An audience of more than 200 gathered at the Hilton Hotel to hear BBA (British Bankers’ Association) Chief Executive Angela Knight CBE deliver the ifs School of Finance Isle of Man Centre’s prestige lecture, ‘Banking in a new landscape’.
Held on 25th March, the event was hosted jointly by the ifs School of Finance Isle of Man Centre, the Isle of Man Bankers’ Association (IOMBA) and the Chartered Institute for Securities and Investment (CISI) Isle of Man branch.
Mrs Knight began her lecture by saying the world had been moving quickly since the Lehman Brothers collapse in 2008.
She went on to say that subsequent co-ordinated global government action to stabilise the world’s banking system was happening ‘in a way we haven’t seen for decades’.
Economies in the East, Australia and Canada were recovering and in Europe there was some growth, but the UK economy remained, she said, ‘static’, despite which she was ‘cautiously optimistic’ for 2010.
Outlining the financial ‘after shocks’ of the collapse of the world economy she said UK building societies had been ‘crunched together’ and that there was now a determination within the banking industry to make sweeping changes. ‘As an industry we have to take responsibility for the future. We can’t leave it to others to achieve an effective and stable system.’
The first stage in the process had begun - ‘more capital, better liquidity buffers’ – to strengthen banks’ foundations but she warned against making ‘vivid and spectacular’ changes and urged the industry to avoid making any ‘regulatory fireworks display’.
The second stage was for the industry to address the question whether a bank can be ‘too big to fail’. Mrs Knight held the view that ‘size matters’, as large banks benefited economies by providing opportunities for synergy, broader ranges of products and technological development.
Heightened regulation was shaping the UK banking marketplace, increasing operational costs and driving a flight to consolidation.
However, while consolidating banks might provide a solution because ‘smaller, narrower banks are most vulnerable’, she cautioned that the costs associated with banking recovery and resolution strategies could be a disincentive for change.
In the UK, lasting change could only be achieved through ‘proper and open’ public debate, particularly in relation to home loans and the societal impact on the property market factors such as reducing loan-to-value ratios would have, especially on first-time buyers.
Drawing her lecture to a close, Mrs Knight was able to offer the audience, drawn mostly from the finance sector, some comfort when she said that in the ‘brave new world’ of the post-Lehman era the financial services industry would have an important role to play as more than ever before customers were seeking high quality professional advice.
In her vote of thanks, CISI president Lillian Boyle remarked that if banks were half as robust as Mrs Knight’s incisive wisdom there would be no problems in the banking world.
Pictured: BBA chief executive Angela Knight CBE, second right with (l-r) Isle of Man Bankers’ Association president John Coyle, ifs School of Finance Isle of Man Centre president Ian Hamilton, and Chartered Institute for Securities and Investment Isle of Man branch president Lillian Boyle.
