From: Athinarayanan Sanjeevraja
Date: October 31, 2013
RE: Congratulation to the Bank of England new Governor and Bank of England is Open for Business and UK Banking Sector Reform
Suggestion:
Good Morning Mr. Governor. Let me start by paying my respects to you and
through you to.
Your Excellency, kindly accepts my heartfelt congratulation Governor.
You are the first non-Briton to be appointed as the Bank of England Governor. As
an Analyst, I knew that you have been an exceptional steward of Canada’s
monetary policy. I fully support the BoE is open for business and the banking
sector reform. Mr. Governor, you knew that the pressure from increased
regulation, tight funding availability and tough economic condition always lead
to substantial increase loan pricing for corporates. As a result, Banks will
increase margins on their loans to corporates and on riskier loans. This will
adversely affect UK businesses. I have an unyielding faith in you, you’ll
reduce risk in banks and the UK banking system including through improving the
resolvability of banks. UK businesses rely on banks with strong balance sheet
and their access to cost efficient funding solutions. UK businesses require
large scale hedging products to mitigate interest rates, credit and foreign
exchange risks, for instance, government bond issuance. The BoE should fulfil
three essential conditions on the corporate customers of banks such as the
financing conditions (long term or export financing, foreign currency financing
etc.), the liquidity of the securities issued by the companies and the
conditions for hedging their risks.
Mr. Governor, you need to preserve the UK banking activities and
services relevant to the financing of the economy and to the activities of
non-banking companies such as industrial, commercial, financing and
investment/treasury activities, particularly in the context of a universal
banking model. You should not excessively reduce the market - making activities
of UK banks relative to their international competitors which could potentially
penalise the UK financial industry, reduce the supply of certain banking
services and raise their costs for corporate customers. Furthermore, if the
capital requirements for UK banks were reinforced for certain activities which
are consider riskier. So I would like to recommend BoE should consider lower
requirements for activities relevant to non banking companies such as
industrial, commercial, financing and investment/treasury activities including
long term financing activities.
Mr. Governor, any businesses need finance to invest and expand their
operation, thus delivering economic growth and job creation. UK banks should
help businesses guard against common business risks, for instance, interest
rates, currency exchange rates or commodity prices. UK businesses use banks to
manage their capital efficiently. Thus, BoE to ensure businesses can continue
to access the financial services they need to grow. While I support BoE open
for business and banking sector reform should not be associated with high costs
which will have negative impact on non-financial businesses.
I trust that
suggestions made therein are of helpful and of relevance to the BoE open for
business and banking sector reform. Should you have any questions regarding the
content of this letter or the articles please contact me by mail.
Thank you very much
for your attention.
Sincere Regards,
Athinarayanan
Sanjeevraja
Athinarayanan Twitter
Athinarayanan
Advisory Authority
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