Financial

Hard-hit online lender CAN Capital makes executive changes

The biggest online lender to small businesses in the US has pulled down the shutters and put its top managers on a leave of absence, in the latest blow to an industry grappling with mounting fears over credit quality. Atlanta-based CAN Capital said on Tuesday that it had replaced a trio of senior executives, after […]

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Banks

BoE stress tests: all you need to know

The Bank of England has released the results of its latest round of its annual banking stress tests and its semi-annual financial stability report this morning. Used to measure the resilience of a bank’s balance sheet in adverse scenarios, the stress tests measured the impact of a severe slowdown in Chinese growth, a global recession […]

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Property

Zoopla wins back customers from online property rival

Zoopla chief executive Alex Chesterman has branded rival OnTheMarket “a failed experiment”, and said that his property site was winning back customers at a record rate. OnTheMarket was set up last year, aiming to compete with Zoopla and Rightmove, the UK’s two biggest property portals. It allowed estate agents to list their properties more cheaply […]

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Currencies

Asia markets tentative ahead of Opec meeting

Wednesday 2.30am GMT Overview Markets across Asia were treading cautiously on Wednesday, following mild overnight gains for Wall Street, a weakening of the US dollar and as investors turned their attention to a meeting between Opec members later today. What to watch Oil prices are in focus ahead of Wednesday’s Opec meeting in Vienna. The […]

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Banks, Financial

RBS emerges as biggest failure in tough UK bank stress tests

Royal Bank of Scotland has emerged as the biggest failure in the UK’s annual stress tests, forcing the state-controlled lender to present regulators with a new plan to bolster its capital position by at least £2bn. Barclays and Standard Chartered also failed to meet some of their minimum hurdles in the toughest stress scenario ever […]

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Archive | November, 2016

Property websites see rise in searches

Posted on 30 September 2013 by

The government’s decision to bring forward phase two of its Help to Buy mortgage guarantee scheme sparked an immediate rush of interest from homebuyers.

The UK’s two biggest online property portals saw a sharp uplift in the number of people browsing properties for sale on their websites on Sunday, the day David Cameron revealed he would accelerate the introduction of the £130bn scheme by three months.

    Zoopla, the property website, said online traffic jumped 17 per cent compared to a week earlier, and Rightmove, the UK’s largest property portal, reported a 10 per cent increase.

    Estate agents expect interest to grow further in the coming weeks as more details of the scheme are announced and lenders begin to advertise their 95 per cent government-backed mortgage products.

    David Yuill, senior negotiator at the Peckham branch of estate agency chain Kinleigh Folkard and Hayward, said he had been deluged with phone calls and emails from prospective buyers on Monday asking how the scheme could help them.

    “Some have decided they will use the scheme to buy a more expensive property than their deposit previously allowed,” he said.

    Experts have questioned whether banks and building societies will be able to cope with demand. Only two lenders – Lloyds and Royal Bank of Scotland/ NatWest – have so far agreed to take part. RBS/NatWest said it would extend opening hours of its branches at peak times, and aims to help 25,500 borrowers through the scheme.

    Albemarle & Bond looks to investors

    Posted on 30 September 2013 by

    Two years after announcing the “the age of the pawnbroker”, Albemarle & Bond has been forced to ask investors for a £35m emergency cash injection as the falling price of gold hurts the UK’s second-largest pawnbroker.

    Albemarle & Bond said that the drop in the gold price – which has fallen from almost $1,800 per ounce in late 2012 to about $1,300 today – creates “significant uncertainty” for the group’s profitability.

      The announcement sent shares in the group plunging, wiping away as much as half of its market capitalisation.

      The age of the pawnbroker, heralded by a stagnant jobs market coupled with rocketing gold prices and a glut of empty shops on the high street, has been cut short by the fall in the price of gold, which has triggered a sector-wide malaise.

      First-half profits at H&T, Albemarle & Bond’s rival and the largest pawnbroker in the UK, fell nearly 40 per cent year-on-year to £4.6m for the six months to June 30.

