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Home » Daily Briefing » Daily briefing - 13 March 2017

Daily briefing - 13 March 2017

Douglas Flint's tenure as chairman of HSBC is coming to a close with the bank naming insurance executive Mark Tucker to succeed him. "In Tucker, HSBC will add an executive with more than two decades of Asia experience to help the lender in its so-called pivot toward the region," writes Bloomberg. "Tucker was CEO of Prudential Corporation Asia from 1994 to 2003 and took over AIA in 2010 prior to its listing in October that year, according to a biography from the Hong Kong-based insurer." Mr Tucker will take up the position on 1 October. Mr Tucker will lead the search to replace CEO Stuart Gulliver, who has stated his intention to retire in 2018, after working his way up through the bank to become its chief executive in 2011. HSBC faces challenges in its leading markets — Asia and Britain — with growth "moderating" in Asia and its UK operation facing the twin challenges of Brexit and ringfencing its domestic retail business.

Back in 2012, American Banker noted efforts by TD Bank to move into the "elusive cross sell" market. Five years later, it is the fifth-biggest bank in the United States by customer deposits, but the effort appears to have borne some rotten fruit, detailed in investigations by Canada's national broadcaster, CBC. "According to the first report, which aired on Monday last week, employees increased customers' lines of credit, overdraft protection amounts and credit card borrowing limits — all without authorisation — in order to reach sales targets," writes the Financial Times. "A follow-up report claimed 'hundreds' of current and former employees had got in touch with the broadcaster, describing a 'pressure cooker' sales environment that encouraged them to break rules to keep their jobs."

It appears that international banks are getting frustrated by Downing Street's approach to Brexit, with Bloomberg reporting that TheCityUK lobby group, led by Barclays and JPMorgan Chase executives, are exploring trade and investment deals post-Brexit. "The committee is working with the UK Treasury and its financial services trade and investment board," Bloomberg reported. "It's not yet clear what agreements will be pursued and talks are informal because the UK isn't officially allowed to negotiate new deals until it legally leaves the EU, which has governed the UK's trading relationships for the past 44 years." Much of the concern of banks is due to the "phasing" arrangement that surrounds negotiations between the United Kingdom and its European Union neighbours, with a series of processes due to begin with Article 50 — which may happen as early as this week — when Britain declares its intention to separate from the EU. The debates over 'Hard Brexit' and 'Soft Brexit' revolve around the transition between EU membership and independent status, which for the UK will involve transferring vast amounts of EU-related legislation onto the UK's legal books.

The FT reports this morning that Lloyds Banking Group has struck an agreement to move some of its computer systems and cybersecurity services to IBM, with almost 2,000 staff due to be shifted over to work for the computer business. The Lloyds Trade Union — which is no longer recognised by the bank — was critical of the move, suggesting that it's a first step in the offshoring of Lloyds' security infrastructure and eventual replacement of the Lloyds staff by cheaper foreign workers. "Even the bank admits that the migration of the accounting details of 20m customers on to a private cloud to be run by staff based offshore could 'weaken existing security controls and adversely effect the confidentiality and integrity of bank data'," it said.

Poor old robots are getting the blame for everything these days. Will we look back one day and marvel that we finally got to 'world government' through a fear of robots? It's no secret that Donald Trump gained the White House in part because he tuned into a sizeable swathe of the American population that is against rampant globalisation; the same may be said of Nigel Farage's Brexit campaigners. Professor Stephen Hawking, a consistent Cassandra on artificial intelligence, now says that the world may need a global government to unify against the threat of robot overlords. "We need to be quicker to identify such threats and act before they get out of control," Hawking said. "This might mean some form of world government." He conceded that this approach "might become a tyranny".

Financial inclusion is proving as complex and intractable a problem as any facing the world of finance, with no big solution emerging apart from the effort to declare a war on cash. "For instance, as shown by an inventory of 200 or mobile money innovators jointly done by Market Platform Dynamics and the Gates Foundation a few years ago, there have been all kinds of efforts — mostly geared toward emulating the success of mPesa in Kenya — with little success to show for it," according to pymnts.com. "The problem mobile banking innovators run into over and over, the study showed, was the classic trouble with trying to solve a big problem. Mobile payments innovators, over-run by the complexity of the issue, rapidly find themselves trying to "boil the ocean," instead of drilling-down on a specific area where a cornerstone can go in, thus allowing them to begin addressing complexity and to start tackling the regulatory realities of these efforts."

Verifone systems breached at point of sale?
Thailand: Where women run finance and men think banking is boring
US digital challenger bank to be spun out of Customers Bank in $175 million deal
Chinese banks are great, fundamentals aside

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