qatar
Barclays paid Qatar £322m in hidden fees to secure the gas-rich Gulf state’s support for its rescue fundraisings at the height of the financial crisis and keep the bank out of UK taxpayers’ hands.

Barclays is the fourth big lender to settle probes by Massachusetts into securitisation practices Photo: Alamy
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By Philip Aldrick
8:19AM BST 17 Sep 2013
31 Comments
Barclays is now facing a £50m regulatory fine for failing to disclose the payments, which it dressed up as fees for “advisory services”. The details emerged in the prospectus for Barclays’ £6bn 1-for-4 rights issue, which was launched yesterday to plug a regulatory capital shortfall.


In the document, Barclays said the Financial Conduct Authority (FCA) believed the fees were designed “not to obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari participation in the capital raisings”. The FCA added that Barclays had “acted recklessly”.

Qatar invested £4.6bn in the bank in two emergency fundraisings at the time of the financial crisis, first in June 2008 and in October later that year. The capital raisings, which came to £11.8bn in total and relied heavily on Middle East money, saved Barclays from part-nationalisation alongside Royal Bank of Scotland and Lloyds Banking Group.

However, the “advisory fees” have threatened to cause another scandal at the bank, following fines over Libor rate-fixing and allegedly manipulating the US energy market. Barclays is fighting the $435m US energy fine, and is contesting the FCA’s “warning notice” - issued on Friday - and accompanying potential £50m fine.

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Britain’s Serious Fraud Office, the US Department of Justice, and the US Securities and Exchange Commission are still investigating claims that Barclays induced Qatar into backing the rescue fundraisings. Barclays had previously revealed that the Financial Services Authority, the precursor to the FCA, was investigating “four current and former senior employees, including [then finance director] Chris Lucas”.

The FCA has threatened to impose the £50m fine for breaching “certain disclosure-related rules”. The “advisory services” agreement with Qatar was disclosed in the June capital raising, but not in the October one. The fees, “which amount to a total of £322m payable over a period of five years” Barclays said, were not mentioned at all.

The disclosed advisory fees were around £100m in the June fundraising and £300m in the October one. The FCA was not commenting on the case beyond Barclays’ disclosures yesterday.

Barclays is disputing the fine on the grounds that the advisory fees did not have to be disclosed under the FCA rulebook. The FCA took issue with the argument on the grounds that they were not advisory fees at all.

Barclays is raising £6bn in a fully underwritten rights issue to comply with the regulator’s new leverage ratio demands. Barclays’ costs are expected to total £132m, including £1.5m for Credit Suisse and £102m for the underwriting syndicate. Barclays Capital, its investment bank, is running the process and will receive a £6m internal payment.

Barclays also disclosed the key legal proceedings it is exposed to, including the US Federal Housing Finance Agency and other residential mortgage backed securities litigation and Libor and other benchmarks civil actions.

The bank also admitted that it had incorrectly charged interest on personal loans in breach of the Consumer Credit Act after making errors in its paperwork.

Barclays said its UK Retail and Business Banking business has "identified certain issues with the information contained in historic statements and arrears notices relating to consumer loan accounts. It is therefore implementing a plan to return interest incorrectly charged to customers."

The errors, which go back up to five years, could affect more than 300,000 people and cost the bank around £100m. Although this could rise as the bank is now reviewing "all its businesses where similar issues could arise, including Barclaycard, Barclays Wealth and Barclays Corporate, to assess any 28 similar or related issues".

Barclays said: "There is currently no certainty as to the outcome of this review. The findings of such review could have an adverse impact on the Group’s operations, financial results and prospects."

Barclays shares, which closed up 3.8 at 305.4p on Monday, slipped 0.8pc as trading opened on Tuesday.

The more you read about just how corrupt the Big Banks are the more customers should demand better interest rates on their deposit account.!!!!

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Five years after the collapse of Lehman Brothers, some say nothing has really changed. Critics argue that the global financial reform effort has been too timid, the industry has become more consolidated, big banks have still not been broken up, the "shadow banking" system has got bigger. There hasn't been the revolution in finance many had wanted.

Much of this criticism seems wide of the mark. In reality, the pace of financial reform has been frenetic.

The Basel bank capital rules have been rewritten and adopted by all the world's major economies. Tough new liquidity rules are being widely implemented even before being formally agreed upon by the Basel Committee. There are new rules to make derivatives safer, curb excessive pay, strengthen accounting standards and improve transparency. Regulatory bodies have been handed powerful new weapons to prick bubbles and wind up failed banks.

