BASEL III REGULATIONS RISK ECONOMIC STAGNATION

The Daily Telegraph (B1, £) reports that up to ?400 billion in fresh capital will need to be raised to meet Basel III regulations, risking a second decade of economic stagnation across Europe, according to a report by Copenhagen Economics on behalf of the European Banking Federation (EBF).

The article states that British banks may have to also raise an additional ?70 billion while potentially excluding SMEs that appear high risk. It is also understood that the rules could shrink total lending by ?2.9 billion, with total bank assets falling by as much as ?4.6 billion.

Quoted in the piece, Simon Hills, director of prudential policy at UK Finance, said that, ?An increase of this magnitude will have knock-on effects for households and business borrowing costs as well as on economic growth?.

COMPANIES AT RISK OF AUDITOR SHORTAGE

The Financial Reporting Council (FRC) has fined accountancy firms £43 million, resulting in them dropping high-risk clients, according to The Times (p42, £). David Herbinet, global head of audit at Mazars, says that, ?capacity in the market was constrained because of the increase in regulatory requirements of audit firms.? Ernst and Young reported last week that revenues from their advisory business had shrunk by three per cent in 2019 (Financial Times, £, online only).

This news comes as the Financial Reporting Council (FRC) is due to re-brand as the Audit, Reporting and Governance Authority, having previously been criticised for being too lenient and too slow in thoroughly investigating alleged misconduct (Financial Times, online only £). The FRC has also appointed Jamie Symington as deputy executive counsel, previously director of investigations at the Financial Conduct Authority (FCA), as the organisation is given more sanctioning powers.

NEWS IN BRIEF

The number of people arrested for suspected tax evasion has fallen by 11 per cent this year, continuing the four-year trend in declining arrests, reports The Times (p44, £).

A 'surge? in fake sellers is expected as Black Friday approaches, with more than 150,000 phoney products identified by the Counterfeit Report website, says the Telegraph (B6, £).

Homes bought without a mortgage have hit a record low since records began in 2007, as fewer owners downsize, with a decrease from 36 per cent to 28 per cent compared with 2009, according to Hamptons International (The Times, p47, £).

The annual Total Tax Contribution (TTC) report will show this week that the UK's biggest companies paid more than £85 billion in tax last year, reports Sky News.

The Autorité des Marchés Financiers, France's main financial regulator, has said that the increasing interest in environmental, social and corporate governance (ESG) and the absence of EU-wide governance of this could undermine responsible investing (Financial Times, p2, £).

WHAT THE COMMENTATORS SAY

In today's Financial Times (online only, £), Patrick Jenkins, Financial Editor, looks at what banks? recent tech problems can mean for the industry as a whole. Mr Jenkins warns that boards must reflect diversity in terms of skills, and that tech is a crucial, yet often missed skill at the top level as banks strive to modernise. Mr Jenkins cites the a report from the Centre for the Study of Financial Innovation, who point out that even with tech specialists, other senior board members still struggle to understand - and therefore oversee - this technology. In conclusion, the author advises that addressing this board-level skills gap is key to avoiding future mishaps.

LATEST BLOGS

Paul Chisnall, our Director of Finance & Operations Policy, blogs following Monday's UK Finance breakfast roundtable on meeting customer needs.

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