Bank Of England Essay

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

Andrew Bailey (2013) “The future of UK banking - challenges ahead for promoting a stable sector”. Bank of England [online]. Available from:

Banking success is all about sustained profitability through the application of robust scientific investments and gap management strategies. It is imperative for banks to keep a close watch on the interest rate cycle: if rates are rising they have to ensure that their lending rates rise alongside or before the borrowing rate and vice versa. The premier position that Barclays enjoyed in the financial industry for over 3 centuries is a validation of the fact that it was built on the strong principles of finance. However, the last couple of decades have seen erosion in its reputation due to the breaching of those very principles.

As part of the Financial Services and Markets Act 2000, the FSAs sole purpose are to meet their four objectives: maintain market confidence, enhance financial stability, protect the consumer and reduce financial crime. By not implementing rules, doing enough investigations and enforcing power, the FSA has failed to meet all these objectives. Trust was lost in the UK Financial system when the LIBOR scandal went public, banks revealed themselves to not be as financially stable as what they portrayed to be, a number of consumers got scalped by the manipulation and the LIBOR scandal occurred as one of the biggest financial crime that has yet to send individuals to jail. As a regulator that failed to meet all of its objectives, the FSA had a responsibility in the LIBOR scandal. Being the UK’s central bank, the BoE’s mandates were to provide monetary stability and financial stability. Even if this body does not oversee banks’ compliance with regulations, the scandal led to monetary and financial instability, which should concern the BoE. In fact, Diamond testifies against Paul Tucker, the deputy governor in charge of financial stability for the BoE. Diamond claims Tucker implied the LIBOR rate is high and should be lowered.

This Act provided an immediate instrument for UK banks to be transported into public ownership and then - if there is one - to make a further transfer to a buyer in situations where it is necessary to maintain stability in the UK financial system . This was also a good response because by using this act it allowed The Treasury to nationalize Northern Rock and parts of Bradford & Bingley . Nationalization safeguarded the bank’s future, which was crucial for the country’s financial well-being, this is great because it could be monitored closely by the government on behalf of the taxpayer - preventing the banks from making the same detrimental mistakes . However, this act was replaced by the Banking Act 2009 that made provision for the nationalization of banks, it amended the law on bank insolvency and administration. This shows the that the Banking Act 2008 is an inadequate response because it was in need of reformation due to nationalization not being successful in the hands of the public, rather only a short term solution. Furthermore, it can be argued that politicians are not the right people to run the banks. They do not have the commercial abilities essential to run such important and challenging financial institutions. If experienced veterans of the banking industry were unsuccessful in evading the pitfalls recently, inexperienced government personnel are very unlikely to succeed. It can be said that the financial, and in

The Financial Services Act has allowed The Bank of England to supervise banks in the United Kingdom and intervene if they see any financial activity not consistent with their objectives. They will also regulate the insurance industry through the Prudential Regulation Authority; which will increase confidence in the community by letting them know that they can use these financial services; getting access to money through banks and knowing that their belongings are insured by these firms and putting a stop to speculation. The future of the banking industry looks more sound and secure with new regulations such as the Dodd–Frank Wall Street Reform and Consumer Protection Act in the United States and The Financial Services Act in the United Kingdom. Banks now have to pay annual tax from their balance sheets. The government hopes this will discourage banks to do risky financial activities and since the financial crisis began in banking, banks should help the economy recover. These legislations aim to put a stop to the impression that whatever banks do without any consequence they will be bailed out by the government and encourage banks to be more responsible in their financial activities. It is important to understand that these

The Bank of England became an independent institution in 1997 and their main objectives since have been to maintain monetary stability, and engage in Asset Purchasing facility, which was started in 2009. The task of handling Monetary Stability is undertaken by the Monetary Policy Committee (MPC) since 1997. In 2009 the Bank of England introduced Quantitative Easing (QE) as a method to maintain their inflation targets in the form of Asset Purchasing facility. “Quantitative easing is an unconventional form of monetary policy where a Central Bank creates new money electronically to buy financial assets, like government bonds. This process aims to directly increase private sector spending in the economy and return inflation to target”.

The Financial Services Act of 2012 in the UK came into force in 2013 on 1st April. This Act has the government reforms on the financial regulatory structure in the UK. The Act gives the new guidelines on the management of the banking sector and other supervisory roles in the financial services sector. This Act bestowed the oversight role to the Bank of England which is therefore expected to be responsible for the occurrences in the financial system and how the financial institutions manage their balance-sheet risks. This Act also stipulates that three more bodies are to be formed to assist in managing this sector. These bodies include the Financial Policy Committee (FPC), Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA). This Act affects significantly the two previous Acts which have been running the sector. These are the Financial Services and Markets Act of 2000 and the Bank of England Act of 1998. In this paper, the Act is clearly analyzed and mostly the effects it has on the Financial Regulatory Regime in the UK (Noked 2013). The economy of the UK has been following a laissez-faire system since 1979 (Allan and Stuart 2011)

The UK Financial Services Act of 2012 was put into effect the 1st of April 2013 and contained the government reforms on the financial regulatory structure in the United Kingdom. This Act gave new guidelines for management of the banking sector and other supervisory roles in the financial services sector, which include the following. The oversight role of the Bank of England was bestowed therefore, it is expected to be responsible for the occurrences in the financial system and how financial institutions manage themselves. Moreover, the Act stipulates that three more bodies are to be formed to assist in managing this sector, these include; the Financial Policy Committee (FPC), Prudential Regulatory Authority (PRA) and

In the UK financial system has grown rapidly over the recent decades, it is large in comparison to other advanced economies, such as the U.S, France and Japan; however it is comparable with Switzerland who also has a historic specialisation in financial services. The largest part of the UK financial system is its banking system.

Northern Rock, a bank in the United Kingdom, was one of the institutions negatively impacted early on during the global crisis (MacDonald & Mollenkamp, 2008; Shin, 2009). Although its failure was among the first signs of the global crisis in the United Kingdom, regulatory barriers were not in place early enough to stymie the resulting financial turmoil, and financial reform resulted (Enrich & Norman, 2010). The purpose of this essay is to outline the particulars of the Northern Rock debacle and then to review the reform of the Financial Services Authority, the main financial oversight entity in the United Kingdom during the period of the crisis.

This report compares financial performance of two major banks of UK i.e. HSBC Bank Plc and Barclays Bank Plc on the basis of their Balance sheets and profit and loss accounts for the year 2009. This report also provides SWOT analysis of both banks i.e. HSBC and Barclays Bank Plc and provides an insight into their Banking Strategies.

Date: May 2011 Disclaimer This publication has been prepared as a general overview of the Banking Industry in Australia and does not constitute and is not intended to constitute financial product advice as defined under the Corporations Act 2001 (Cwth). Nothing in this document should be construed as a recommendation or statement of opinion intended to influence a person in making an investment decision. The information is made available on the strict understanding that the Australian Trade Commission (Austrade) is not providing professional advice. While all care has been taken in the preparation of this publication, Austrade expressly denies liability for any loss or damage of any nature (including but

Barclays Bank Plc (“Barclays”) is one of the banks, whose international presence is strong and which is engaged in personal banking, corporate and investment banking. Moreover, it also provides wealth and investment management and is globally present in European, the American, African and Asian countries. It exists since a long time and has expertise in banking and is operating in more than 50 countries and has about 140,000 of employees.

Michael Porter has developed a framework called five forces framework forces that shape every single industry and market. These forces help us to analyse everything from the intensity of competition to the profitability and attractiveness of an industry. In this paper I will analyse the Irish Banking Industry using Porters Model.