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What’s first strategy or risk appetite?

December 2nd, 2020

A regular feature in the Investors Chronicle is a column called “Portfolio Clinic”, it evaluates a reader’s investments, appetite for risk and their retirement plans. Often the reader gets a shock – their assumptions about risk and return do not match and they are forced to adjust their plans. In this way investment strategy and […]

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Capital Question

October 6th, 2020

Capital adequacy is right up there in terms of importance and quite rightly too as it’s a measure of the ability to absorb losses. What’s a lot harder to nail down is the way we manage the interest rate risk on capital and that is what this article addresses……..Read more here Capital question  

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Write mortgages, wrong price?

September 11th, 2020

Selling mortgages with interest rates of between 1% and 4% may seem like an opportunity too good to miss, particularly now Bank rate is 0.10%, but is this too good to be true? Let’s see. As a lender if you want to build a mortgage pipeline it’s straight forward, all you need to do is […]

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Dealing With Uncertainty – Part 2

June 16th, 2020

In a world where our risk has now increased the natural inclination is to add to buffers as a way of protection, but this can become ruinously expensive. To offset this, the more levers you can pull and the more effective they are, the more you manage such costs. There are big gains therefore to […]

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Dealing With Uncertainty – Part 1

June 2nd, 2020

Victorian bridges (or any other long-lasting structure) remain functional because the engineering was known. Herein lies a problem our business contains a lot of uncertainty and subjectivity -What triggers customers to withdraw money? -Are wholesale markets riskier than retail? -Are government guarantees like the FSCS helpful, if so, how do they affect withdrawal rates? -Is […]

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Net Interest Income

May 6th, 2020

Given it’s importance why is it that many firms don’t target NII? It’s just not a regulatory priority. The main concern for the regulator is whether the capital supports the business. Just as night follows day preoccupation by the regulator on certain things draws in management too. The PRA concentrates on solvency not what makes you solvent.  Basis risk also […]

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Legacy Assets

February 16th, 2020

The balance sheets of building societies often contain legacy assets. That’s business that you wish you hadn’t got. It can be on either side of the accounts and typically it’s base rate, Libor or lifetime linked. The customer may also have flexibility concerning drawdown and repayment, and this makes things worse. The net effect is […]

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The cost of divorce

November 29th, 2017

When two parties separate there’s often a settlement involved. Normally this is an up-front payment and may include ongoing maintenance. The amount is subject to assets, dependents and time. A 50/50 split is often considered equitable. Breaking up isn’t just for the family courts it happens elsewhere too. Exit a contract early and pay the […]

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The wealth effect

June 6th, 2017

To be an equity investor (active or passive) you must be an optimist. You believe that the future will be better and with this income and growth will accrue.  The route may be bumpy but you know that if you are invested for two decades it’s almost impossible to lose money. This applies even before […]

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Negative rates

March 22nd, 2016

It takes a bit of thought. When you lend money you take a haircut. That’s what negative rates mean. It’s supposed to stop banks redepositing, lending money to the real economy instead. But it’s not well thought through. Sub-zero rates lead to unanticipated problems. It sends out a very confusing message. We want banks to […]

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