News & Insights

Is another Banking crisis just waiting to happen?

A study by the Adam Smith Institute (ASI) said the Bank’s tests – designed to measure whether a bank could withstand a severe financial shock – give false comfort by overstating the resilience of the finance sector.

“It is disturbing that 10 years on from Northern Rock, the best measure of leverage – those based on market values – indicate that UK banks are even more leveraged than they were then.

“The biggest risk facing the UK banking system now is the Bank of England’s own complacency.”

The report said high bank leverage had helped fan the flames of the financial crisis, while market valuations of UK lenders indicate that some have hidden losses.

And for those thinking, “I’m OK, I don’t have my money in UK Banks.” Do you believe that the banks in Europe are any better? Just look at the current state of Italian banks. And then there’s the recent collapse of Banco Popular, the 6th largest bank in Spain, which only last year passed the stress tests with flying colours.

The collapse of Northern Rock didn’t just highlight the fragile state of the banking sector across the world, it has caused repercussions still being felt 10 years on; pensioners and savers are still suffering due to low interest rates, which have meant that in real terms they are losing money year on year as they are unable to keep up with growing levels of inflation.

In September 2007, a £40,000 savings pot would have earned a couple annual interest of £2,679, when the best rate on an easy access savings account was 6.5%, from West Bromwich Building Society. This compares to today’s best-buy rate of just 1.25% from Ulster Bank. This would generate a paltry £503 over 12 months — or £2,176 less.

Today, the only real alternative that can possibly offer the potential to outperform inflation is investing your money.

Other News

Chinese Investment Could Hold Key to Future of Grand Cayman Wealth Management

Maneki NekoThe Cayman Islands has signalled its intention to invite greater Chinese investment opportunities following recent corporate events in Asia in which Cayman Finance CEO Jude Scott spoke about the potential for increasing collaboration.

While attending events in Shanghai, Beijing and Hong Kong, Scott, whose organisation is charged with protecting, promoting and developing the Cayman Islands’ financial services industry “through cooperation and engagement with domestic and international political leaders, regulators, organisations and media”, spoke of how The Cayman Islands could use their status in the wealth management industry to benefit Chinese investment.

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Blacktower Ready to Respond to New Challenges

Time for a changeLet’s face it: Brexit is a confusing time for everyone. However, it is important that panic doesn’t set in. This applies at every level, from the uppermost echelons of government and business leaders to expatriate workers and the everyday retiree.

The same applies to financial advisers. Not only do clients – and of course the markets – require their calm to steer them through uncertain and uncharted waters, but firms themselves need to stay composed and attentive to ensure that they continue to meet regulatory standards as Brexit unfolds and transition periods take effect.

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