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Labour gets boozy with the City

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—  Rachel Reeves schmoozes City bigwigs at London reception.

— Defense sector fights back against debanking.

Bank of England hosts talking shop on handling risks to the financial system.

Good morning! Welcome to week two of the MFS U.K. newsletter ― we made it!

We hope you are enjoying it thus far, especially after a debut week of excellent, insightful and scoopy content from the team. I’m James Fitzgerald, and we kick today off with news that Labour will continue its City of London charm offensive at a boozy reception this evening.

Elsewhere my colleague Eleanor Myers has a great report into the defense sector fighting back against debanking. And Hannah Brenton has the goss on the Bank of England’s annual research conference which starts today, as well as all the details on the Basel chair’s latest whack at the banking industry.

It’s going to be another big week in U.K. financial services, so strap yourselves in.

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POPPING CORKS: City bosses, grandees and industry shills are gearing up for a boozy drinks reception at the usual Guildhall spot in Central London this evening for a “thank you” reception to celebrate the launch of Labour’s recent financial services review.

Roll out the red carpet for…. Labour shadow ministers Chancellor Rachel Reeves and City Minister Tulip Siddiq, who will put on a charm offensive for City players over champagne and beers throughout the evening. The event starts at 6 p.m. and is slated to finish at 8 p.m., but many attendees will no doubt kick on into the wee hours, work credit cards in tow. MFS U.K. is reliably informed that journalists are not allowed at the event, so obviously we are taking that news well.

What the invite says: “Shadow City Minister Tulip Siddiq MP, in partnership with the City of London Corporation and Oliver Wyman, is pleased to invite you to a drinks reception on Monday 26 February with senior industry leaders, to thank those who contributed to Labour’s Financial Services Review, Financing Growth.”

Dress code: Business suit.

Golden handshake: The event is Labour’s latest effort to woo the City of London in the lead up to the general election, which is anticipated to be held sometime later this year. The reception follows a massive event in the capital only a few weeks ago, where Reeves and Labour leader Keir Starmer pledged to FTSE 100 bosses that they will be the party of business.  

Review: Labour launched its financial services review on January 31 with the help of a group of City grandees. It pledged to “unashamedly champion” the City if it were to win the next general election.


Monday, Bank of England annual research conference begins, featuring keynote address by chief economist Huw Pill, 9 a.m. The Institute for Fiscal Studies holds a briefing for media and industry on the constraints facing the chancellor ahead of the spring budget, online, 10 a.m. 

Tuesday, the Association of British Insurers will hold its annual conference, including a keynote address by Economic Secretary to the Treasury Bim Afolami. The Treasury Committee questions the chief executive of the Financial Ombudsman Service, 10:15 a.m. The Economic Affairs committee questions economists on how sustainable the U.K’s national debt is, 3 p.m. The FCA publishes its Enforcement Guide Review consultation paper, 9:15 a.m. The City regulator’s Therese Chambers holds a speech at City and Financial Global: The Market Abuse and Market Manipulation Summit, 9 a.m. 

Wednesday, The Treasury Committee will question Bim Afolami on support for SMEs, 2:15 p.m. Submissions to the FCA’s advice guidance boundary review — proposals for closing the advice gap — close. FCA joint director of enforcement and market oversight, Steve Smart, gives oral evidence to the Home Affairs Committee inquiry on fraud, 10:30 a.m.

Thursday, BoE publishes its money and credit statistics for January, 9:15 a.m. The central bank also publishes its report into effective interest rates, 9:30 a.m. 

Friday, BoE’s Huw Pill holds a speech at the Cardiff University Business School, 2 p.m. 

**A message from Nationwide: Unlike the banks, Nationwide Building Society is owned by its members, not shareholders. That’s anyone who banks, saves or has a mortgage with us. Which means we can always focus on what’s best for them. It’s our fundamental difference and what makes us a good way to bank.**


DEBANKING HITS DEFENSE SECTOR: The debanking saga continues, with City minister Bim Afolami set to be hauled in front of Parliament’s Treasury Committee this Wednesday to give his view on whether the government needs to legislate to ensure SMEs are protected from bank account closures. For businesses in the defense sector, the issue appears to be particularly acute.

The evidence: A cross-party MP report last week found that hundreds of thousands of accounts are shut because of their incorrectly perceived financial crime risk. The report found that atypical businesses like cryptocurrency firms or bookies are seeing their bank accounts being shuttered, and it appears defense sector SMEs are also high up on that list given their sensitive operations.

Who’s paying attention? Labour MP Derek Twigg questioned Afolami in late January about defense sector businesses being denied banking facilities. John Attlee, a member of the House of Lords, has been trying to raise awareness of the issue around Westminster. 

Tanks gathering dust: MFS U.K. spoke to a business that had been “debanked” for posing a potential money-laundering risk. Nick Mead, owner of Tanks A Lot Ltd., said he was told his 45-year-old account with Barclays would be closed, for raising a red flag internally due to his business of sending armored fighting vehicles to Ukraine, which are used for casualty extraction in combat zones. He sent 120 vehicles before his account was closed, Mead told MFS U.K.