      Albemarle & Bond’s rapid expansion into the UK’s otherwise struggling high streets became a burden, heaping pressure on the group’s debt covenants. In response, the company has closed 33 of its “pop-up gold buying stores”, which were no longer profitable with a lower gold price.

      While the company’s net debt of about £51m is within its current debt facilities, the group said that it was “at high risk” of breaching earning covenants after profits failed to pick up from their slump earlier this year. Pre-tax profits fell by a third to £8.1m in its interim results in February.

      The pawnbroker’s lenders have agreed to delay its covenant test from September 30 to October 30.

      The company said that plans for the rights issue were in their “final stages”. The £35m cash injection may be underwritten by EZCORP, the US pawnbroker, which is also Albemarle & Bond’s largest shareholder.

      At 50p per share, the rights issue will be at a hefty discount to the 125p that the shares traded at on Friday. The company declined to comment beyond its statement.

      The rights issue comes as the pawnbroker appointed Chris Gillespie, a former director of subprime lending group Provident Financial, as chief executive, after a five-month hunt for a new head.

      Analysts at Shore Capital wrote: “We wish Mr Gillespie well in his new role, though we cannot profess to a feeling of envy given the scope of the challenges that will present to him.”

      Shares in the group closed 40.4 per cent down at 74.5p.

      Shadow insurer schemes soar to $360bn

      Posted on 30 September 2013 by

      US insurers have offloaded more than $360bn worth of liabilities to subsidiaries in jurisdictions with weaker reserve rules underlining how insurers have shifted a swathe of their holdings into the shadows.

      Critics warn that the strategy allows US life insurers to set aside less money as reserves to pay future claims than they would otherwise be required to, leaving insurers and their customers vulnerable in the event of a sudden spike.

        Data seen by the Financial Times show a 33-fold rise in the use of such schemes between 2002 and 2012.

        Liabilities held by subsidiaries in light regulation jurisdictions such as South Carolina and Bermuda amounted to 43 per cent of those left on the books of US life insurers last year. That is still down from a peak of 50 per cent in 2009, but up from 3 per cent in 2002, according to new research, underlining the scale of the recent shift.

        Ben Lawsky, New York state’s Superintendent of Financial Services, has already described such schemes as “financial alchemy”.

        His office has drawn parallels with some practices banks employed before the financial crisis, such as issuing securities backed by subprime mortgages through structured investment vehicles, which had lighter capital requirements. When markets froze, a number of big banks were hit with unexpected losses from SIVs and some needed taxpayer help because they did not have enough capital to cover them.

        The shadow insurance arrangements expose policyholders to greater risks equivalent to three notches of an aggregate credit rating across the industry, the researchers estimated.

        The figures are disclosed as the National Association of Insurance Commissioners reviews the use of “captives” and special purpose vehicles by US insurance companies to establish whether the rules governing them should be tightened.

        Mr Lawsky welcomed the analysis by London Business School as providing a “first real, deep look” across the US of such arrangements in the insurance sector.

        But the industry has described many of Mr Lawsky’s allegations as “flat out wrong”. “US life insurers using captives hold 100 per cent of reserves as required by law,” said the American Council of Life Insurers.

        “The rationale [for such arrangements], quite simply, is that companies can finance a portion of their statutory reserves on a cost-effective basis with, of course, full review and approval by their regulator.”

        The researchers found the companies set up “captive” reinsurers to transfer risks to entities that do not have credit ratings based in other states such as South Carolina and Vermont, or offshore, to territories such as Bermuda and Barbados.

        Ralph Koijen, Professor of Finance at London Business School, said he could see no obvious rationale for such arrangements other than to circumvent regulatory requirements.

        “The only [other rationale] that may apply is that there are tax advantages across different states,” he said.

        “We’re not saying they’re doing something illegal,” he added. “It’s really that there’s this loophole they can take advantage of.”

