Annual Report 2014

BBA at a glance- Our work in 2014

The BBA is the leading trade association for the UK banking sector with 200 member banks headquartered in over 50 countries with operations in 180 jurisdictions worldwide. Eighty per cent of global systemically important banks are members of the BBA. As the representative of the world’s largest international banking cluster, the BBA is the voice of UK banking.

Our member banks make up the world’s

largest international banking cluster,

operating 150 million accounts for

UK customers and contributing over

£50 billion annually to UK economic

growth. We represent our members to

policymakers, regulators, the media and all

key stakeholders across the UK, Europe

and beyond, working together to promote

a legislative and regulatory system that

helps customers, promotes growth and

raises standards in the industry.

Helping customers

In 2014, we worked with the Government,

regulators, consumer bodies, charities

and our members to improve services for

consumers and businesses and increase

competition in the banking sector for the

benefit of all customers. The BBA:

• Steered a landmark agreement

between the banking industry and

the Government to deliver what is

arguably the world’s best entry-level

and payment account. This has paved

the way to help more than a million

remaining unbanked consumers to get

the bank facilities they need for their

day-to-day needs.

• Recommended the ISA regime be

made simpler and more flexible, which

resulted in the Chancellor announcing

the arrival of New ISAs or “NISAs”.

Customers are now able to save up to

£15,000 a year tax-free and the savings

allowance can be put into cash, shares

or a combination of the two.

• Boosted competition by promoting the challenger bank sector as a credible alternative to the status quo, and argued for improved access to capital and more proportionate capital weightings for these institutions.

• Helped the Financial Conduct Authority shape its rulebook on helping vulnerable customers in financial difficulty, after the regulator took over responsibility for credit legislation transfer from the Office of Fair Trading.

Raising standardsWe helped shape the many new measures in 2014 to enhance banking stability and raise professional standards of behaviour, as lessons were learned after the financial crisis. The BBA:

• Stimulated debate around culture and ethics in the banking industry with our inaugural “Better Banking” conference.

• Brought together senior representatives of banks, government departments, regulators and law enforcement in a new Serious and Organised Crime Forum to develop a collective way to fight financial crime.

• Worked closely with the Prudential Regulation Authority and the Financial Conduct Authority on proposals for the new Senior Managers Regime, which will make senior managers more individually accountable for key functions within their banks.

• Worked with HM Treasury to ensure that the secondary legislation on

ringfencing was consistent with the

services needed by retail and SME

customers in particular.

• Helped tackle the problem of “too

big to fail” by leading industry

engagement with the Government and

Bank of England to ensure that the

arrangements in place for failing banks

would work as effectively as possible.

• Worked to support the new single

global standard for the automatic

exchange of information between tax

authorities, and provided guidance on

how to make the new regime workable

and sustainable for our members.

Promoting growth

The BBA and its members, in partnership

with the Government, Bank of England

and leading business organisations, made

a significant contribution to the success

of small and medium-sized businesses in

helping revive the UK economy. We:

• Helped thousands of entrepreneurs

with friendly, unbiased support and

guidance through our Mentorsme

website.

• Celebrated the success of women-led

businesses with the second annual

Mentorsme Awards.

• Identified ways in which the European

Commission’s proposals for bank

structural reform could be placed on a

sounder technical footing.

BBA membershipThe BBA experienced its fastest growth in membership for

over 40 years

As the leading voice for the world’s largest banking cluster, we continued to maintain constant engagement with UK and international policymakers throughout 2014 with our comprehensive programme of briefings, formal submissions and reports, as well as ensuring regular dialogue through high-level events.

In helping to shape the policy and regulatory agenda, the BBA provided industry input and expert feedback across every aspect of banking policy with members participating in new committees, technical panels and working groups with industry peers, interacting with regulators, policymakers and government officials.

As we entered 2014, we overhauled our membership and governance structures in line with the new segment advisory boards, to enhance the service given to banks operating in distinct areas of the market. Today, our growing membership represents every aspect of global banking and covers all areas of market focus;

• Large, regional and small retail banks

• Challenger banks

• Private banks

• Major wholesale banks

• International banks

• Custody banks

• Islamic banks

With our expansion into Brussels in early 2014, our members welcomed the new opportunities and understanding afforded to them through the building of closer connections with the European Parliament, key officials and policymakers. A series of Brussels-based summits, stakeholder meetings and technical member briefings has kept the importance of the UK banking sector front-and-centre with the most senior policymakers and standard setters.

As a result, the BBA has

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experienced the fastest growth in membership in the last 40 years, with new banks joining every month throughout 2014 and now, almost all global systemically important banks (G-SIBs) are represented by the BBA.

In 2014 we also commenced the development of a series of new market innovations that increased our engagement across all banking subsectors. These new operationally-focused initiatives have been designed to address common issues whilst enhancing organisational effectiveness and include:

• Online audit confirmations to reduce burdensome paper-based administrative processes

• A new web-based Financial Crime Alerts Service to enhance the sharing of data between government and law enforcement agencies and the industry

• A global operating loss database to improve internal risk management controls.

The BBA now represents £8 trillion of UK-based banking assets and we are proud to represent the diverse interest of our membership; from our retail banks or new challengers innovating consumer services, to world-leading private banking operations and global wholesale and investment banks. •

Diverse members, stronger togetherChairman’s report

Our diverse membership puts the

BBA in a unique position to offer a

strong voice to the banking industry

as it responds to uncertainty

2014 saw some progress for the banking industry in Britain. Banks are now better capitalised and have greater liquidity. But it is generally recognised within the industry that more still needs to be done to restore its reputation in the eyes of the general public.

I know that the senior management of banks has this as a top priority and are working hard to translate the new approach to banking throughout their organisations. Key to that new approach is the recognition that individuals working in banking at all levels have a personal responsibility for the restoration of public trust in the industry. The Banking Standards Board, set up by the UK’s six largest banks and largest building society, will have an important role to play in contributing to the continuous improvement in the behaviour and competence of banks doing business in the UK.

The BBA is fortunate in having a broad and diverse membership, ranging from small, private banks, challenger banks and foreign banks to the largest retail and investment banks. Many of these banks have not been touched by incidences of poor conduct and have continued to provide good service to their customers.

While 2014 saw progress within the banking industry, the industry still faces much uncertainty, including as a consequence of possible political developments. In addition, many banks are in the

midst of implementing “the ringfencing” of their businesses, required by the Financial Services (Banking Reform) Act 2013. This is proving expensive and requires significant management resources. At the same time the banks are facing three reviews, each of which could have major consequences for the organisation and running of their business; namely the review by the Treasury, the Bank of England and the Financial Conduct Authority into fair and effective financial markets, the investigation of the Competition and Markets Authority into retail banking and the FCA’s investigation into competition in investment and corporate banking services. Each of these measures might be justified on their merits, but taken together they are bound to increase the uncertainty facing the banking sector and so inhibit the development of business to support growth and prosperity.

To top it all, the Bank Levy has been increased nine times in the last five years. Discriminatory Corporation Tax changes have targeted the banking sector too.

The Chancellor has set out no clear justification for this discrimination against the British banking industry. It will cause damage to a sector which brings significant benefit to this country, in terms of tax, jobs, export earnings and finance for growth.

The Association has worked hard in 2014 to reach out to its diverse membership. We have been helped here by its new set of rules which simplify its governance and provide for an organisation more sensitive to the needs of its members. In 2014 the Association began to benefit from this new structure. The BBA’s

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Member Segment Advisory Boards – or MSABs – are now firmly established and give every sector of the industry, both new and old, the opportunity to have a say in policymaking in the BBA. Challenger banks are becoming an important voice in our industry and I welcome the role that they are playing in boosting competition in the banking sector.

I believe the BBA has become a respected channel for communicating the banking industry’s views to regulators, supervisors, government departments and politicians from the UK, as well as members of foreign governments.

The BBA remains committed to helping customers, raising standards in our industry and promoting growth in the UK economy. With this in mind, we have continued to carry out a number of important public interest functions. One such example is our work to help banks and the authorities in the fight against financial crime. Our new Financial Crime Alerts Service – an industry-first which has been developed with the National Crime Agency – will be launched in 2015. This pioneering new system will change the way that banks and law enforcement fight criminals and fraudsters.

Not only is the BBA helping to keep consumers’ banking activities safe, but it is reuniting them with money that was once considered long lost. Our “MyLostAccount” tracing service has just celebrated its seventh birthday. It is estimated to have helped unite bank, building society and NS&I customers in excess of £800 million since its launch in 2008.

The Association has restablished BBA Confirmations, powered by Confirmation.com. This provides a secure online solution that enables external auditors to confirm their clients’ bank balances and arrangements directly with UK financial institutions.

The BBA has successfully transferred the operation of LIBOR to Intercontinental Exchange (ICE). The Association still faces a number of lawsuits in the USA which are presently stayed, but which we will be vigorously defending should they proceed (details of these can be found in the Notes to the Accounts).

Early this year, a consultation paper was published on “Rethinking the UK financial services trade association landscape”. It is a

matter for the members of the various trade associations, including the BBA, to make known their response to this document. The BBA will be guided by the views of its members and will continue to act in a way that safeguards their interests.