Not just one: Mead said that he knew of other SMEs with business in Ukraine who had their bank accounts closed without any reason given. Barclays said they could not comment on their policy for closing accounts unless given specific details.  

Reminder: The report published by MPs last week blames the FCA for encouraging banks to prioritize reputation above all else. No doubt that will come up in the hearing Wednesday.


BOE TALKING SHOP ON HANDLING RISKS TO THE FINANCIAL SYSTEM: The U.K. central bank today hosts its annual research conference — lamely dubbed BEAR, after “Bank of England Agenda for Research.” It’s a talking shop for the big issues of the year, bringing together academics, regulators and central bankers and the agenda gives an indication of what’s top of mind in Threadneedle Street.

Domino effects: Back in 2022, the first edition of the conference discussed “the monetary toolkit,” last year it was “new digital technologies,” and in 2024 the focus is on “the prudential framework.” The BoE’s bigwigs and top researchers will spend the day chatting about bank runs, liquidity and macroprudential tools — aka how to stop a problem at one bank or financial player creating a domino effect across the financial system. 

Nonbanks: Sam Woods, chief executive of the BoE’s Prudential Regulation Authority, hosts a dinner tonight, and then the conference returns for another day on Tuesday with a major focus on nonbanks — which includes the likes of investment funds, hedge funds, private equity and insurers. Central bankers are increasingly worried about their lack of oversight of risks that have migrated from banks to this growing and diverse part of the financial system over the last decade. And they’ll be looking for some ideas on how to handle it.

**Brüssel, London, Paris… und jetzt kommt Playbook nach Berlin! Our expert reporters are bringing their stellar journalism to another hub of European politics. We won’t be hiding out in Mitte – from the Bundestag and key institutions all the way to each of the Bundesländer, Berlin Playbook has got you covered for your daily dose of deutsche Politik. Mit nur einem Klick anmelden.**


BASEL CHAIR ATTACKS INDUSTRY ‘MYTHS’ ON CAPITAL REFORMS: The chair of the Basel Committee on Banking Supervision on Friday hit back at the banking industry for pushing the “myth” that now is not the time to bring in global reforms.

Dragging it out: “Regulators are often accused of fighting the last war. Yet in the case of implementing Basel III, it is the dragging on of the process — with attempts to reopen past reforms and battles — that will divert important resources from banks and supervisors to deal with current and emerging risks instead,” chair Pablo Hernández de Cos said at the Eurofi conference in Ghent. 

Lobbying battles: Banks have been lobbying hard against the final Basel III bank capital standards in the EU, U.K. and U.S. — warning of the impact on lending to the economy. But de Cos, also governor of the Bank of Spain, used a speech at the industry-funded conference to dismiss those arguments, claiming the reforms will be positive for the economy by making banks more resilient to shocks. 

Waiting for Godot: “The list of arguments provided over the past 15 years has continued to grow and includes economic headwinds — including both the ‘low-for-long’ and ‘high(er)-for-long’ interest rate environment — national elections, the pandemic, geopolitical developments and, perhaps most ironically, concerns about the frailty of banks,” he said. “The truth is that waiting for the ‘ideal’ time to implement Basel III is like waiting for Godot.”

Friendly reminder: It’s not just words. The Basel Committee does have a stick to hit wayward jurisdictions with, as de Cos reminded his audience, via its Regulatory Consistency Assessment Programme — where the global standard-setter can dole out black marks. The U.K. has the chance to get a top score now it is outside the bloc, as many will remember that ten years ago the EU was given the worst possible “non-compliant” grade from the global standard-setter.


To mark the launch of MFS U.K. we are answering questions from readers — send yours in here.

This question comes in response to our story last week on who should pay for online fraud.

Q: Instead of the banks or the online platforms paying, why not make the fraudsters pay?

A: In an ideal world, the fraudsters would pay: They’d be caught, they’d go to prison or at least get some sort of legal retribution, and they would pay back their victims. But that’s just not the reality. In England and Wales there were 4,956 arrests for fraud offenses in 2022/23, and 5,640 in the previous reporting year (we’re getting worse at this, too, there were 14,609 in 2015/16). But that’s nowhere near the number of frauds being reported, let alone the number of victims who don’t even bother reporting their case because they don’t think it will go anywhere. According to the National Crime Agency, there were 3.5 million incidents of fraud in 2022/23, and the authority believes only 13 percent of cases are reported.

The difficult truth is that scam artists get away with it, for the most part, so the question becomes whether victims receive compensation or whether they are just left out of pocket. Views may be divided on that, but let’s say they are compensated — then who pays? The banks, which allow fraudsters to have accounts or the social media companies, which profit from scam ads on their websites? There’s not necessarily an easy answer, which is why this debate continues.


Interest earned on frozen Russian assets should be sent to Ukraine, Rishi Sunak writes in the Sunday Times.

Why have efforts to crush Russia’s economy not worked, ask our colleagues.

Goldman insider-trading conviction shows FCA sharpening its teeth, writes the Financial Times.

Thanks to: Fiona Maxwell, Izabella Kaminska, Giulia Poloni.

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