The Strategies to be adopted for UK Financial Services sector in the light of implementation of Brexit

1. UK Financial Services
R.Kannan
5th
May 2017

2. Mega Trends
• Increased Geo political issues in the world.
• The rise of terrorism across the world.
• Tensions in South China Sea.
• Threats by North Korea.
• Frequent changes in Government policies
across the world / uncertainty of continuity of
policies.
• Increasing protectionism
• Rising tensions across borders

3. Why UK is best place for Global Financial Services
• Robust Economy
• The leading Financial Centre in the world.
• Low interest rates
• Domain expertise in
• Open Economy
• Citizens from around the world
• Investments from around the world
• Very good Eco system for Financial Services
• Most of the Global Multinationals having
operations.
• Good financial infrastructure

4. Present Status
• Despite predictions of big impact on Brexit on the Financial
services, the sector continues to do well.
• The major players in the sector reported good results.
• The Economic activity continues to be steady and among the
best in Europe today.
• Even in the reduced interest environment, Net Interest
Margins continue to be steady.
• The capital adequacy ratio has improved.
• High Dependence on EU for the financial services exports.
• World Class regulation is giving the required support to keep
the leadership position

8. UK and EU Financial Services

9. UK Banking System in 2014

10. Assets under Management

11. Number of Cross Border Funds

12. Emerging Risks
• Implementation of Brexit Provisions.
• Likely reduction in Economic Activity.
• Shortage of skilled employees
• Transition to new regime creating uncertainty.
• Elongated Transition period
• Likely reduction in Services exports to EU.
• Likely reduction of operations by Incumbents.
• Cyber security.
• Other Financial Centres trying to take lead

13. Likely Impact of Brexit

18. Vision
• Vision for Financial Service could be , “ Remain
the leading Financial Centre in the world . “
• Mission for the Bank of England has been
already well defined.

19. Objectives
• To make the Eco system more competitive and make UK more
attractive for Financial services. To help attract more FDI into UK.
• Keep the debt levels at desirable levels at Country level, Firm level
and Individual level.
• To help achieve an Economic Growth of 2% every year .
• To maintain the inflation of 2%.
• To develop strategies to achieve an annual growth of 4% p.a in
Financial Services.
• To help achieve an unemployment level of less than 5%.
• Catalyze the Faster adoption of Fintech
• Catalyze the development best Cyber security solutions.
• Always ensure an integrated approach to regulation of financial
services.
• Catalyze Optimum utilisation of Capital Financial Services entities

20. Opportunities
• Adoption of Fintech.
• Fast growing countries in the world.
• Offer the boquet of products available in the UK market to
countries which are looking at developing their financial
services market.
• Assist the countries which are in the phase of developing their
financial markets and link these new markets to UK Financial
services through JV’s , Tech transfers and sharing of
infrastructure.
• Bond / Share issuances from countries like India, China, Brazil,
Mexico, Russia.
• Introduction of Sharia Products and help countries from
Middle East and Africa to raise capital .

21. Strategies
• Already well defined documents on strategy are available.
• Create a global campaign to market UK as the Centre for
Financial Services.
• Conduct Road shows.
• Create specific strategies for attracting more FDI and more
short term flows.
• Set the policy rate based on GDP growth, Unemployment /
Under employment / Inflation levels.
• Whenever changing the policy rate, change the rate by 10 bps
which makes it easier increase or decrease later.

22. Strategies
• Take the lead in signing the MOUs / agreements with other
Regulators in EU even before other agreements relating to
Brexit kicks in. The terms could be same as what is the status
quo with the European Union Today.
• Convince the government, the need for employing skilled
professionals from EU and other countries in the world and
not to disrupt the existing employees in the system.
• Create special incentives for existing Financial services firms
to continue their commitment to UK.
• Create a contingency plan for each sector of operation at
Central Bank level.
• Create new plans with a higher growth target for Banking,
Insurance and Asset Management sector.

23. Strategies
• Guide the Financial Services firms to prepare their
contingency plans for addressing the Brexit .
• Encourage the firms to look at new markets and new
products/ services to grow their business.
• In the light of the Brexit, the existing Structures, Systems and
processes could be reviewed and if any modification is
required, it could be effected.
• Create a kitty for addressing the effects of budget. Make a
provision in the budget for various measures required to
address the challenges posed by Brexit.
• The budget could be for the next three years .

24. Thank you