Finally, I would like to acknowledge the role of the executive team and staff in their contribution to the BBA’s achievements, and thank them on behalf of BBA members for all their endeavours in 2014. In particular, I would like to pay tribute to the BBA’s Deputy Chief Executive Sally Scutt, who after 17 years of service will be stepping down from the BBA this summer. •

Restoring trust must be at the heart of banks’ rehabilitationChief Executive’s report

2014 saw good progress towards

restoring banks’ reputations, but

more needs to be done

In 2014 the banking industry worked hard to restore trust, innovate and improve the standards of service that it delivered to its customers. Although good progress was made towards righting the wrongs of the past decade, there is still further to go.

It’s regrettable that just as our industry appears to have moved from the “recovery” phase into “rehabilitation mode”, scandals of years gone by continue to rear their head and remind us that more still needs to be done.

I am confident that Britain will again one day have a banking industry that has a strong reputation for honesty, integrity and fairness. We are making good progress, but there is still much to do.

The new Senior Managers Regime, the Fair and Effective Markets Review, and proposals on Capital Markets Union are all signs of strides towards rehabilitation. At the core of the Senior Managers Regime is accountability – those at the top of the banks will now take responsibility for the actions of their staff and be held accountable for doing so. The Fair and Effective Markets Review will help to drive up standards in the fixed income, currency and commodities markets. Capital Markets Union, if successfully implemented, will promote growth in the UK and the European Union.

The BBA remains committed to delivering on our strategic goals of promoting growth, raising standards and helping customers as these are

essential elements in rebuilding trust in banks. The subject of trust was central to discussions between delegates and experts at our inaugural Better Banking conference last December.

We should also be aware of the unintended consequences of regulatory change, which are a threat to the banking industry’s progress. The fragmentation of the global banking system, the balkanization of capital and liquidity, and the differing, and at times conflicting, regulatory regimes across the world have all had unintended consequences for our sector.

As I told our Annual Conference last October, this matters if we are to maintain London’s place as a global financial centre that creates jobs, growth and prosperity across the UK. There are already signs that we are starting to slip down global rankings, and the US recently overtook the UK to become the largest exporter of financial services in the world. It is important to get the balance right – banks want to operate within the remits of the rules, but these rules should not stifle growth.

These concerns can in part be mitigated by the EU. The BBA has been a strong voice in Europe, and last autumn wrote to European Commission First Vice-President Frans Timmermans, calling for a fresh look at the Commission’s proposals on the structural reform of banks.

In 2014 we welcomed a new European Parliament and European Commission. The UK’s Commissioner, Lord Hill, is responsible for financial stability, financial services and Capital Markets Union. Lord Hill’s appointment is good for customers and businesses, as the Commission looks for ways to unlock the flow

Sir Nigel Wicks

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of finance to bolster jobs and growth across Europe.

Closer to home, a year on from the introduction of the BBA’s new governance rules there is now stronger engagement with different sectors of our broad membership. The shift has gone from looking backwards to looking forwards. We disposed of LIBOR in 2014 and undertook a major internal reorganisation which resulted in the need to recognise an exceptional loss for the year. Please see accounts on page 29.

The clear result in May’s general election meant that the UK economy avoided the uncertainty that is caused by coalition negotiations, but I know some banks are concerned about the EU referendum that has been promised by the new government. We look forward to working constructively with the new government.

Finally, I would like to join our Chairman Sir Nigel Wicks in paying tribute to the BBA’s Deputy Chief Executive Sally Scutt, who after 17 years of service will be stepping down from the BBA this summer. Sally’s wisdom, energy and institutional memory will be missed and I would like to wish her well and thank her for everything she has done for the BBA. •

Deepening knowledge of banking’s role in the UK

Promoting competition in the UK banking industryJames Barty Tommy Ricketts

Supported by

It’s in your hands Financing European GrowthThe cyber threat to banking A global industry challenge

In association with

The Benefits of Banking

Banking on the moveThe next revolution has begun

THE WAY WE BANK NOW

We produced our biggest ever

selection of publications last year,

informing debate and strengthening

knowledge of the issues affecting

the City

Last year, the BBA produced its biggest selection of publications. These ranged from policy reports and statistical data, through to leaflets for consumers on issues such as protection against fraud. Our specialised knowledge and experience means that the BBA is considered an authoritative voice in the City and one whose groundbreaking policy work is highly regarded. Our members and many other parties rely on us to deliver a clear understanding of our industry and the issues it faces in the 21st century.

This year the BBA has expanded the number of reports and other publications it produces, deepening knowledge of the role of banking in the UK.

Banking on the moveThis leaflet explores the new ways that

customers are using mobile apps and online banking that allow them to bank wherever and whenever they please.

British influence in the EUThis report looks at the number of British

staff working at the European Commission, and considers the implications that declining staffing levels may have on British influence in the EU policymaking process.

Promoting competition in the UK banking industry

Britain already has a highly competitive banking industry, but here we set out vital steps policymakers should take to encourage new entrants to set up and grow.

It’s in your hands A revolution is underway in how millions of

us spend, move and manage our money. This report explains how much retail banking has changed in recent years and outlines what the next generation of financial services could look like.

Financing European growth This report sets out a range of ideas to boost

the growth of the European economy, including strengthening the financial system across Europe and ensuring it is more diverse and better equipped to support the needs of businesses.

The benefits of banking Banking is a vital industry for Britain’s future

and one that supports businesses, the economy and consumers in their everyday lives.

The cyber threat to bankingBanks and their customers are under attack

from a variety of threats, ranging from small scale hackers to foreign government agencies.

A Wealth of OpportunitiesThe first study of its kind, A Wealth of

Opportunities examines the contribution of wealth management and private banking to the UK economy. •

Anthony Browne speaking at the BBA Annual Conference

Rules made in 2014 have made our

industry safer, so that the taxpayer

never again has to bail out a bank

In the words of Bank of England Governor Mark Carney, 2014 was a “watershed” year with regards to efforts made to address the problem of “too big to fail” in the banking sector. First, the G20 leaders endorsed proposals that will ensure the largest banks can fail without calling on the taxpayer or disrupting the wider economy. Second, 2014 was the year in which the UK implemented the Bank Recovery and Resolution Directive (BRRD), the centrepiece of the EU’s response to the financial crisis. The Directive improves the tools for dealing with bank crises across Europe, by requiring banks to prepare recovery plans to overcome financial distress. Authorities are also granted a set of powers to intervene in the operations of banks to avoid them failing.

In November 2014 the Financial Stability Board published proposals for total loss absorbing capacity (TLAC). This was a momentous moment for the FSB/G20 process. The BBA engaged with central banks and regulators in the UK, Europe and other G20 countries to offer expertise to support the design of the proposed framework.

While much of the technical detail remains to be agreed, at the start of 2015 it looks likely that the framework will ensure that each of the largest banks (G-SIBs) has sufficient loss absorbing and

recapitalisation capacity available to implement an orderly resolution should it fail. Critically, this will be structured in a way that will promote trust and cooperation between authorities in different countries.

Although conceptually similar to existing UK rules, implementing BRRD has been a major project for the UK. The BBA has led industry engagement with the Government and Bank of England to ensure that the toolkit – governing the arrangements for a failing bank – will work as effectively as possible, including from a commercial and operational perspective. Importantly, HM Treasury withdrew a proposal for interim UK-specific rules which would have required banks and their clients to prepare for two different regimes within a short space of time. There was also confirmation that the UK will opt to use the existing UK Bank Levy to meet the BRRD obligation for a resolution fund, ensuring that bank resources can continue to be used to support growth. •

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After several years of consultation, dating back to the Independent Commission on Banking appointed in June 2010 under the chairmanship of Sir John Vickers, the Financial Services (Banking Reform) Act 2013 put in place the legislative framework for ringfencing. Under this, the UK’s largest banks will be required to provide retail and SME deposit-taking services in a separate ‘ringfenced’ legal entity to investment banking services which they may offer. Ringfencing is seen as complementary to resolution planning in ensuring the continuity of services for households and SMEs in the event of a banking group encountering financial difficulty.

With the primary legislation completed at the tail end of 2013, the focus of attention for the first half of 2014 turned to finalising the secondary legislation, which defines much of what it is that a ringfenced bank can and cannot do. This determines, for instance, the product range that can be provided from within the ringfenced bank in areas such as trade finance and ‘simple’ derivative hedging – and has been characterised as setting the ‘location’ of the ringfence. This is key to the services that our larger banks will be able to provide to customers once the ringfence is put in place.

With the secondary legislation completed, in July, attention then turned to the regulatory regime needed on the part of the PRA and the FCA. This has been characterised as the setting of the ‘height’ of the ringfence. This was marked by the PRA publishing, in October, the first of three consultations on the regulatory regime for ringfencing, this time round on governance, legal structure and operational issues.

As well as providing an industry view on the many technical issues raised in the consultation paper, our response underlined the need for the PRA and FCA to publish the remaining draft guidance as soon as possible this year and to ensure that, looking forward, they have the capacity to provide on a timely basis the regulatory approvals that will be needed in respect of ringfencing plans. The BBA also flagged the demands that the transition to ringfencing will place upon payments systems, the Land Registry and Companies House. All will need to play their part if UK banks are to meet the 1 January 2019 timeline.

An added complexity has been the publication of proposed EU structural reform measures at the start of 2014. These build on earlier recommendations by a High-Level Expert Group, chaired by Erkki Liikanen, Governor of the Bank of Finland. The Commission proposals give rise to issues not only for the UK ringfenced banks, but UK non-ringfenced, EU and third country banks operating in London and across the UK.

