IBS Journal December 2016
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launch to customers by January and is the brainchild of Anne Boden, a former Chief Operating Officer of Allied Irish Bank (AIB). Monzo also landed a licence with restrictions. It was founded by Tom Blomfield, formerly CTO at Starling, and is currently in the ‘mobilisation’ phase, working with the regulators to get its restrictions lifted and launch a full current account with debit cards, faster payments, direct debits etc.
It wasn’t all sunshine and rainbows, however. October brought a reminder that challengers need nerves of steel, boundless optimism and deep pockets, with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) cancelling the restricted licence for First Global Trust Bank, given to it earlier this year.
According to a statement posted on the venture’s website: “On 4th April 2016, Gordian Knot (which was funding the bank) received an “authorisation with restriction” licence (the standard mobilisation process) for FGTB, a new narrow wholesale bank. We designed FGTB to be a simple, safe and narrow wholesale bank with the aim of re-liquefying some of the markets severely damaged during the last financial crisis and to help lower the cost and availability of credit to the wider economy. Gordian spent a significant amount of time, effort and funds over the past five years in order to help reshape the financial landscape in a positive and safe manner. However, the combination of a difficult and fast changing regulatory environment coupled with the difficulties of trying to innovate in the financial markets post the 2008 crisis, have forced us to take the difficult decision to withdraw our application for the foreseeable future.”
Hard Brexit? EU must be joking!
Many UK politicians and right wing media pundits called for a hard Brexit (an immediate exit from the single market), following the vote to leave the EU earlier this year. They claimed that the impact of such an approach would be relatively limited, although many in the banking and FinTech sectors would beg to differ.
Britain’s biggest banks are preparing to relocate out of the UK in early 2017 as the reality of Brexit hits home, while smaller ones are looking to get out before
Christmas. Writing in The Observer during October, the Chief Executive of the British Bankers’ Association, Anthony Browne, warned “the public and political debate at the moment is taking us in the wrong direction”.
Prime Minister Theresa May will trigger formal talks to leave the EU by the end of March. The country’s banks
depend on a European “passport” to serve clients across the EU from one base and their concern is that this right will end after Britain departs. May has said she will work to retain access to the single market but it looks like that will depend on Britain accepting free movement of workers from the EU, which would not sit well with the hard Brexiters in and around her cabinet.
Browne commented: “Most international banks now have project teams working out which operations they need to move to ensure they can continue serving customers, the date by which this must happen, and how best to do it. Their hands are quivering over the relocate button.”
He added: “On this side of the Channel, some high- profile Brexiters have poured scorn on the idea that we need passporting at all and that other regimes such as ‘third country equivalence’ will do. But the EU’s equivalence regime is a poor shadow of passporting – it only covers a narrow range of services, can be withdrawn at virtually no notice, and will probably mean the UK will have to accept rules it has no influence over. For most banks, equivalence won’t prevent them from relocating their operations.”
Not everyone is down on Brexit, however. The likes of UK challenger bank OakNorth view it as an opportunity to increase lending efforts. Co-founder and CEO, Rishi Khosla, told IBS Journal that he had voted to remain believing that, for business owners and entrepreneurs in the UK, access to the EU’s significant markets (750 million people vs 60 million in the UK) was too beneficial to relinquish.
“As we’ve already seen since 23rd June, a number of lenders have faced some challenges following the vote. From our perspective, we are still very much committed to continuing to grow our loan book and support UK
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