The year since the UK voted for Brexit has been dramatic one for banks. Share prices have plunged and recovered, uncertainty has been high and firms have attempted to figure out what jobs and operations, if any, need to be shifted into the European Union.
Fortunately, Anthony Browne, the voice of UK banking for the last five years, is used to a bit of drama. The former BBC, Times and Observer journalist was appointed head of the British Bankers’ Association (BBA) two weeks before the Libor scandal broke, joining at a “time of crisis” for the industry and for the organisation itself, which was later stripped of its rate-setting role.
“[The Libor scandal] changed banking from being merely incompetent and plunging the economy into recession to being, by public perception, a group of criminals in the main,” Browne tells City A.M. ahead of his departure from the BBA next week.
“It caused really intense anger. And unlike other scandals that we had been involved in as a trade association, this one was here: it was in-house. It was actually operated by some people sitting outside the office here.”
In addition to the reputational damage, the BBA faced a loss of income and intense political scrutiny. Browne reveals that in his first meeting with Ed Balls in his new role, the then-shadow chancellor’s “opening gambit was: shouldn’t we just close the BBA down?”
Banks are still dealing with legacy issues – Tuesday morning saw the Serious Fraud Office charge Barclays and four former executives over 2008 fundraising from Qatar – which Browne says is “frustrating” for them. But he does believe the reputation of the industry is on the mend after a “toxic” period.
Making banking boring
After two decades as a journalist, Browne went on to run think tank Policy Exchange, worked as a policy director for then-London mayor Boris Johnson and, before joining the BBA, was head of government relations in Europe for Morgan Stanley.
Despite his political background, one of Browne’s main objectives at the BBA has been to “depoliticise” the industry. “When I started, my slightly flippant objective for myself was not to have the word ‘bank’ or ‘banking’ in the manifestos at the 2015 election,” he says. “There was a bit about banking there, but in the 2017 election just gone it wasn’t fought on banking issues at all. It has become a lot more depoliticised.
“Banking needs to be a boring industry that competently does its bit, helping the economy and helping customers. If it’s doing its part properly, it shouldn’t be in the news the whole time, and it certainly shouldn’t be the subject of politicians’ speeches in the House of Commons or from election hustings. And that is a lot more the case now.”
Clearing, protectionism and Brexit
Browne may celebrate some depoliticisation, but there can be no denying banks have not been following political developments in the UK and beyond closely in recent months.
One of hot topics that has dominated the City over the past year, since the UK voted for Brexit and stirred up debate on the continent, is euro clearing. Despite warnings that relocation of the market could cost banks tens of billions in extra collateral costs, the BBA has until now remained quiet on the subject.
“None of my members have expressed support for forcibly trying to relocate clearing of euro-denominated derivatives to the euro area,” Browne says. “We can’t see how it would work, how it would be practical. It would be disruptive, and as Mark Carney said [at the Mansion House breakfast this week], you risk separating out different capital pools and liquidity.”
Browne believes recent noise from the EU around euro clearing relocation is one of a few “reasons to believe the EU is becoming more protectionist”. He also points to proposals last November, which would require non-EU banking firms to establish intermediate holding companies in the bloc, in addition to an equivalence review.
On exiting the European Union, the BBA’s priorities are for a transition period, avoiding a “no deal” situation and a free trade agreement in the financial services sector.
Browne declines to speculate on whether the industry’s hand, and interest in a softer Brexit, has been strengthened by Theresa May’s General Election flop, which has seemingly boosted the status of a business-friendly chancellor. Though he does say: “Philip Hammond’s a good chancellor.”
However hard or soft the UK’s Brexit is, it is certain that banking jobs will be moved from London.
How many? Browne refuses to make a guess. But he does say: “I know the banks are very keen not to relocate jobs, not least because their staff are keen not to move. They’ve got homes here, they’ve got kids in school and so forth.”