We have spoken in Brussels with various interested parties and in November we joined the Fédération Bancaire Française in writing to the First Vice President of the European Commission, Frans Timmermans, suggesting that the incoming Commission think carefully about how to proceed. We have also identified ways in which the proposals could be placed on a sounder technical footing. •

Bank structural reformLegal changes to the way that banks are structured were clarified in 2014. The BBA remained a strong voice for our members, and highlighted the challenges they will face to meet the 2019 deadline for change

Tackling the problem of “too big to fail”

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Representing the UK’s international wholesale markets

The far-reaching implications of

MiFID II continued to pose questions

to our industry in 2014. EU plans

for a “Capital Markets Union” also

provided an opportunity to drive

much needed economic growth

across Europe

The BBA provides an important forum for policy decisionmakers because we represent UK international wholesale markets. Our work in this area saw us respond to two consultations from the European Securities and Markets Authority (ESMA), which focused on level two of the Markets in Financial Instruments Directive (MiFID) II. MiFID – which has now been split into a Directive and a Regulation – is the cornerstone of EU regulation of capital market activities, investor protection and market infrastructures. It governs the provision of investment services by banks and investment firms, and sets out a framework for regulating market infrastructures. The complexity of the subject-matter and its pan-European implications made this one of the most far-reaching reforms to have ever been attempted by the EU.

Specifically, the consultations concerned MiFID II’s regulated technical standards and technical advice, and asked a staggering 848 questions.

The BBA was the driving force behind a cross-industry effort to respond to the 1,000 page document. The consultation asked for the financial industry’s view on whether the proposed

policies would benefit users of the EU’s capital markets and achieve their objective of improving the competitiveness of the EU’s financial markets by enhancing a single market for investment services and activities.

We prioritised our response to questions on third country issues, investor protection and transaction reporting.

The BBA stimulated further debate on the subject at our conference “MiFIR/MiFID II: from birth to implementation” in April 2014, which examined the context, possible pinch points and strategic decisionmaking behind the new regulations. Following this, the BBA’s Capital Markets and Infrastructure team continued to work on ensuring MiFID supports and promotes European capital markets which fund economic growth, whilst at the same time ensuring markets are safe, effective and sustainable.

Capital Markets Union

There was further excitement in the capital markets last year when the EU announced plans to establish a “Capital Markets Union”. In September 2014 the President of the European Commission, Jean-Claude Juncker, tasked the UK’s Commissioner, Lord Hill, with “bringing about a well-regulated and integrated Capital Markets Union, encompassing all Member States by 2019 with a real view to maximising the benefits of capital markets and non-bank financial institutions for the real economy”.

CMU is an important opportunity for European capital markets to provide complementary sources of funding to support European businesses to drive much needed

economic growth across the continent. The BBA outlined potential considerations in our publication Tuning ‘Capital Markets Union’ to deliver an engine for European Growth. We also identified a list of potential measures which were discussed with the European Commission. We believe that CMU’s purpose is to strengthen the Single Market and deliver a single rulebook for the EU. We strongly advocate that the European Commission should harness all the tools at its disposal to deliver this objective. This may mean using non-legislative means, as well as reviewing existing legislation to assess if it supports the objectives of Capital Markets Union. We also feel that a key element of the framework should be to set measurable outcome-based targets that can be achieved in the short and medium-term.

European Market Infrastructure

Regulation (EMIR)

In the post-trade area, the BBA helped our members to implement the European Market Infrastructure Regulation (EMIR). EMIR focuses on derivatives, central counterparties and trade repositories. It also introduces new requirements to improve transparency and reduces the risks commonly associated with the derivatives market.

Last year the BBA worked with a number of global industry bodies and policymakers to drive forward negotiations concerning an agreement on data taxonomy/report taxonomy. This included a meeting with David Wright, Secretary General of the International Organization of Securities Commissions (IOSCO). •

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Supporting Britain’s businessesThe BBA’s business finance team remains dedicated to helping firms find the right finance at the right time, and in the right mix

The BBA’s business finance team is at the heart of business and growth policy development, providing direction on key issues that affect all business types from start-ups, to SMEs, midcaps and larger firms.

Businesses are Britain’s engine for economic growth and in 2014 we remained focused on ensuring that the banking industry supported firms in a range of ways, from getting them the right information and support to understand their options, to improving access to finance across the spectrum of finance types.

The banking industry is committed to working with small and medium-sized enterprises, helping them to expand, create jobs and drive economic growth. Last year the cost of finance fell and credit availability improved, which provided good conditions for growing and developing a business. Gross lending and net lending to businesses improved and alternative finance options offered by banks and non-banks equally expanded. This reflects a welcome pick-up in business investment.

Exports

Exporting is vital for the health of Britain’s economy and the BBA is committed to ensuring British exports continue to grow. Last year saw much of the BBA’s Export Committee’s work bear fruit. The Committee is a 20-strong expert group made up of the world’s leading export banks, and has been hard at work making sure that UKEF – the UK’s export credit agency – has a mix of products and services that is as good as its international counterparts. In 2014 we saw a newly formed Direct Lending Facility (DLF) and Export Refinancing Facility (ERF) and a landmark agreement to change the longstanding constitution of UKEF to make it more able to support export supply chains.

Under the DLF, exporters are paid immediately as if they had a cash contract, and the buyer has time to repay the loan over a number of years at a very competitive fixed rate of interest. This improves the exporter’s cash flow and makes it easier for overseas businesses to buy UK goods. The BBA also called on the Government to price the loan repayments at a much more competitive interest rate. Ministers heeded our calls and the scheme is now one of the most competitive in the world.

Work with government

In 2014, the BBA helped the Government review its small business strategy, industrial policies for the automotive and creative industries, and to set up the British Business Bank (BBB).

These discussions fed into the creation of the Small Business, Enterprise and Employment Bill. The Bill was the first of its kind in the UK to propose specific measures to help small and medium-sized enterprises across a spectrum of activities, from prompt payment to tax to credit services. It received Royal Assent in March 2015, and includes our recommendation of change to UKEF’s constitution so that it can be more flexible in its help to exporters.

The BBA and our members also talked to the Government about how a more formalised “platform exchange” might work between banks and alternative finance options. Our ideas were crystallised in the Act, and more detailed work on the operational mechanics of our ideas is set to take place in 2015.

Throughout 2014, the BBA stressed the importance of policy certainty and continuity as Britain’s economy continues to recover. We called on the Government to build on the success of the BBB and to consolidate all government finance schemes into it. We also suggested that the BBB increase its work in growth sectors, and urged the Government to boost core funding for catapult centres to help further develop their engagement with supply chains and SMEs. This led to several evidence sessions in Parliament with the Treasury Select Committee, Northern Ireland Affairs Committee and the Business, Innovation and Skills Committee on a range of issues affecting our industry and its business customers.

Our work also continues on diversity and transparency to help business choice. We launched our Diversity Council with practical outreach actions and continued policy suggestions for LEPs and government. We worked with the FSB and Chambers to develop the new BBI survey and online tool for businesses to review the rating of bank services by their peers covering over 70 banks. We also worked with ICAEW and the Business Bank on a business finance guide to complement the Better Business Finance online tool, supporting many thousands of businesses in their search for the right finance to support growth plans. All

of this work is used in our ongoing discussions with Europe as we support the Commission’s aims and progression towards Capital Markets Union.

Mentorsme

The BBA is proud of its work in supporting businesses across the UK and our Mentorsme programme has helped thousands of entrepreneurs. Mentorsme, which is managed by the BBA on behalf of the banking industry, helps businesses benefit from unbiased support and guidance from an experienced mentor. Through Mentorsme, businesses can connect with mentoring organisations and take forward a mentoring relationship suitably matched to their needs. The initiative includes 1,000 bank staff who offer their services for free.

When Mentorsme was launched in 2011 it enlisted the support of 44 mentoring organisations. Today that stands at 121 with access to 27,000 mentors, and with bank participants also now covering Northern Ireland. Mentorsme plays a pivotal role in ongoing quality assurance of enterprise mentoring via its Enterprise Mentoring Advisory Council, which is co-chaired by the BBA and SFEDI, the Small Firms Enterprise Development Initiative.

Powering growth

Mentorsme has reached over 200,000 businesses, and the bank programme within it has reached around 4,000 businesses. In 2014, the BBA researched the initiative’s impact, and many firms testified to its important role in their development and growth plans. Our research found that:

• 75 per cent of businesses improved investment readiness;

• 65% of businesses mentored reported a positive effect on international expansion;

• 67% an increase in productivity;

• 60% an increase in sales; and

• 62% reported a positive impact on increasing product, markets and business services.

The bank programme has also seen the creation of over 200 new businesses and more than 1,500 jobs around the country.

Mentoring is an effective way of encouraging entrepreneurs to pursue their passions and plays a key role in contributing to their growth and economic impact.

Export clubs and sector support

One of the most effective ways of encouraging entrepreneurs and business professionals to become involved in mentoring is to experience it at first hand.With this in mind, the BBA organised a number of “Meet the Mentor” events in 2014. These events offered small businesses the opportunity to meet a mentor, ask questions, and learn what mentoring could do for their business. The majority of businesses attending these events signed up a mentor and progressed to specific one-to-one work.

Our Export Clubs also offered businesses important insight. Last year we held Export Club events in Glasgow, Newcastle, London and Manchester. The events offered businesses interested in exporting the opportunity to meet with bankers who could share with them their specialist knowledge. Entrepreneurs had the opportunity to ask questions about exporting, and seek guidance and help with putting their plans in motion.

Throughout 2014 the BBA focused on increasing mentoring within a number of sectors, including agriculture and farming. We worked closely with the Department for the Environment, Food and Rural Affairs and SFEDI to put 200 farming training mentors out into farming communities.

