News and Views

£2.9bn Irish cash call
Ireland’s economic problems have prompted Bank of Ireland to announce a €3.4bn (£2.9bn) rights issue and private placing. It is hoped the cash call will enable Ireland’s biggest lender to meet its capital needs and aid its recovery from the financial crisis.

Bank of Ireland, which also runs the credit card and banking products of the UK Post Office, says it will launch a €1.89bn rights issue and a €1.54bn private placing to institutional investors and the state. It admits that conditions in its core Irish and UK markets “remain challenging”.

‘Bad bosses’ could wreck recovery
The economic recovery could be jeopardised by managers of financial services firms, claims a new report. The Chartered Management Institute (CMI) says that nearly 50% of the workforce in the sector believes the dominant management style in their business is negative.

Just 5% of the 5,000 respondents to the CMI survey think that senior staff in their organisation are innovative while only 8% feel empowered by their superiors.

CMI chief executive Ruth Spellman comments: “Negativity breeds negativity and, if we’re serious about pushing the UK towards economic recovery, we need more businesses that are innovative, accessible and empowering.”

The CMI has launched an online application to help managers consider their strengths, weaknesses and how staff may see them at www.comparethemanager.com

It’s “great fun with a serious message,” says Spellman. “We cannot allow sub-standard management to continue to damage UK plc.”

Barclays: An escape from low interest...
A Barclays Capital joint venture will help retail investors escape low UK interest rates. Solid Solutions Associates (SSA), a consultancy that manages retail share offerings, will advise and assist the bank’s investment arm on aspects of any retail tranche on equity Initial Public Offerings (IPOs) listed in London and other markets.

With interest rates on cash deposits remaining close to zero, Barclays believes that alternative investment products, including IPOs, are likely to be popular. For its part, SSA claims it offers the logistical in-house expertise that allows UK investment banks to easily manage retail tranches of large IPOs.

… And goodbye to the credit crunch
Meanwhile, Barclays’ finance director expects no more losses from toxic assets at the bank – calling an end to the credit crisis after nearly three years.

Chris Lucas says write-downs are likely to be “zero” next quarter, having been reduced to £141m in the first quarter compared to £2.6bn during the same period last year.

FSA won’t name guilty banks
Five unnamed UK banks are under fire from the Financial Services Authority for “unacceptable standards of complaints handling”.

Among other practices, the regulator finds evidence that incentives were offered to staff to avoid paying compensation even when the bank was at fault. In some cases, customers were repeatedly asked to reiterate their complaints in the hope that the process would wear them down and they would cease their action.

Senior Management is accused of being “uninterested” in customer complaints and two of the banks in question face possible fines.
While the FSA won’t identity those under scrutiny, HSBC has already declared it is not one of the guilty parties and it is believed that Santander is also not involved.

Meanwhile, the London branch of Commerzbank has also fallen foul of the regulator with a £595,000 fine for failing to provide accurate transaction reports.

Alexander Justham, FSA director of markets, says: “Commerzbank’s reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse.”

New IFA-only Bank mooted
A new bank will target cash deposits from the Independent Financial Adviser community. Former chief executive of IG Index, Nat Le Roux, is thought to be lined up to chair the unnamed institution.

A group, led by Adam Habib, the former head of structured retail products at Lehman Brothers and current chief executive of Jubilee Financial Products, is reportedly close to securing a license for the bank. But one source doubts their ability to raise the £50m they still need saying the “rush to launch banks has passed”.

In February, former Panmure Gordon analyst Sandy Chen ditched plans to raise £200m to launch Albion Bank, after failing to secure investor backing. The bank has since said it plans to secure alternative funding away from public markets.

Lloyds ‘explores broker deal’
Lloyds Banking Group is said to be eyeing further expansion into investment banking. A number of stockbroking firms are reported to have held talks with the group about establishing a joint venture.

Industry sources claim the bank has had ‘positive discussions’ with Numis Securities, Execution Noble and Evolution. Such a move would allow Lloyds to profit from equity market fundraisings by its corporate clients.

The bank has already recruited a handful of executives from rival brokers and has been building a presence in equity capital markets for months. Some broker firms were unhappy with what they saw as uncompetitive behaviour by a state-owned company. So Lloyds has apparently opted instead to explore the possibility of establishing a joint venture with a stockbroker.

Leading institutions such as JP Morgan and HSBC earned hundreds of millions of pounds in fees last year by underwriting share issues for British companies, many of which were Lloyds clients.