        Without shadow insurance, the researchers estimated the size of the insurance market would shrink by about a fifth – although these findings were based on modelling and should be interpreted with caution, the researchers said.

        Prof Koijen added: “If you shut down the shadow insurance system, you make the system as a whole safer – but at the same time you’re going to increase prices of insurance policies and decrease the amount of insurance sold.”

        Prof Koijen conducted the research along with Motohiro Yogo of the Federal Reserve Bank of Minneapolis.

        The use of such schemes had risen dramatically since regulatory changes at the start of the last decade increased reserve requirements, the researchers found.

        Merkel may bend on minimum wage

        Posted on 30 September 2013 by

        ©Reuters

        One German oddity may be about to disappear as Angela Merkel tries to form a governing coalition: a decades old aversion to the minimum wage.

        Unlike most of its peers, Germany does not have a minimum pay level laid down in law. The explanation lies partly in its totalitarian past – the Nazis banned trade unions, set wage floors and eventually controlled all pay movements, leading to a postwar consensus that pay should be agreed solely between employers and unions without state interference.

          Yet the fraught process of coalition-building for Ms Merkel’s Christian Democratic Union means this could be one policy on which the chancellor will have to give way, with both of her possible coalition partners, the Social Democratic party and Greens, having campaigned vigorously for a national €8.50 an hour minimum.

          Such a step has been strongly resisted by the Bundesbank, market economists and conservatives, with opponents fearing Germany could wipe out the hard-won labour force competitiveness that has driven the export-led success of Europe’s largest economy over the past decade.

          Adopting a minimum pay level would also “hinder the employment chances of the poorly qualified and long-term unemployed and make it harder for those without specific skills to enter the job market”, Jens Weidmann, president of the Bundesbank, said in a speech last week.

          Many of Germany’s competitors seem to disagree. Of the other 27 EU countries, 21 have statutory minimum wages and the rest have collectively agreed levels that cover more of the workforce than those in Germany. Among the 34 rich countries in the OECD, 25, including the US, have minimum wages.

          While the collective bargaining agreements in Germany for established forms of labour served it well for many years, the proportion of the workforce covered by such deals has eroded. New forms of low-pay work, introduced in the so-called Harz reforms a decade ago, migrant workers and Germany’s slow shift towards a bigger service sector have all chipped away at that coverage.

          Meanwhile the low pay sector, defined as those receiving two-thirds of median wages, has grown from about 15 per cent of the workforce in the 1990s to more than 22 per cent now, slightly higher than the UK and well in excess of the 6 per cent in both France and Belgium, according to Eurostat data.

          Some 32 per cent of the workforce is not covered by collective bargaining. Although this includes many people who are already paid more than any minimum wage, the low pay sector dominates.

          “It is definitely the case that the higher an employee’s income, the more likely they are to be part of a collective wage agreement,” said Thorsten Schulten, a wage expert at the Hans Böckler Foundation, a research institute linked to the German Confederation of Trade Unions.

          It is largely service sector jobs – from hairdressers to warehouse workers for internet shopping companies – that pay as little as the market will bear in a country that is attracting workers from Europe’s crisis-hit south and which has near record low unemployment.

          A study released last week by DIW, the German institute for economic research, said an €8.50 an hour minimum wage would immediately benefit 17 per cent of the workforce, with disproportionately more of the benefit felt in the lower-paid east.

          However, DIW advised against that level on the grounds it could harm small enterprises, instead suggesting €7 and a strategy of “watch and wait”.

          Yet €8.50 would not represent a radical step, compared with Germany’s peers. Mark Keese, head of the Paris-based OECD’s employment division, said it would “roughly put Germany somewhere towards the lower to middle end of OECD countries relative to average wages”. He calculates a wage at that level would represent about 44 to 48 per cent of Germany’s median wages.

          A carefully chosen minimum wage is unlikely to lead to job cuts, and this was borne out by the UK’s experience in 1999, according to the OECD.