Excellence in Women’s Enterprise

Mentoring Awards

In November 2014 we celebrated the success of women-led businesses with the second annual Mentorsme Awards. The awards, which were supported by BT and the Women’s Business Council, were held at the BT Tower during global entrepreneurship week. Recipients were honoured for excellence in start-up, growth, export and innovation, and digital enterprise. Two women were also honoured for their work as mentors. Nominees worked in a diverse range of businesses, ranging from renewable energy, to gin distillers and road safety technology. •

Irene Graham, Executive Director of Business Finance speaking at Unlocking the Potential of Diverse Businesses

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Financial crime

Over the last decade technology has

revolutionised the way that people

interact with each other, data is

shared and businesses operate.

Politicians, regulators and policymakers remain highly focused on financial crime at the UK and international level and a range of new measures to tackle it have been enacted or are in development. The interconnectedness of international financial services, geopolitical instability and an evolution in the ways that criminals offend have also altered the operational risks posed to firms. The BBA has worked through 2014 to deliver a programme of industry initiatives, with regular updates to our Board to support banks to strengthen their responses to financial crime challenges.

A key development in the public/private partnership in this area has been the formation of a new Serious and Organised Crime Forum to bring together senior representatives of banks, government departments, regulators and law enforcement to develop collective initiatives to address financial criminals. Co-chaired by the BBA and the Home Office, the Forum has established a new Task Force to strengthen intelligence sharing on money laundering, as well as reforms to UK legislation and international engagement. Such collaboration is essential to effective responses to financial crime and the BBA is proud to have driven this work forward in 2014.

The BBA has also sought to promote a better public understanding of how banks approach financial crime matters. This has included providing written evidence to the Treasury Select Committee and the Financial Action

Task Force, as well as verbal evidence to the London Assembly and international groups, such as the United Nations. We also published our inaugural annual industry report The cyber threat to banking – a global industry challenge. The report provided a view of the current cyber threats targeting the banking industry, in order to promote dialogue on collective protection strategies.

The BBA has intensified our practical support to banks to understand their risks. Last year, we carried out a number of thematic assessments which enhanced banks’ knowledge of financial crime threats. We have also begun to facilitate information sharing with public authorities through a new Strategic Money Laundering Intelligence Group. Internationally, the BBA has helped promote a new memorandum of understanding between banks and Europol, the EU’s law enforcement agency. The BBA also published further guidance for banks on addressing bribery and corruption. All of these efforts are supporting the most effectively targeted actions by our members against financial criminals.

Financial criminals continue to target banks’ customers, be they individuals or businesses. To help customers to protect themselves against these threats, in October 2014 we launched our “Know Fraud No Fraud,” campaign. This helped consumers by warning them of eight things that a bank will never ask – such as their PIN – but a fraudster might. This campaign received considerable traction in the media, and helped to protect consumers from fraudulent practices. •

Matt Allen, Director of Financial Crime speaking at the BBA Cyber Conference

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Taxation

The BBA worked closely with

members in 2014, as governments

collaborated on automated data

exchange

The exchange of information between tax authorities enables them to administer and enforce their own taxes and combat avoidance and evasion. Financial institutions are increasingly being required to report information about customers with a foreign tax residence, so that tax authorities can exchange this information between themselves and identify possible tax liabilities involving assets held overseas.

Last year the Organisation for Economic Co-operation and Development (OECD) continued to work on a new single global standard for the automatic exchange of information between tax authorities, allowing for the systematic and periodic transmission of bulk taxpayer information between tax authorities.

The BBA worked to support this initiative and provided guidance on how to make the new regime workable and sustainable for our members.

Common Reporting Standard

January 2014 began with intensive rounds of discussions between the BBA, HM Treasury and HM Revenue & Customs (HMRC) as the member governments of the G20 and OECD sought to agree a new global standard for the automatic exchange of financial account information and an ambitious timetable for its implementation in 2016. In the months that followed, the BBA, with extensive involvement by member banks, engaged in constructive engagement rounds with key stakeholders at a global, European and

domestic level, using comprehensive analysis and a solutions-based approach to assist in the development of detailed guidance for the consistent implementation and operationalisation of the Common Reporting Standard. The BBA’s advocacy on the issue of automatic exchange of information has yielded a number of pragmatic solutions and again reinforces the UK banking industry’s role as the leading industry advocate for a coordinated, worldwide approach to tackle tax evasion.

Base Erosion and Profit Shifting

(BEPS)

The OECD BEPS project was initiated to update the international tax system and address concerns that gaps and mismatches between tax rules were being used by some multinational businesses to artificially shift profits to low tax locations, resulting in little or no overall corporate tax being paid in the jurisdiction in which the business activity apparently takes place. The OECD developed a BEPS Action Plan in response to these concerns which included 15 actions scheduled to be finalised in 2014 and 2015. In 2014, the project concentrated on: tax challenges raised by the digital economy; hybrid mismatch arrangements; prevention of abuse of tax treaties; transfer pricing changes and country by country reporting. The BBA worked with key stakeholders to advocate for broader policy considerations affecting the banking sector to be taken into consideration while designing the new tax rules. For example, making the case that the tax treatment of hybrid regulatory capital needs to be consistent with regulatory policy. The BEPS project, and the BBA’s engagement with these proposals, will continue in 2015. •

Big challenges, bold moves, better banking

Customer relations, diversity and

ethical banking were just some of

the subjects discussed at our first

“Better Banking” conference

In December 2014 we were delighted to host almost 200 delegates at our inaugural “Better Banking” conference in London. Financial services professionals and representatives from consumer groups and the third sector heard industry experts discuss culture, ethics and standards for a good banking system. They were joined by journalists from a number of high profile media outlets, including Thomson Reuters, the Daily Telegraph and the Mail on Sunday.

Our Chairman, Sir Nigel Wicks, said that with the advent of the Banking Standards Board and the increasing focus on standards in the sector, now was the right time to explore the role of ethics in restoring confidence. He also highlighted the importance of individuals working in the financial services industry taking “personal responsibility” for the restoration of trust.

The BBA also welcomed Alex Chisholm, the Competition and Markets Authority’s first CEO and Chairman, who discussed the CMA’s role in ensuring that competition is not “weakened or frustrated”. He said: “For consumers, banking performs a vital service across society. Virtually every household in the country uses retail banking services.”

Mr Chisholm described banking as “part of the essential economic infrastructure of our society” and said the CMA would support moves to remove “disproportionate or excessive regulatory requirements” that dampen

competition.The strong line-up of speakers also included

Klaus Woeste, Director of Financial Services People and Change Team at KPMG, Patrick Crawford, CEO of Charity Bank, Steve Cochran, Head of Customer Proposition at Allied Irish Bank and Vinay Kapoor, UK Head of Diversity and Inclusion at BNP Paribas.

Delegates heard discussions on a broad range of topics, including the practicalities of building a strong culture and ethics organisation, ethical banking, customer relations and diversity.

Speaking at the end of the conference, Hon Mr Justice William Blair, Chair of the Law and Ethics in Finance project, said that ethical culture and responsibility needs to be within an organisation and across the system as a whole. He called for a consensus of ethical principles at an international level.

Feedback from the event was extremely positive and the conference provided an important forum for discussing lessons learned from our members’ experience over the last decade. We look forward to hosting “Better Banking” again in 2015. •

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Safer and sounder

The BBA has worked with regulators

to build a more resilient financial

system and to ensure the highest

standards are upheld

In 2014 the BBA’s Prudential Capital and Risk team worked closely with our members and helped them make sure they complied with new European rules on securitisation and reporting. Using our policy expertise, we were also kept busy responding to a range of important consultations that potentially had far-reaching effects on our industry.

Leverage ratio proposals

At the request of the Chancellor, in 2014 the Bank of England’s Financial Policy Committee undertook a review of the role of the leverage ratio in the UK’s capital framework for banks.

The BBA responded to this consultation, and advised against an overly complex design. We called for a simple leverage ratio that would act as a non-risk based complement to the already much improved risk weighted minimum capital adequacy framework. We also stressed the importance of calibrating it to ensure the leverage ratio remains a backstop regulatory capital tool, rather than a binding constraint.

Following our response to the proposals, we welcomed the FPC’s eventual decision not to include leverage ratio conservation buffers of Pillar 2 requirements, or automatic distribution restrictions if buffers are breached, as well as the

recognition that additional tier 1 instruments can count towards meeting minimum requirements.

The proposals are a further step towards ensuring that the UK has one of the safest and most competitive banking markets in the world.

Senior Managers Regime

A key aspect of the report by the Parliamentary Commission on Banking Standards (PCBS) has been the need for stronger accountability and clearer lines of responsibility on the part of senior management. This includes the introduction of the Senior Managers Regime.

The BBA has worked closely with the PRA and FCA as they responded to the PCBS’s call to redesign the Approved Persons Regime. The Commission recommended that senior managers should be made more individually accountable for key functions within their banks, and banks themselves should be responsible for monitoring the on-going fitness and proprietary of their material risk takers.

In our response, we emphasised the importance of a reasonable transition period to ensure that banks can properly introduce the new regime, and the concern that all non-executive directors were to be scoped into the Senior Managers Regime.

We were pleased that our concerns were taken on board. Banks will have until March 2016 to introduce the regime and non-executive directors that are not chairs of a board committee will not be classified as senior managers.