Banks are being forced to change. They now operate with more capital relative to their risk-weighted assets and hold far more liquid assets. Balance sheets are being shrunk, old business models are being abandoned.

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Mark Carney, governor of the Bank of England, seen addressing business leaders in Nottingham on Aug. 28, also heads the G-20's Financial Stability Board.
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Providing it is properly monitored, the growth in shadow banking—an unhelpful term since it confuses a wide range of very different activities from money-market funds to direct lending by insurers—should be welcomed since alternative sources of finance are essential to the development of a healthy, more diversified financial system.

Indeed, the more troubling question of the global reform effort is why, given all this progress, the global financial system is still not functioning effectively.

Why are financial institutions continuing to scale back their cross-border exposures, impeding the free flow of capital and liquidity to where it is needed? And what can the Financial Stability Board, set up by the Group of 20 industrial and developing nations to oversee the global financial reform effort and under the leadership of Bank of England Gov. Mark Carney, do to reverse this fragmentation, which is a potential drag on global growth?

Of course, at the heart of this fragmentation lies continued mistrust of the euro-zone financial system, whose oversize banks relative to national income are suspected of hiding large-scale losses. The most telling criticism of the FSB has been its failure to address the sources of this mistrust. There are three areas in which it has fallen short.

First, it has been too slow to address the crisis of confidence in the central feature of the Basel rules—the risk-weighting system used to determine bank capital requirements. Investors and regulators increasingly fear that banks are taking advantage of the freedom under Basel II and III to use their own models to calculate their capital needs to game the system. Studies by the Bank for International Settlements and the European Banking Authority have shown that bank calculations of the capital required for similar portfolios can vary widely.

Bankers say some of this variance reflects legitimate factors such as differences in quality of collateral, risk management and debt collection. But much of the variation, they say, is the fault of national regulators who adopt very different approaches to signing off model assumptions.

Restoring faith in the Basel regime is essential not only to restoring faith in the European banking system but to halting a worrying regulatory drift toward cruder measures of capital strength such as the leverage ratio, which compares equity to total assets.

Taken too far, this approach could encourage banks to dump low-risk assets, reducing liquidity in vital markets and loading balance sheets with riskier assets instead—counterintuitively making the system less stable.

Second, the FSB still has not found a way to resolve the crucial problem of too-big-to-fail banks. This failure is all the more remarkable given the solution has been widely understood for a long time: Credit Suisse argued as far back as 2009 that the answer was to require banks to hold a buffer of debt that can be "bailed-in" during a crisis. This approach was subsequently embraced by the U.K.'s Vickers Commission and the Swiss National Bank. Yet progress toward implementing bail-in regimes has been slow, largely because policy makers feared markets would stop funding banks if they were put on the hook for the cost of failures. Instead, they have wasted time on second-order issues such as ring-fencing various activities—steps that would be unnecessary if bail-in worked effectively.

In fact, regulators need not have worried. Under the pressure of events, bank bondholders have already been forced to take losses in the Netherlands, Spain, the U.K. and Ireland, while in Cyprus, the losses extended to uninsured depositors. The markets didn't blow up.

But the lack of internationally-agreed rules on how bail-in should work in practice—what instruments should be bailed in, where the capital should be held and how bail-in might be used to recapitalize a cross-border bank—means the concept is still clouded by legal uncertainties. Fears that the cost of the failure of a global bank would still be borne by its home country's taxpayers are a powerful factor behind fragmentation.

A third reason why the financial system remains fragmented is that the regulatory response itself has been fragmented. In Europe and the U.S., national policy makers have pursued domestic agendas independently of—and sometimes at odds with—the international reform effort, while refusing to recognize the validity of each other's rules.

Some of this may reflect the understandable desire to ring-fence domestic markets from international contagion. But some of it looks suspiciously like covert protectionism, whether to shield domestic institutions from irksome global rules or to drive down domestic funding costs by making it harder to export capital and liquidity.

Tackling regulatory fragmentation is almost as important as restoring faith in the Basel regime or solving the too- big-to-fail problem. In recent public pronouncements, Mr. Carney has shown himself alive to the dangers, warning of the importance of mutual recognition of equivalent standards and the risks of creating an unequal playing field in which regulators engage in a counterproductive race to the top to prevent risky activities from migrating to their jurisdictions but which results in a further gumming up of cross-border financial flows.

