Bank Lobby Group Faces Pressure From Members

Mark Kleinman, City Editor
Bank Lobby Group Faces Pressure From Members

The banking industry's main lobbying group is facing growing unrest from some of its largest members over its administrative costs and strategy as it attempts to chart a new course under its recently-appointed chief executive.

Senior bankers say they are alarmed by proposals from the British Bankers' Association (BBA) for the biggest high street banks such as Lloyds Banking Group and Royal Bank of Scotland to stomach a sharp increase in the membership fees they pay.

One banker who is critical of the BBA said the major lenders were being asked to fork out millions of pounds in fees in the coming years.

Some executives are also expressing concern that a new three-year strategy being drawn up by Anthony Browne, the BBA chief executive, is not being made the subject of sufficiently wide consultation.

A copy of part of the draft agenda for the BBA's next board meeting, which is scheduled for next week, has been leaked to me.

Focusing on the lobbying group's 2013-2015 strategy, the document outlines two objectives for the BBA during the period: restoring trust and confidence in banking; and establishing the BBA "as the 'go to' association for banking and financial services".

The BBA's choice of words has further irritated some bank executives who have for some time grumbled that Barclays has exerted undue influence over the organisation.

That is because Antony Jenkins, Barclays' new chief executive, has repeatedly described his ambition as being to position the bank as the 'go to' lender for British customers.

Marcus Agius, who stepped down as Barclays' chairman last month, was also chairman of the BBA for two years.

In the document circulating among BBA members this week, the group said it "must represent and be seen to represent and serve the entire cross section of banks operating in the UK, including small banks, foreign banks and challenger banks, and it must effectively ensure that it serves all their interests. It should actively review and monitor its membership offering to ensure that it is continuously offering value for money services that appeal to all sections of membership. It should not be seen as representing just a subset of the banking sector".

Some major lenders, such as Virgin Money, are not members of the BBA, which has been attacked in the past for focusing solely on the interests of the biggest UK banks.

"Trust and confidence in banking in the UK is at record lows in the wake of the Libor and other scandals. Just 5% of the public have a favourable view of bankers, according to research by CTF, and there is widespread hostility to banks among politicians, regulators, the media, consumer groups and some business groups," the BBA agenda says.

"This leads to a conveyor belt of regulation aimed at 'controlling' banking, and it is difficult for banks to either get their concerns heard or addressed. The BBA's own reputation has also been negatively impacted by the Libor scandal, and it has been the subject of public criticism. The high level strategic aim of the BBA in 2013-2015 is to rebuild the reputation of the banking sector and of itself."

The document proceeds to outline measures which the BBA should pursue, including repositioning banking "as a normal sector of the economy, which politicians feel compelled to support rather than bash... The ambition should be to get banking out of political debate".

Senior bankers said this aim appeared unrealistic given that the Government is widely regarded as being likely to remain as a shareholder in Lloyds and RBS until at least the end of this decade.

In relation to the wider economy, the BBA strategy also sets the objectives of: promoting policies "that are not just in the interests of banks, but are of wider public benefit"; establishing alliances with third parties such as consumer and business groups; directing customers to alternative sources of finance when bank finance is inappropriate; promoting financial literacy; and explaining the role of banks in the wider economy.

The BBA also says in relation to its own role that it should "seek to maximise its commercial activities, both to diversify its revenue base, and to provide value for money services to members, including training and conferences".

Last week, Sky News revealed that some major banks were urging the BBA to seek a merger with the Council of Mortgage Lenders or another trade body in order to cushion the loss of millions of pounds in revenues from its role in overseeing the Libor benchmark interest rate.

The BBA, which is relinquishing that role in the wake of the Libor-fixing scandal, declined to comment.

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