Regulatory enforcement decision-

making

HM Treasury published a call for evidence on regulatory enforcement decisionmaking as a government follow-up to recommendations made by the PCBS. The call asked for views on the fairness, transparency, speed and efficiency of the institutional arrangements and processes for enforcement decisionmaking at the FCA and the PRA. In our response, we identified a number of areas in which the process could be improved including the transparency within the process and the degree of independence built into the arrangements. The final report recommended changes along these lines, with the FCA and PRA to publish referral criteria, the dialogue to remain open throughout investigations to maintain a broad symmetry of information and greater emphasis to be placed upon when to begin enforcement investigations and when to use supervisory tools. The review deemed the FCA Regulatory Decision Committee to be suitably composed, but recommended that the PRA establish an independent enforcement Decision Making Committee and proposed better access to the Upper Tribunal.

Foreign branches

The BBA responded to the PRA’s consultation on its willingness to consider applications from foreign banks to establish in the UK as branches, rather than UK regulated subsidiaries. We welcomed the regulator’s decision that, subject to an assessment of equivalence and minimal engagement in retail deposit-taking, foreign bank branches would be welcomed in the UK.

Securitisations as liquidity coverage

ratio eligible assets

The finalisation by the European Commission of the liquidity coverage ratio (LCR) delegated act recognised that a wide range of types of securitisations would be eligible to meet LCR requirements, as the BBA had proposed. This will make them more attractive to bank investors, and therefore better able to play their part in financing the European jobs and growth agenda.

Regulatory Reporting

The BBA has been working closely with our members to achieve a smooth implementation of Common Reporting (COREP) and Financial Reporting (FINREP) requirements. These requirements were introduced by the Capital Requirements Regulations (CRR), which have introduced a new EU-wide supervisory reporting framework. With our members, we worked hard to ensure that they were clear about the granular aspects of the reporting, and able to identify the key data, and help finalise the XBRL (eXtensible Business Reporting Language) taxonomy. XBRL is a global standard for exchanging business information. The general consensus across the industry is that given the challenge provided by these requirements, implementation has been a success. •

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BBA strengthens its visibility in Brussels

Last year saw the BBA open the

doors of its new Brussels office,

bringing its work even closer to the

EU’s beating heart

The BBA may be the voice of banking and financial institutions operating in the UK, but because the City of London is a global financial centre our work in Brussels is increasingly important. With this in mind, we opened the doors to our new Brussels office in January 2014. Located close to the European Parliament, we are just moments from the beating heart of the EU.

Jonathan Faull, Director-General for the Internal Market and Services, and Ivan Rogers, UK Permanent Representative to EU kindly agreed to be guest speakers at the reception we held at the office’s official opening.

The BBA was the first national trade association to lease offices at the European Banking Federation’s premises, and our Danish and Irish counterparts have followed our path. Being right at the centre of the “Brussels bubble” means that that the BBA has grown in visibility and influence as an industry body, at the EU-level.

Last summer the BBA hosted a number of parliamentary assistants, financial attachés, officials, think-tankers, journalists, NGO and business representatives at our annual summer reception. The event, held at the European Banking Federation, was a big success and guests were able to relax and enjoy the informal atmosphere. This event demonstrated the importance that we place on the UK bank voice being heard in Brussels. •

Popular and easy-to-use banking technology is transforming the way millions of us spend, move and manage our money.

In 2014 the BBA launched a new channel of work to highlight the rapid adoption of mobile banking, contactless cards and balance alerts – innovations saving customers time and money as well as making it easier for them to keep track of their finances.

Launched at our Parliamentary reception in March, the BBA’s work – known as The Way We Bank Now – offered the most detailed look at the uptake of banking apps across the industry. These statistics received extensive coverage across the broadcast and print media, and today commentators often refer to our figures in their reporting.

A major report followed in July, setting out how much retail banking has changed in just a few decades and underlining how customers now have more choice about how, when and where they bank.

The Way We Bank Now has also helped explain the changing role of the branch. Transactions in high street outlets are falling sharply, but the branch will remain a vital part of banking in the 21st century providing a place to discuss products and services. This is why nearly a quarter of all branches have been refurbished in the past two years.

With the advent of Paym and the development of cheque imaging technology, there is no end in sight to this exciting transformation of retail banking.

So the BBA will continue our Way We Bank Now work in 2015 – with figures on the uptake of banking technology by older customers early in the New Year and a second full report in the summer. •

The Way We Bank Now

BBC News: Mobile phone banking transactions double in a year, BBA says

“Mobile banking app use for customers at the five major UK High Street banking groups almost doubled over the past year, BBA figures suggest. Customers now make 5.7 million transactions a day using smart phones and other mobile devices.”

Herald Scotland: There’s an app for that: Banks use technology to woo custom

“(But) the British Bankers’ Association argues that competition will be driven naturally as new technology spurs more innovative banking services.”

Sunday Telegraph: Banks get out their chequebooks to chase the next banking revolution

“The British Bankers’ Association found last year that 77% of us bank online at least once a month, using banking apps that have been downloaded 14.7m times, and that transactions worth £1bn a day pass through mobile and internet banking portals.”

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Saving for tomorrowThe BBA is working hard to rebuild a savings culture where customers can plan for tomorrow

New ISAs announced by

Government following BBA

recommendations

Anyone’s personal circumstances can change unexpectedly, leaving them to face payments they are surprised to see. That’s why the BBA is such a strong supporter of savings, and we believe that financial resilience is vital for ensuring that people can cope with managing their money day-to-day.

We were pleased when the Chancellor announced changes to the ISA regime during his 2014 Budget. We recommended that he make the regime simpler and more flexible, but the Chancellor went further than this by announcing the arrival of New ISAs or “NISAs”. Customers are now able to save up to £15,000 a year tax-free and the savings allowance can be put into cash, shares or a combination of the two.

After the changes were announced, banks were busy getting ready to help their customers take advantage of the new regime and support moves to promote a nation of savers. The new rules came into force on 1 July 2014.

Enhanced protection for savers

Savers taking advantage of reforms made to the ISA regime are now even more likely to be aware of the fact that up to £85,000 worth of their savings are protected. Last year, the BBA worked with Financial Services Compensation Scheme to help to drive up awareness of the protection that the scheme offers. The scheme is the statutory compensation fund of last resort for customers of authorised financial services firms and applies to all deposits, not just savings.

Alongside this, the BBA has encouraged the Financial Conduct Authority to adopt more formal oversight of the key comparison rate for savings accounts. The BBA believes that better products with clearer information that are underpinned by deposit guarantee are essential enhancements that will help to rebuild a savings culture. •

Challenger banks are a genuine and

credible alternative to the status quo

The BBA encourages diversity within the banking sector. Large or small, retail or investment, private or foreign, our members have a common interest in wanting to make the UK a good place to carry out banking business.

On behalf of our challenger bank members, the BBA made the case for a level playing field in front of government and regulators in 2014, and argued for improved access to capital and more proportionate capital weightings.

In a range of meetings with senior politicians, central bankers and regulators we have promoted the challenger bank sector as a genuine and credible alternative to the status quo.

Our work with the FCA

Last April, we saw responsibility for credit legislation transfer from the Office of Fair Trading to the FCA, as the Government’s reforms to regulation continued to take hold. The BBA urged the FCA to ensure that vulnerable customers in financial difficulty were not deprioritised by these operational changes, and was fully behind the regulator, helping it to shape its rule book. The credit industry’s work on debt and mental health – in which the BBA played its part – remains groundbreaking and has informed the FCA’s thinking on its wider vulnerability agenda.

We also encouraged the FCA to prioritise its consideration of debt management activities. This was an important piece of work which has seen a

number of debt management companies have their licences withdrawn and others leave the market altogether. Whilst there might be room in the market for such companies to charge their customers to negotiate with their lenders when they fall into arrears, there is no room for some of the more harmful practices at the bottom-end of the market and we support fully the FCA’s firm approach.

Helping customers in debt is as much about rehabilitation in the longer term as it is about the immediate issues of making overdue payments, which is why the BBA was instrumental in encouraging fee-free debt charities to harmonise income and expenditure assessment. This reflected a fundamental shift in approach, allowing for modest savings to be built up within debt management plans to help customers to get back on their feet.

Our work with the Ministry of Justice

The BBA has worked with the Ministry of Justice to encourage claims management companies (CMCs) to take responsibility for cold calling. Last year the BBA responded to the MoJ’s consultation on its plans to change regulation fee levels for CMCs in 2015/16. We supported the Ministry’s move to set fees at a level that is sufficient enough to support and strengthen enforcement and compliance programmes across all CMC sectors, including financial products in services. Raising fees to fund adequate regulation will stop bad behaviour and prevents consumer detriment, hopefully putting an end to unsolicited and inappropriately targeted calls to consumers. •

Our work with regulators and government

Promoting competition in the UK banking industryThe BBA supports competition and want customers – both retail and business – to have a choice about which bank and the type of banking they want.

Last year we laid out our plans for improving competition in the banking industry in a new report, Promoting competition in the UK banking industry. In our report, we canvassed the views of established banks and challengers, with a variety of different business models.

We were told that they welcome competition and want the playing field to be fair to all. Our report created wide-ranging press coverage, demonstrating the importance that is placed on competition in our industry.

More competitive markets allow customers to choose from a greater range of products and providers to suit their needs, and more transparency will improve the efficiency of the market. Ultimately, customers will be able to make informed decisions about the best deal for them.