Of course, this is a difficult message for Mr. Carney to deliver, not least because the U.K. regulatory authorities have been a prime contributor to this regulatory fragmentation. It will be interesting to see whether Mr. Carney as head of the BOE will practice what he preaches.

Simon Nixon Report

JP MORGAN HAS EMPLOYED AN EXTRA 30,000 FOR THEIR COMPLIANCE DEPARTMENT.

Home»Finance»Personal Finance»Consumer Tips»Banking'TSB has locked me out for a week'
All 4.5 million customers transferred from Lloyds to TSB were promised a "seamless transition". Our readers tell a different story.

A customer, left, passes their savings book to an employee inside a newly rebranded branch of TSB Photo: MATTHEW LLOYD/BLOOMBERG
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By Dan Hyde, and Sophie Christie
7:15PM BST 20 Sep 2013
15 Comments
Two weeks ago, TSB became Britain's eighth-largest bank overnight. The bank, which was created out of 631 Lloyds branches, is now hard to miss, with prominent advertising plastered across billboards and television screens around the country.

Just before the transfer, the chief executive of Lloyds Banking Group promised that every one of its 4.5 million customers due to be transferred to the new bank would enjoy a "seamless transition".

Their accounts were to be hived off to comply with EU competition laws – it was unavoidable – and Antonio Horta-Osorio pledged all customers would notice was a change in the name on branches and their statements.

But The Daily Telegraph has learnt that the process has proved a nightmare for pockets of customers. Not only did the new TSB website crash during its first morning, but this newspaper has heard from one reader who has been locked out of her current accounts for a week and a half following the transfer on September 9.

Others have found that accounts opened in different Lloyds branches – for example, due to moving home – are now split between TSB and their old bank.

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The transfer problems are believed to stem from a mix-up with account names and passwords. It has given staff difficulty in locating customers in TSB computer systems.

One of those inconvenienced was Jayne Hill, from Cockermouth in the Lake District, who has been unable to access her online banking since the launch. Mrs Hill, 53, called TSB every day for a week, speaking with customer service staff for an hour each time, before the bank admitted her internet banking details had been lost in the transfer.

When the former sales manager asked for details of the balance on an associated account, she discovered another problem: Lloyds no longer linked her joint current account, held with her husband, with her own current and savings accounts.

The call was transferred to Lloyds to see if the accounts had been left at the parent bank, rather than transferred as part of the move. But Lloyds denied this was the case and passed the call straight back to TSB, where staff finally admitted to a system error.

Mrs Hill said the ordeal has only served to exacerbate the annoyance at being dumped into a new bank without permission. "As a Lloyds customer of 15 years, I was not happy in the slightest to be switched to TSB," she said. "I have now been severely inconvenienced and stressed by the problems since the transfer a week or so ago – and especially annoyed that it has taken such a long time to resolve. I will be closing all my accounts with Lloyds and TSB and switching to another bank."

Mrs Hill has been offered compensation of £50. A spokesman for TSB confirmed an administration mix-up had occurred, but insisted it was an "isolated incident". "We are not receiving any similar complaints from other customers at the moment," the spokesman added.

Ironically, the transfer problems at TSB coincide with new rules designed to make switching current accounts "hassle-free".

This switching guarantee could at least offer unhappy TSB customers a way out.

The Daily Telegraph has received a stream of letters from customers unhappy about being moved from Lloyds to TSB. Ann Chapple, from Tadworth in Surrey, wrote to the chairman of Lloyds Banking Group to complain that the bank made it almost impossible to avoid the switch.


Anne Chapple found Lloyds's wish to switch her accounts to TSB "baffling"

The 73 year-old said: "As someone who has had my bank account with Lloyds for the past 55 years, I found the obvious lack of desire to keep my account somewhat baffling. After all these years I would have preferred to stay with Lloyds but in the circumstances I feel I will have to consider moving to another bank."

TSB has been formed out of 631 branches, which account for 4.5 million personal and business customers. This total includes 185 Lloyds TSB Scotland branches, 164 Cheltenham & Gloucester branches and a further 282 Lloyds TSB branches across England and Wales.

The new bank will be floated on the stock exchange next year. The sale was a condition, imposed by the EU, of the bail-out of Halifax Bank of Scotland in 2008.

Currently, customers are still able to use both Lloyds Bank and the new TSB-branded branches. As yet there have been no changes made to the terms and conditions as products and services have become TSB-branded.