UK’s first MSc in Islamic finance
The UK’s first postgraduate qualification in Islamic accounting and finance is being launched by Dundee University. Its MSc course, which opens in September, aims to address the skills shortfall brought about by the rapid global expansion of interest in Islamic banking in recent years.

Omar Shaikh of the Islamic Finance Council (IFC) welcomes the launch as a “wonderful opportunity” to help realise “the ambition to make Scotland and the UK a global gateway for Islamic finance.” The new programme will be led by Dr Rania Kamla who has considerable experience and research in the area.

Spanish mortgage armada
One in five new mortgages offered to UK borrowers in the first quarter of 2010 came from Spanish bank Santander. New figures released by the bank also reveal that British lending now accounts for around one-third of its total outstanding loans.

At the end of March, Santander’s total UK mortgage lending was £162bn, up 5% on this time last year. The bank recently rebranded its Abbey, Alliance & Leicester and Bradford & Bingley branches under its parent banner. However, some ratings agencies are concerned about the bank’s outlook due to the economic situation in Spain.

Fraud "adapts and expands"
The UK’s Fraud Prevention Service (CIFAS) has revealed a sharp rise in identity fraud. Instances rose 20% over the first quarter of this year compared to 12 months ago. CIFAS says that “changes in the types of fraudulent activity witnessed in the past two years demonstrate that fraud does not disappear – it simply adapts.”

More online investors
More savers are relying on the internet for financial advice. Fidelity International says around 15% of British investors base their investment decisions solely on the websites of financial product providers and that number is likely to grow.

Ethical supermarket
A new website offers a one-stop shop for ethical options in current accounts, credit cards, savings, ISAs, mortgages and pension funds. With more people incorporating ethical and green behaviour into their daily lives, yourethicalmoney.org aims to point the conscientious consumer in the right direction.

FSA imposes lifetime bans on ex-RBS Director
Former Chairman of Global Markets and Chief Executive Officer of Corporate Markets at The Royal Bank of Scotland Group, Johnny Cameron, has been banned from holding a senior role in the City again following an investigation by the Financial Services Authority (FSA).

Mr Cameron has agreed to the FSA decision following an investigation into systems and controls in the banks’ global markets division. He will not face a fine as a result of his settlement, but will not be allowed to hold another top job in the City or full-time role in the UK financial services industry.

The FSA, however, did not find Mr Cameron guilty of any regulatory breaches and he has not made any admissions of guilt.

Major summit examines ethical business ideals
A business summit in Switzerland has been examining the impact of ethics on business practices. The 3-5 June event, described as an ethical Davos and organised by The Zermatt Summit Foundation, saw business innovators, CEOs and senior policy makers discuss a new ethical mandate.

Speakers included microfinance leader Mohammed Yunus; Colin Melvin, CEO of Hermes Equity Ownership Services, one of the world’s largest and most influential institutional investors; and renowned economists Nouriel Rubini and Hernando de Soto. The summit aims to publish a series of practical recommendations for business, political and civic leaders.

Chartered Banker’s top values
The Chartered Banker qualification is most highly prized by bank employees for widening their understanding of banking, according to the latest research by the Institute.

In the online survey*, respondents were asked to grade, on a rising 1-5 scale, the value that they personally attributed to defined attributes associated with being a Chartered Banker.

The percentage of those choosing the two highest (4&5) grades are:
1. Widens my understanding of banking 61.8%
2. Ensures my skills and knowledge are up to date 54.5%
3. Strengthens my abilities to do my current job 49.3%
4. Enhances my customers’ trust in my advice 42.6%
5. Reinforces my career promotion prospects 38.5%
6. Meets my employer’s expectations 38.2%
7. Shows my employer’s commitment to ethical behaviour 37.0%
8. Raises my status with my colleagues 32.6%
9. Shows I’m more motivated to serve than to sell 26.5%
10. Shows I put my customer’s interests before my own 23.2%
11. Increases my earnings potential 20.6%
*Total responses: 136%

Credit Skills Library
Our on-line Credit Skills Library launched earlier this year gives members instant access to 19 modules covering a range of topics including: Basic Principles of Lending, Consumer Lending, Client Relationship Skills and Basel II. They can be accessed from the members’ area at www.charteredbanker.com

Social networking survey
Our members’ survey on social networking received an excellent response from almost 500 members. The 60% of respondents using social networking sites indicated that they would be interested in joining an official Institute group.