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BBA helps basic bank account customers across the UK

Landmark agreement between banks

and the Government will help more

than a million customers

Financial inclusion is a consistent theme in our work and access to banking is a key entry-point. Our members have worked hard to reduce the number of customers in the UK that do not have a bank account, achieving the shared goal with HM Treasury to halve the number of unbanked customers some years ago. A decade ago there were nearly 3 million unbanked customers, and in a couple of years there needs to be none, to enable the Government’s Universal Credit programme to roll out successfully – and to enable consumers presently outside the banking system to benefit from what so many of us take for granted when we use our current accounts.

In December 2014, a landmark agreement was reached between the banking industry and the Government, which has paved the way to help more than a million remaining unbanked consumers to get the bank facilities they need for their day-to-day needs, such as receiving a salary from an employer, or benefits paid by the Department for Work and Pensions.

Following a positive report by Consumer Focus and the recommendations by the Parliamentary Commission on Banking Standards, the BBA worked closely with HM Treasury to deliver what is arguably the world’s best entry-level and payment account. The revised basic bank account far exceeds the statutory requirements set out by the EU’s Payment Account Directive 2014,

and, crucially, it is entirely fee-free for customers. The BBA worked closely with the providers

to develop a new industry standard for basic bank accounts, in order to broaden out financial inclusion and give customers the confidence to use the account without fear of unforeseen charges. The basic bank account has very similar features to a standard current account – except for an overdraft and a cheque book – and easy access in line with other current account customers will be built in.

The revised basic bank account is geared towards customers – many of whom are vulnerable – who don’t currently have a bank account and who might not be able to open a standard account. It is also suited to customers looking to switch account providers, and customers experiencing financial difficulty.

The revised standards have been warmly received by consumer advocates and are a very visible demonstration of the industry’s commitment to building trust and confidence in the sector. •

A Wealth of Opportunities

Last year we conducted the first

study of its kind into private banking

and wealth management, a sector

that supports thousands of jobs and

contributes £3.2 billion a year to the

UK economy

Private banking and wealth management (PBWM) is one of the UK economy’s hidden success stories. That’s why in autumn 2014 the BBA produced a groundbreaking report to give this valuable part of our industry the recognition it has long deserved and emphasise why fostering its further growth is in everyone’s interest.

This research, conducted by ComPeer and Oxford Economics, and supported by the Wealth Management Association (WMA) established that the UK’s private banks and wealth managers contribute £3.2 billion a year to GDP and oversee £524 billion of assets on behalf of their customers.

Our report found that the PBWM sector supports an amount of economic activity similar to the entire economy of Brighton and Hove and generated £1.2 billion worth of tax receipts for the UK’s public finances last year. It is also responsible for directly employing some 23,000 people and supporting the employment of a further 42,000.

As the key recipients of services from this sector, the BBA asked the views of high net worth investors in the UK PBWM sector, speaking with more than 250 individuals in the course of our research. Both UK and non-UK passport holders voted London as the most attractive banking centre internationally, with investors also confirming that they are placing the majority of their assets in the UK. Many of

those interviewed, however, didn’t describe their PBWM firm as client centric which suggests the sector still has more to do if it wishes to retain its international standing.

As our findings demonstrate, the PBWM sector is an important part of the UK banking industry and we have worked hard to ensure it is not unduly disadvantaged by “one size fits all” legislation. The combined voice of the BBA and WMA has proved effective in negotiations with government and regulators during 2014. Aligning our input into the Financial Conduct Authority’s thematic review into in-house products and conflicts of interest helped ensure the FCA’s information requests were better targeted and in keeping with the scope of the review. In addition, collaborative activity between the BBA and WMA on MiFID II, Packaged Retail Investment Products (PRIPs) and the ongoing development of tax information exchange agreements has ensured these rules involve an appropriate level of proportionality for the sector. The BBA also successfully called for specific provisions to be adopted within the Bank of England’s loan-to-income requirements that reflect the different nature of lending to high net worth customers.

We have sought to better communicate this activity to our members and the wider PBWM community by speaking at events and sharing platforms wherever possible. The BBA will continue to make the case for private banks at all levels in 2015 and beyond. •

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BBA EnterprisesEngaging the sector with insight and innovation

BBA Enterprises (BBAE), the commercial arm of the BBA, manages all events, training, associate member activities, venue hire and publications on behalf of the BBA.

With 75 major events delivered in 2014, all aspects of banking were embraced with over 5,000 banking personnel attending conferences, forums, briefings and roundtable discussions with UK and international policymakers, regulators, opinion formers and industry experts. A move to thematic events covering digital banking, financial crime and sanctions and cyber resilience generated considerable interest and brought together CEOs, CROs, COOs and experts from around the globe. These new-style events, linked to the publication of BBA industry reports and research, created a new format in addressing key issues and new business models that will shape the future of our industry.

Throughout 2014, the BBA Learning Academy continued to grow and develop, delivering over 100 workshops covering the core themes of financial regulation, risk management and compliance, financial crime and leadership. The Academy also furthered the promotion of industry-related professional qualifications extending its collaboration with the world-class institutions to the CFA Institute and the Chartered Insurance Institute with both delivering an aligned programme of courses specific to the banking sector.

Associate membership experienced its highest ever level of growth drawing-in over 30 organisations from the wider financial and related professional service sectors. In particular, expert

consultancy, advisory and tech firms sought to support the technological innovation taking place in the banking sector, advising on new solutions and developments at BBA events and contributing to market insights, research and reports.

The hiring of Pinners Hall as a destination venue for meetings and conferences continued to prove popular with interest from external firms representing the breadth of banking, financial and professional services.

With the responsibility for the content development of more than 40 consumer publications used throughout the retail banking sector, BBAE issued licences granting the print production of more than 3 million leaflets providing valuable information and advice on topics as diverse as fraud prevention to guides for microenterprises. •

Member listThe following list details every member bank and associate member of the BBA

• ABC International Bank plc

• ABN AMRO Bank N.V.

• Ahli United Bank (UK) Ltd

• Al Rayan Bank

• Aldermore Bank plc

• Allied Irish Bank (GB)/First Trust Bank

• Allied Irish Bank plc

• Alpha Bank London Ltd

• Arbuthnot Latham & Co Ltd

• Australia & New Zealand Banking Group Ltd

• Banca Monte Dei Paschi di Siena SpA

• Banco Bilbao Vizcaya Argentaria, SA

• Banco de Sabadell

• Banco Santander S.A.

• Bank J Safra Sarasin Gibraltar Ltd

• Bank Leumi (UK) plc

• Bank of America NA

• Bank of Baroda

• Bank of Ceylon

• Bank Of China

• Bank Of Cyprus UK Ltd

• Bank of India

• Bank Of Ireland (UK) plc

• Bank of London and Middle East

• Bank Of Montreal

• Barclays Bank plc

• BLOM BANK France

• BNP Paribas

• British Arab Commercial Bank Ltd

• Brown Shipley & Co Ltd

• Butterfield Bank (UK) Ltd

• C Hoare & Co

• CAF Bank Ltd

• Cambridge & Counties Bank

• Canadian Imperial Bank of Commerce Group

• Canara Bank

• China Construction Bank (London) Limited

• Citibank NA

• Close Brothers Ltd

• Clydesdale Bank plc

• Commerzbank AG

• Commonwealth Bank Of Australia

• Credit Suisse Securities (Europe) Limited

• Crown Agents Bank Ltd

• Danske Bank A/S

• Deutsche Bank AG

• Duncan Lawrie Ltd

• EFG Private Bank Ltd

• Europe Arab Bank plc

• FBN Bank (UK) Ltd

• FCE Bank plc

• Ghana International Bank plc

• Goldman Sachs International

• Gulf International Bank BSC Group

• Habib Bank AG Zurich

• Habibsons Bank Limited

• Hampshire Trust plc

• Harrods Bank Ltd

• Havin Bank Ltd

• HSBC Bank plc

• HSBC Private Bank Limited

• ICICI Bank UK plc

• ING Bank NV

• Investec Bank

• Jordan International Bank plc

• JPMorgan Chase Bank

• Julian Hodge Bank Ltd

• Kingdom Bank Limited

• Kleinwort Benson Bank Ltd

• Lloyds Banking Group

• Mashreqbank PSC

• Metro Bank plc

• Mitsubishi UFJ Trust and Banking

• Mizuho Bank Ltd

• Mizuho International plc

• Morgan Stanley Bank International Limited

• N M Rothschild & Sons Ltd

• Nacional Financiera SNC

• National Australia Bank Ltd

• National Bank Of Canada

• National Bank Of Egypt (UK) Ltd

• National Bank of Kuwait

• Nationwide Building Society

• Natixis

• Nedbank Limited

• Nomura International plc

• Punjab National Bank

• Qatar National Bank S.A.Q.

