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THE UK BANKING SECTOR REFORM 2013


To: The Right Honourable Bank of England Governor Mr. Mark Carney 

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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