There was equal interest expressed for developing sub groups based on location and specialist work areas.

We will be analysing the data in more detail, however, responses indicate support for establishing a presence on both LinkedIn and Facebook.

We would be keen for this to be a member-led initiative and would like to hear from anyone interested in supporting this project, email membership@charteredbanker.com.

Thanks to all those who participated and congratulations to David Ferguson who won the prize draw for the TM Lewin voucher.

Continuing Professional Development: Get online
CPD monitoring for 2009 has been completed and members should have started recording their CPD for 2010 on the members’ section of the website.

New online CPD material for 2010 includes:
• Online Professionalism and Ethics toolkit
• Two new Nelson Croom Courses: Communicating Complex Ideas; and Negotiation Skills: The Principles
• Credit Skills Library
• Online Professionalism and Ethics Webinars – to follow during 2010.

There is also a range of CPD resources within the members’ section including Nelson Croom courses (Leadership Skills, Networking Skills and Business Performance Management), mock examinations, workbooks, CIOBS e-learning modules and ethical dilemmas.

For queries regarding CPD, please email cpd@charteredbanker.com

Annual General Meeting 2010
The AGM of the Chartered Institute of Bankers in Scotland will take place on Friday 25 June 2010, at 4.15pm at the Institute’s offices, 38b Drumsheugh Gardens, Edinburgh EH3 7SW. We look forward to seeing you there.

New online courses from Nelson Croom
Two new online courses from Nelson Croom have been added to the members’ area of the website. These are Negotiation Skills: The Principles, and Communicating Complex Ideas. Both are available free of charge.

Being able to negotiate effectively will benefit you both in and outside of the workplace. Negotiation Skills: The Principles covers the basics, the preparation and the practice of negotiating skills, combining theory with practical activities and scenarios to help you put what you learn into action.

The Communicating Complex Ideas course develops skills to clearly communicate technical or specialist information to a wide range of audiences.

Professionalism and ethics toolkit launches
Our brand new Professionalism and Ethics Toolkit is a great online resource which is free to members. It is packed full of useful information including theoretical and practical applications such as checklists and diagnostics to help members maintain and develop their ethical and professional competence.

Access it on the members’ area at www.charteredbanker.com.

IFAs offered new Diploma to meet RDR standards
Independent Financial Advisers aiming to meet the qualification requirements stipulated in the Retail Distribution Review (RDR) are to be assisted by a new Diploma in Investment Planning.

The Association of Independent Financial Advisers (AIFA) is working alongside the Institute and BPP Learning Media to offer the qualification in response to overwhelming demand from members.

Simon Thompson, the Institute’s chief executive, explains: “The new Diploma will help advisers apply the knowledge and skills gained in achieving their existing advice qualifications and via their experience as an IFA. This is achieved by working through a series of scenario-based, online case studies designed to assess the adviser’s ability to develop and present suitable recommendations to their clients.”

The Diploma will therefore offer an alternative route for advisers seeking to meet the RDR requirements which must be achieved by the end of 2012.
Chris Cummings, Director General of AIFA, says: “We have consistently supported the drive towards higher industry standards that will enhance the standing of IFAs among the public. But this should not be at the expense of driving good, experienced advisers out of the profession.”

Those awarded the Diploma will gain a qualification exceeding the minimum level 4 requirements stipulated within the RDR, and will not be required to undertake gap-filling Continuous Professional Development. The first assessments will be available from 1 August 2010.

Advisers interested in the qualification are encouraged to register their interest online at www.aifa.net/qualifications

Decline and fall of banking
A former Institute examiner has published a major new book on the financial crisis. Bill Penman Brown’s The Decline and Fall of Banking provides an understanding of what went wrong and what should be done to prevent a recurrence.

The author has a lifetime of experience in UK and international banking. Among other roles he was President of the local centres of the Chartered Institute of Bankers in both Jersey and Guernsey, a Fellow and Member of the Council; and for several years was chief examiner of an Associateship examination, ‘Offshore Practice and Administration‘, which he created.

The Decline and Fall of Banking is available to order through Troubador Publishing.

Student subscriptions
Please note that, with effect from 1 July 2010, student subscriptions will increase to £60 for students employed by one of the Institute’s corporate patrons and £90 for all others. A list of the Institute’s corporate patrons is available from the ‘About us’ section of our website at www.charteredbanker.com.