          “There are caveats,” Mr Keese said. “The reason you might not have had a big impact on employment in the UK is that they also introduced a sub-minimum for younger workers, aged 18 to 21 years old.” Without such a measure, there was a risk of adverse employment effects.

          Ms Merkel’s preferred alternative to the national minimum wage is an extension of existing arrangements – a series of wage agreements agreed by sector and place between employee representatives and employers. But this would not cover jobs where employees have no unions or other representation.

          In order to seal a coalition agreement with another party, Ms Merkel is almost certain to have to offer them at least one tangible policy victory that they can show to their own ranks, making a minimum wage a likely candidate.

          The changing nature of the German labour market and the international comparison indicates there could also be more fundamental reasons to do so.

          Torsten Müller, a senior researcher on collective bargaining at the European Trade Union Institute, said: “With the increase of the low pay sector in Germany, we’ve reached the point where a statutory minimum wage is necessary.”

          Stop aiding banks to buy government debt

          Posted on 30 September 2013 by

          ©Bloomberg

          It appears to be another case of the “principle of unripe time” – the notion coined by the late English classicist F.M. Cornford “that people should not do at the present moment what they think right at the moment, because the moment at which they think it right has not yet arrived”.

          The financial and sovereign debt crisis have underpinned the importance of breaking the disastrous sovereign-banking nexus – in which shaky bank balance sheets degrade the solvency of their sovereigns, and vice versa. A European banking union is an important step towards escaping this deadly embrace. To this end, and to complement the banking union, a reassessment of the regulatory treatment of sovereign exposures of financial institutions is crucial.

            The current and incoming regulatory framework implies preferential treatment of sovereign exposures in various forms. While bank exposures to a single counterparty are limited, in principle, to a quarter of their eligible capital, exposures to sovereigns are exempted from that large exposures regime. Sovereign exposures are also privileged by low or zero capital requirements.

            Preferential regulatory treatment makes it highly attractive for financial institutions to invest in government bonds – and those of their home countries in particular. During the crisis, this has become more attractive still. The share of euro-area sovereign bonds in total bank assets in the eurozone increased over the past five years by one-third – from 4 per cent to 5.3. And in most countries the home bias, which decreased over the first decade of monetary union, increased again during the crisis.

            Average figures mask important differences from bank to bank and country to country. Recent studies, including one by the Bundesbank, find that larger banks, less capitalised banks and banks that are dependent on wholesale funding invest more in sovereign bonds than others. Hence, the more vulnerable banks are, the more they expose themselves to sovereign debt.

            Weak banks invest in high-yield sovereign bonds and refinance at currently low interest rates. Such “carry trades” sustain the low profitability of those banks and postpone necessary adjustments of their business model.

            The reasons for the increased exposures of banks to their domestic sovereigns may vary: the search for yield, moral suasion, the endeavour to stabilise their own respective sovereigns or simply strategic considerations. In an economy in which the sovereign defaults, banks are likely to default, too. Thus, the domestic banks have an incentive to invest in sovereign’s bonds and earn the yield mark-up if things go well. What happens in the event of a joint sovereign-bank default is not relevant for them. This undermines market discipline for governments and reduces their incentive to carry out necessary structural reforms. On the other hand, banks, which can obtain unlimited cash against sovereign collateral from the central bank, are protected from discipline from investors who provide funding.

            Large sovereign bond exposures might also harm the real economy. Rises in sovereign risk are transmitted into reduced bank lending. Banks that were highly exposed to strained European sovereign debt have reduced their lending to the private sector.

            Thus, the current regulatory treatment is incompatible with the principle of individual responsibility; the market interest rate no longer reflects the riskiness of the investment. I am aware that banks as well as governments are afraid of rising funding costs as a result of ending the regulatory privileges afforded to sovereigns. The argument goes, moreover, that such a regulatory move risks considerable market turmoil. I do not think that this argument should keep us from doing the right thing.

            No market participant would judge a French bond to be as risky as a Greek one: the riskiness of each is reflected in their prices. Investors believe that sovereigns differ in terms of riskiness. So no one should be surprised when the regulatory treatment accommodates this fact.