• QIB (UK) plc

• R Raphael & Sons

• Rathbone Investment Management Ltd

• Reliance Bank Ltd

• Royal Bank Of Canada

• Sainsbury’s Bank plc

• Santander UK plc

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• Schroder & Co Ltd

• Secure Trust Bank plc

• Shawbrook Bank Ltd

• Skandinaviska Enskilda Banken AB

• Smith & Williamson Investment

• Societe Generale

• Sonali Bank

• Standard Bank plc

• Standard Chartered Bank

• State Bank of India

• State Street Bank & Trust Company

• Sumitomo Mitsui Banking Corporation

• Sumitomo Mitsui Trust Bank Ltd

• Svenska Handlesbanken AB (publ)

• Syndicate Bank

• TD Bank NV

• Tesco Personal Finance plc

• The Bank Of New York Mellon

• The Bank Of Nova Scotia

• The Bank Of Tokyo Mitsubishi UFJ Ltd

• The Charity Bank Ltd

• The Co-operative Bank plc

• The Norinchukin Bank

• The Northern Trust Company

• The Royal Bank of Scotland Group

• Triodos Bank NV

• Tungsten Bank

• UBS AG

• Union Bancaire Privee, UBP

• Union Bank UK plc

• United National Bank Ltd

• United Trust Bank Ltd

• Unity Trust Bank Plc

• Virgin Money plc

• VTB Capital plc

• Weatherbys Bank Ltd

• Wells Fargo Bank, NA

• Wesleyan Bank Ltd

• Westpac Banking Corporation

Associate Members

• Accenture

• ADT Fire and Security

• Allen & Overy LLP

• Almis International

• Aspect Software UK Limited

• Avantage Reply Ltd

• AxiomSL

• Bankers Almanac/ Accuity

• BDO Services Ltd

• Begbies Traynor Group Plc

• BFC Exchange Limited

• Bureau Van Dijk

• Calastone Ltd

• Callcredit Plc

• Capita Asset Services

• Capital One (Europe) plc

• Chicago Mercantile Exchange Inc

• Clearstream Banking

• Clifford Chance LLP

• Confirmation.com

• Conister Bank (Isle of Man)

• DBRS Ratings Limited

• Deloitte LLP

• DLA Piper UK LLP

• Equifax Ltd

• Ernst & Young LLP

• EuroCCP

• Eversheds

• Experian Ltd

• Farrer & Co

• Financial Services Training Partners

• First Data

• Freshfields Bruckhaus Deringer

• G4S Cash Solutions (UK) Ltd

• Gibraltar Bankers› Association

• Goal Group Limited

• Government Banking Service

• Herbert Smith Freehills LLP

• Hogan Lovells LLP

• Huntswood CTC

• IBM UK Ltd

• Innovative Systems Ltd

• Isle of Man Bankers Association

• Jaywing

• Jersey Bankers Association

• King & Wood Mallesons

• KPMG LLP

• Kreab Gavin Anderson

• Linklaters Business Services

• LogRhythm Inc

• Management Solutions Europe UK Ltd

• Mayer Brown International LLP

• Morton Fraser Solicitors

• National Savings & Investments

• Norton Rose Fulbright

• Ordnance Survey

• Otkritie Capital International Ltd

• Pinsent Masons LLP

• Post Office Ltd

• PricewaterhouseCoopers Services Ltd

• Redland Business Solution

• Riyad Bank

• SEI Investments (Europe) Ltd

• Selftrade

• Shearman & Sterling

• Sidley Austin

• Slaughter & May

• Spring Coin

• SunGard e-process Intelligence

• The Bank of England

• Think Money Limited

• Thinkbanking

• Trax

• Trillium Software

• Una Vista Ltd

• Unipart Group Ltd

• Vocalink

• Wolters Kluwer Financial Services

• Wynyard Group

Financial statementsBritish Bankers’ Association (including BBA Enterprises Ltd and BBA Trent Limited):Extracts from the consolidated financial statements for the year ended 31 December 2014

Strategic report

Principal activity

The British Bankers’ Association (the BBA) is the leading trade association for the UK banking sector with 200 member banks headquartered in over 50 countries with operations in 180 jurisdictions worldwide. Eighty per cent of global systemically important banks are members of the BBA.

Our member banks make up the world’s largest international banking cluster, operating 150 million accounts for UK customers and contributing over £50 billion annually to UK economic growth. We represent our members to policymakers, regulators, the media and all key stakeholders across the UK, Europe and beyond, working together to promote a legislative and regulatory system that helps customers, promotes growth and raises standards in the industry.

Governance

The Association is governed by its Rules, the latest version of which was approved by the Members at AGM on 16 May 2014. Since that date the Association’s governing body has been the Board (previously the Council), comprising a broad representation of its membership. Member Segment Advisory Boards and other senior Committees provide advice and direction on banking policy issues.

The Board appoints a Chairman and Chief Executive, the latter having all the necessary powers to manage the running of the Association.

Business review

Income from continuing operations has increased by 5.3% in 2014, which is a combination of 2.8%

for subscription income and 16% across our commercial and other revenue streams including associate membership, events, training, venue hire and publications. The BBA has experienced the fastest growth in membership for many years, with 13 new banks and 30 new associates from the related financial and professional service sectors joining in 2014.

Total expenditure from continuing operations increased 7.4% to £10,538k. Staff costs reflect an increase in the average number of employees from 66 to 68 in accordance with the business plan, a 2.2% pay increase, and not having the benefit in 2014 of a reduction in the actuarial valuation of healthcare benefits provided to pensioners. Other costs have generally decreased as a consequence of enhanced cost monitoring and control.

On 31 January 2014 BBA Trent Limited (formerly BBA LIBOR Limited) successfully handed over responsibility for the administration of LIBOR to Intercontinental Exchange Benchmark Administration Ltd and accordingly the results of BBA Trent Limited have been accounted for as discontinued operations. Following the transfer of the LIBOR operations the BBA undertook a thorough review of, and re-organised, its operations team and as a result incurred reorganisation costs of £310k. These have been disclosed as exceptional items, as have certain costs that have been identified that should have been recognised in prior years. Exceptional items total £771k.

As a result of the loss of the LIBOR associated income and the exceptional items referred to above the Association has incurred an excess of expenditure over income for the year of £1.1m (2013: excess of income over expenditure of £1.4m). After tax credits and actuarial gains, the transfer to reserves for the

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Consolidated income and expenditure

account

for the year ended 31 December 2014

2014£’000

2013£’000

Income

Subscriptions 7,729 7,515

Other income 2,472 2,131

Bank interest 23 59

Discontinued activities 168 2,357

10,392 12,062

Expenditure

Continuing (10,538) (9,811)

Discontinued (120) (775)

Excess of (expenditure)/over income before exceptional items, finance charges and tax (266) 1,476

Exceptional items (771) -

Excess of (expenditure)/over income before finance charges (1,037) 1,476

Finance charges (73) (55)

Excess of (expenditure)/over income after finance charges and before taxation (1,110) 1,421

Taxation 325 (439)

Excess of (expenditure)/over income after taxation transferred to accumulated fund

(785) 982

Extracts from the notes to the consolidated financial statements

1 Accounting policies

Basis of preparationThe financial statements have been prepared under the historical cost convention and in accordance with United Kingdom applicable accounting standards.

Consolidated balance sheet

at 31 December 2014

2014£’000

2013£’000

Tangible fixed assets 493 545

Current assets

Stock 16 12

Debtors 9,478 8,742

Cash as bank and in hand 4,092 4,957

13,586 13,711

Creditors: amounts falling due within one year

(8,682) (8,219)

Net current assets 4,904 5,492

Total assets less current liabilities 5,397 6,037

Provisions for liabilities and charges

Deferred taxation - (24)

Dilapidation provision (482) (461)

Net assets excluding post-retirement benefits liability 4,915 5,552

Post-retirement benefits liability (1,261) (1,207)

Net assets 3,654 4,345

Statement of accumulated fund

Accumulated fund at 1 January 2014 4,345 3,420

Actuarial gains/(losses) 94 (57)

Excess of (expenditure)/over income (785) 982

Accumulated fund at 31 December 2014 3,654 4,345

The principal accounting policies of the Association have remained unchanged from the previous year and are set out below.

Going concern basisThe financial statements are prepared on the basis that the members will continue to support the Association. The Association believes that itslevel of accumulated reserves is adequate for its continued operation.

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year was a loss of £691k. Accumulated reserves at 31 December 2014 were £3.6m, which at 37% of total annual expenditure excluding repayment of the pension deficit is comfortably within the Association’s reserves policy (30%).

Risk

The Board monitors risk through the Audit and Oversight Committee which gives financial, risk and membership oversight and direction for the operational issues of the Association. The main areas of risk are considered to be as follows:

• financial risk – the financial position of the Association is regularly reviewed to maintain financial stability against the risk of a reduction of income (whether that is subscription income or commercial revenue) and/or increased costs.

• risk associated with civil actions against the BBA in respect of alleged manipulation of US$ LIBOR – these actions are presently stayed and will be vigorously defended if they proceed. Progress is reviewed on a regular basis with the BBA’s UK and US lawyers. Further detail is contained in note 13 to the financial statements.

• defined benefit pension scheme liabilities – the liabilities of the British Bankers’ Association Pension Scheme and the results of actuarial valuations are carefully monitored to ensure funding levels are appropriate for the level of the scheme’s liabilities and for the financial security of the Association. Details are contained in note 14 to the financial statements.

Future developments

The Association’s future developments are driven in the first instance by the rolling 3 year business plan which is updated on an annual basis.

New commercial initiatives that will generate income in 2015 include BBA Confirmations, powered by Confirmation.com to provide a secure online solution that enables external auditors to confirm their clients’ bank balances and arrangements directly with UK financial institutions. We are also launching our new Financial Crime Alerts Service which will change the way that banks and law enforcement fight criminals and fraudsters.

In early 2015 a consultation paper was published on “Rethinking the UK financial services trade association landscape”. It is a matter for the members of the various trade associations, including the BBA,

to make known their response to this document. The BBA will be guided by the views of its members and will continue to act in a way that safeguards their interests.