            If additional capital requirements for European banks were imposed to cover sovereign exposures, the extra capital would be almost negligible on aggregate – albeit with substantial differences between banks. Other measures, such as the inclusion of sovereigns in the large exposures regime might lead to more substantial repercussions, but these would be manageable if introduced over a transition period – which undoubtedly has to be granted.

            When it comes to funding costs for governments, a healthier banking system with better diversification would pose less of a burden on states. The contingent liabilities of the government would shrink which – all other things being equal – would reduce the risk of investing in sovereigns and, eventually lower the sovereign bond yields.

            The current regulation’s assumption that government bonds are risk-free has been dismissed by recent experience. The time is ripe to address the regulatory treatment of sovereign exposures. Without it, I see no reliable way of breaking the sovereign-banking nexus.

            The writer is president of the Deutsche Bundesbank

            Help to Buy scheme: Q & A

            Posted on 30 September 2013 by

            Residential houses line streets in the Brixton district of London, UK©Bloomberg

            From next Monday, borrowers will find it easier to buy a home with just a 5 per cent deposit after the government launches the second part of its Help to Buy scheme.

            David Cameron, UK prime minister, announced at the weekend that he was bringing forward the launch of its government-backed mortgage scheme from January 2014 to next week, because it was “not right” that young people and families had to rely on rich parents to get their foot on the housing ladder.

              The £12bn scheme, which will underwrite about £130bn of mortgages over the next three years, has sparked concerns that it will help stoke another house price boom.

              FT Money takes a look at the key questions about the second – and more controversial – part of the Help to Buy scheme.

              ——————————————-

              What is Help to Buy?

              Help to Buy consists of two main policies designed to help borrowers with deposits of just 5 per cent get on to the property ladder. The first part of the scheme was launched in April and offers loans of up to 20 per cent to all homebuyers purchasing a new-build property up to the value of £600,000.

              The loan will be interest-free for the first five years, after which buyers must pay an annual fee of 1.75 per cent of the loan, rising annually by retail price inflation plus 1 per cent. Borrowers can repay the loan at any time.

              Editorial Comment

              A British bubble

              The second part of the scheme – the mortgage guarantee – will allow buyers of properties valued at less than £600,000 to borrow with a deposit of just 5 per cent of the property’s price.

              Unlike the equity loan scheme, the mortgage guarantee will apply to all property purchases, not just new-build homes. The government will guarantee up to 15 per cent of the home loan as an insurance policy for the banks.

              ——————————————-

              Who can apply?

              The mortgage guarantee scheme is available to all borrowers – not just first-time buyers – purchasing a property up to the value of £600,000.

              Buy-to-let landlords, people looking to buy a second home, or foreign buyers with no credit history in the UK will not be able to get a loan.

              The scheme is also open to so-called mortgage prisoners – borrowers who cannot move home or remortgage because of a lack of equity.

              ——————————————-

              Will it be easy to get a mortgage through the scheme?

              Not necessarily. The mortgage guarantee scheme has been designed to boost the number of high loan-to-value mortgages on offer, but the government has stressed that only borrowers that meet lenders’ strict income tests will be able to get a mortgage through the scheme.

              You take a nurse married to a teacher. They’re both earning £25,000 – that’s pretty close to average full-time earnings. If they want to buy a £200,000 house, they’re going to have to find a £40,000 deposit. Now, they can’t do that, unless they’ve got rich parents. That’s not right

              – David Cameron

              For example, borrowers won’t be able to access guaranteed mortgages if their credit history fails to meet the city regulator’s “impaired credit” standards, including having a county court judgment over £500 in the past three years.

              Interest-only mortgages or self-certified mortgages will not be offered through the scheme.

              ————————————————-

              How do I access the mortgage guarantee scheme?

              Only two lenders – Lloyds Banking Group and Royal Bank of Scotland – have confirmed they are taking part in the scheme from the outset.

              Lloyds will offer the mortgages through its Halifax brand and via its telephone, branch and broker network. Both RBS and its sister brand NatWest will offer the loans through its branches and by telephone.

              More lenders are expected to take part in the coming months. However, the scheme is voluntary, so it is up to each provider whether they want to take part. Lenders will have to pay the government a fee to be given the guarantee and they will have to take a 5 per cent share of any net losses. As a result, many banks will need to decide whether it is feasible commercially.

              ——————————————-

              What rates are on offer?

              Lenders have not yet revealed what mortgage rates they will be charging, but details are expected next week.

              ——————————————-

              I’ve found it hard to remortgage, can I access the scheme?

              The details of the scheme say that it can be used by borrowers simply looking to remortgage to a better deal, rather than only when people move home.

              However, there will be certain rules to ensure that lenders cannot just use the scheme to restructure the riskiest parts of their existing loan books. For this reason, borrowers that want to access the scheme would have to remortgage with a different lender.

              ——————————————-

              What are the risks of the scheme?

              Critics of the scheme say it will inflate house prices even more, making houses ever more unaffordable for future generations. Experts also point to the fact that the scheme fails to deal with the real problem: a lack of housebuilding.

              ——————————————-

              How long will the scheme last?

              The mortgage guarantee scheme will be in place for three years. However, last week George Osborne, chancellor of the exchequer, said the Bank of England will be given powers to place an emergency brake on the scheme should signs of a bubble emerge. The BoE will be able to recommend that Mr Osborne lowers the £600,000 cap on properties eligible under the scheme to reduce its availability to would-be homeowners wishing to enter London’s booming property market.

              Palamon curtails fundraising ambitions

              Posted on 30 September 2013 by

              Palamon Capital, a London-based private equity group that invests in medium-sized European companies, has scaled back its fundraising ambitions by more than two-thirds after investors proved reluctant to make a long-term bet on the region’s growth.

              The buyout fund manager secured €210m of commitments for a new fund, compared with €670m in 2006. In an unusual set-up, the pledges will be invested over the shorter period of two years, compared with a typical five to six years. The group is charging lower management fees than it does usually.

                “We didn’t want to change our strategy – pan-European investments in growing companies – but that’s a difficult sale in this market,” co-founder Louis Elson, a former executive at Warburg Pincus, told the Financial Times.

                “Most of the money comes from the US and in the period we were out fundraising, there was a belief that the eurozone may even break up. A pan-European offer was less attractive than country-focused funds. Besides, growth and Europe were seen as a contradiction in terms.”

                Palamon, which owns pre-university education provider Cambridge Education, started seeking money in late 2011. After more than a year of struggling, it revised its offering. It has now received backing from investors including fund-of-funds manager Adams Street, AlpInvest and Honeywell’s corporate pension plan.

                The buyout group, whose 2006 fund has generated 2.6 times its initial cost so far, believes it can maintain a rate of investment of about €100m a year and seek additional money in two years. It declined to say whether the smaller size of the fund would affect staffing levels.

                Espirito Santo bolsters corporate broking

                Posted on 30 September 2013 by

                Espirito Santo has hired 11 people to its corporate broking team, just a few months after losing staff to fellow broker Liberum Capital.

                The investment bank, whose clients include fashion retailer Ted Baker and Sports Direct, said the hires were part of an effort to streamline its European equities franchise by focusing on five “super sectors”.

                  Luis Luna Vaz, chief executive of the UK division of Espirito Santo, said concentrating the bank’s London equity business around telecoms, financials, industrials, support services and retail would help align the division with the bank’s global operations.

                  Mr Luna Vaz acknowledged that the jobs market in London’s stock broking sector was “very liquid” after losing staff this summer – including Peter Tracey, who was the bank’s joint head of corporate broking in the UK.

                  One senior City broker said there was “slightly more” movement in equity research staff among companies in recent months, which was partly spurred by wages being squeezed and people moving to a broker that offered them better pay.

                  “You should not underestimate the pressure that has been put on compensation in the last few years. It is brutal,” he said.

                  Small and mid-cap brokers’ margins have been hit by fewer corporate transactions to advise on, and lower income from trading commissions in the past few years.

                  This has driven consolidation in the sector, which has included Canadian bank Canaccord’s acquisition of Collins Stewart Hawkpoint, Investec’s £200m purchase of Evolution Group, and Cantor Fitzgerald’s purchase of Seymour Pierce from administrators earlier this year.

                  However, many brokers have indicated they are more optimistic about the second half of this year because of a pick-up in fee-spinning initial public offerings and mergers and acquisitions.

                  Sam Smith, chief executive of small-cap broker FinnCap, said: “The good [brokers] will continue to hire strong teams. But everybody is always looking for quality people, and quality people become more and more in demand.”

                  Espirito Santo said Nick Wilson – who was previously at Credit Suisse – is among the new hires and will become head of industrials at the bank. Robert Grindle has been appointed head of telecommunications and Rickin Thakrar has become head of food retail.

                  Richard Crawley became sole head of corporate broking after Mr Tracey’s departure.

                  Mortgage approvals hit five-year high

                  Posted on 30 September 2013 by

                  Mortgage approvals in the UK last month soared to their highest level since the collapse of Lehman Brothers, according to Bank of England figures published on Monday.

                  The BoE said lenders approved 62,226 mortgages in August, up from 60,914 in July and the highest since February 2008. The amount of remortgages approved also rose to 36,225 – its highest level since February 2011. Though both figures are high by recent standards, approvals remain well below the levels seen at the peak of the housing boom.

                    In August, mortgage borrowers owed a total of £1.27tn on their homes – a figure virtually unchanged from July.

                    The data come amid concern government policies to spur mortgage lending risk stoking another property bubble.

                    It emerged last week that George Osborne, chancellor of the exchequer, is to give the BoE powers to place an emergency brake on his Help to Buy scheme, unveiled in March, should signs of a bubble emerge. The BoE will be able to recommend that Mr Osborne lower the £600,000 cap on properties eligible under the scheme to reduce its availability to would-be homeowners wishing to enter London’s booming property market.

                    David Cameron, prime minister, said on Sunday that he would expedite the second phase of the scheme, which allows buyers of properties valued at £600,000 or less to borrow with a deposit of 5 per cent of the property price with the support of a government loan.

                    The BoE’s release on lending conditions showed that the amount borrowed by households increased by £1.6bn to £1.43tn. The amount of loans to businesses fell £3.8bn to £454.5bn.

                    Banks plan client data outsourcing deal

                    Posted on 30 September 2013 by

                    Four of the world’s largest investment banks are planning to outsource a collection of vital client data to a centralised library in an effort to combat rising compliance costs.

                    JPMorgan, Barclays, Goldman Sachs and Credit Suisse have all signed a memorandum of understanding to build a platform to be run by the Depository Trust and Clearing Corporation, the US post-trade services group.

                      The service will seek to provide client reference data for banks, broker-dealers, asset managers and hedge funds for a range of data such as legal entity identifiers, standing settlement instructions, regulatory compliance data as well as tax and client background checks.

                      The announcement underscores how slashing costs and improving compliance amid a string of new rules has risen close to the top of investment banks’ concerns. There has been a flurry of talks this year between data management and technology groups including Markit, the Depository Trust and Clearing Corporation, Broadridge Financial Solutions and Swift aimed at reducing costs by pooling resources via a third party.

                      Worries about rising compliance costs were a key theme of the recent Sibos financial services conference in Dubai, with attendees concerned about the increased cost of compliance but to little competitive advantage.

                      Multiple fines in recent years covering customer checks, anti-money laundering and tax evasion have forced banks to acknowledge what has been an open secret in the industry for years.

                      “Our ultimate aim is to support the industry’s call for a comprehensive, centralised platform to effectively manage virtually all client reference data,” said Michael Bodson, chief executive of DTCC.