Board’s responsibilities

From 16 May 2014 the BBA’s principal management body has been the Board. Prior to that date it was the Council. The Board is responsible for the preparation of financial statements, in accordance with UK Generally Accepted Accounting Practice, which give a true and fair view of the state of affairs of the Association and of its income and expenditure account. In preparing these financial statements, the Board has:

• selected suitable accounting policies and applied them consistently;

• made judgements and estimates that are reasonable and prudent;

• followed applicable UK accounting standards; and

• prepared the financial statements on the going concern basis.

The Board is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association. The Board is responsible for safeguarding the assets of the Association and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

So far as the Board at the time the report is approved is aware:

1) there is no relevant audit information of which the auditors are unaware; and

2) the Board has taken all steps that ought to have been taken to make itself aware of any relevant audit information and to establish that the auditors are aware of the information.

Approved by the Board on 17 April 2015

Sir Nigel Wicks Anthony BrowneChairman Chief Executive

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These recharges and associated costs are not recognised in the profit and loss account of the Association. They include:

• legal costs incurred in the Association’s defence of seven civil actions in the United States in respect of the alleged manipulation and suppression of US$ LIBOR. These costs are being recovered from the contributor banks.

• cost incurred in the management of the Better Business Finance initiative in collaboration with leading banks here in the UK (including Northern Ireland) and business partners.

Basis of consolidationThe Association financial statements consolidate the financial statements of the Association and its subsidiaries BBA Enterprises Ltd and BBA Trent Limited (formerly BBA LIBOR Limited), drawn up to 31 December 2014. In common with companies governed by the Companies Act, the Association has not presented its own profit and loss account. The net loss after taxation of the Association was £834,000 (2013: profit of £767,000).

Deferred income and expensesIncome and expenses are accounted for on an accruals basis and only relate to the period of the financial statements. Deferred income and expenses are carried forward.

2 Turnover

2014 £’000

2013 £’000

Subscriptions invoiced to members 7,729 7,515

Other income

comprises:

Events, training and publications 1,387 1,334

Associate income 639 511

Room hire 140 127

Sundry 306 159

2,472 2,131

3 Excess of expenditure over

income

The excess of expenditure over income (2013: excess of income over expenditure) is stated after charging:

2014 £’000

2013 £’000

Auditor’s remuneration:

Audit services 33 44

Non-audit services 46 25

Depreciation 165 115

Operating lease payments - rent 575 722

Dilapidation provision 21 28

4 Other operating expenses

2014 £’000

2013 £’000

Continuing:

Staff costs 6,561 5,729

Accommodation charges 1,080 1,311

Professional services projects and outsourcing 677 518

Subscriptions 599 579

Other operating expenses 1,621 1,674

10,538 9,811

5 Exceptional items

2014 £’000

2013 £’000

Reorganisation costs 310 -

Costs that relate to prior years:

Impairment of fixed assets 179 -

Additional FRS17 provision for healthcare costs 167 -

Pension scheme administration 52 -

Other costs 63 -

771 -

StockStock is valued at the lower of cost or net realisable value.

TurnoverTurnover consists of the invoiced value (excluding VAT) for goods and services supplied in the period.

SubscriptionsIn accordance with the Rules of the Association, subscriptions payable by members are determined to cover the budgeted level of expenditure of the Association including taxation.

DepreciationDepreciation is provided on fixed assets in equal annual amounts over the estimated lives of the assets. The rates of depreciation are as follows:

• Fittings 10% per annum

• Furniture 20% per annum

• Office equipment and computers 33% per annum

Pension costsDuring the year, the group contributed to a defined benefit pension scheme. The assets of the scheme are invested and managed independently of the finances of the group. Contributions are assessed in accordance with the advice of an independent qualified actuary.

The scheme is a multi-employer scheme and because the group is unable to identify its share of the underlying assets and liabilities on a consistent and reasonable basis, the pension contributions are accounted for as if the scheme were a defined contribution scheme. Therefore, the pension cost for the scheme represents contributions payable by the group in the period. The scheme was closed to future accrual on 30 June 2010.

The group also contributes to a nominated stakeholder compliant pension scheme. This was open during the period to all employees who were not active members of the defined benefit scheme. The pension costs for those arrangements represent contributions payable by the group in the period.

Post-retirement benefitsThe Association provides health care to certain

employees in retirement. The amounts charged to operating profit are the current service costs and gains and losses on settlements and curtailments. They are included as part of staff costs. Past service costs are recognised immediately in the income and expenditure account if the benefits have vested. If they have not vested immediately, the costs are recognised over the period until vesting occurs. The interest cost and the expected return on assets are shown as a net amount of other finance cost or credits. Actuarial gains and losses are recognised immediately in the statement of total recognised gains and losses.

Post-retirement benefit liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The resulting scheme asset or liability net of the related deferred tax is presented separately after other net assets on the face of the balance sheet.

The Association has adopted FRS17 to account for post-retirement benefits.

TaxationThe payment of taxation is deferred or accelerated because of timing differences between the treatment of certain items for accounting and taxation purposes. Full provision for deferred taxation is made under the liability method, without discounting, on all timing differences that have arisen, but not reversed by the balance sheet date, unless such provision is not permitted by Financial Reporting Standard No 19.

The Association has adopted FRS19 to account for deferred tax.

Operating leasesRentals on operating leases are spread over the life of the lease on a straight line basis even if the payment pattern is irregular due to receipt of incentives such as rent free periods.

Costs recharged directly to membersIn certain circumstances costs are recharged directly to specific categories of members.

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6 Staff costs

Staff costs during the year were as follows: 2014

£’0002013

£’000

Salaries and social security costs 5,169 4,859

Past service costs - (463)

Pension contributions to personal schemes 450 427

Additional pension contributions 707 687

Recruitment and other benefits 235 219

6,561 5,729

Included within exceptional items are £294k of staff costs.The average number of employees of the organisation during the year was 68 (2013: 66 - restated).

7 Investments

BBA Enterprises Ltd, a wholly owned subsidiary of the Association, was set up in August 1996 to act as the commercial arm of the Association. The company, incorporated in England, has an issued share capital of two £1 ordinary shares, both shares being owned beneficially by the Association. The results for the year to 31 December 2014 have been consolidated.

BBA Trent Limited, a wholly owned subsidiary of the Association, was set up in November 2009 and began trading on January 1 2010 to conduct LIBOR business. BBA Trent Limited was formerly known as BBA LIBOR Limited until it changed its name on 23 September 2014. The company, incorporated in England, has an issued share capital of one £1 ordinary share, the share being owned beneficially by the Association. The results for the year to 31 December 2014 have been consolidated.

9 Debtors

2014£’000

2013£’000

Trade debtors 5,969 5,987

Deferred tax 197 -

Prepayment and accrued income 2,005 2,755

Corporation tax receivable 65 -

Other debtors 1,242 -

9,478 8,742

10 Creditors: amounts falling due

within one year

2014£’000

2013£’000

Trade creditors 1,234 1,191

Corporation tax payable - 272

Deferred income 5,861 6,756

Accruals and other creditors 1,587 -

8,682 8,219

Included in deferred income are member subscriptions billed in advance of £5,000k (2013: £4,084k).

11 Borrowing facilities

The Association has an overdraft facility with its bankers Coutts & Co for up to £200,000 in order to assist its working capital requirements.

12 Capital commitments

The Association had no capital commitments at 31 December 2014 or 31 December 2013.

13 Contingent liabilities

On 14 March 2013, 1 August 2013, 31 October 2013, 14 March 2014, 31 March 2014 and 13 November 2014, seven civil actions were commenced in the United States against the BBA and various other parties, including certain contributor banks, BBA Enterprises Ltd and BBA Trent Limited, by The Federal Home Loans Mortgage Corporation, the Principal Financial Group, the Federal National Mortgage

Association, the Federal Deposit Insurance Corporation, the Bay Area Toll Authority and the Berkshire Bank and others respectively. In the proceedings, damages are claimed in respect of the alleged manipulation and suppression of US$ LIBOR. The amount of damages claimed in each of these seven actions is not quantified and is not quantifiable at this stage and as a result it is not practicable to provide an estimate of any financial impact.

The BBA has indemnified the Hogg Committee, HMT and the FCA in respect of remuneration, costs and expenses of each incurred from January 2013 until completion of the transfer of the LIBOR operation on 31 January 2014 in connection with the sale of the business and assets of BBA LIBOR Limited. The total aggregate liability of the BBA and BBA Enterprises Ltd to the Hogg Committee, HMT, and the FCA is limited to £1.5 million. No claim has been received nor is the BBA aware that any is contemplated.

The BBA believes that its level of accumulated reserves is adequate to support its known contingent obligations in relation to the above.

14 Pension arrangements

The British Bankers’ Association Pension Scheme is operated on behalf of the Association and UK Payments Administration Limited.

The Scheme, which is closed to the future accrual of benefits, is a funded defined benefit scheme and provides benefits based on final pensionable pay and the period of pensionable service completed up to 30 June 2010. The contributions are determined by the Trustees of the Scheme and the employers, after receiving advice from the Scheme Actuary, on the basis of triennial valuations.

The most recent triennial valuation was carried out as at 31 March 2012 under the Scheme Funding regulations. Details of the valuation are shown below.

Scheme liabilities £62.0m

Scheme assets £49.5m

(Deficit) (£12.5m)

Funding level 80%

8 Tangible fixed assets

Furniture and fittings£’000

Office equipment and

computers£’000

Total£’000

Cost

At 1 January 2014 2,889 1,991 4,880

Additions 262 30 292

At 31 December 2014 3,151 2,021 5,172

Accumulated depreciation

At 1 January 2014 2,545 1,790 4,335

Charge for the period 101 64 165

Impairment in respect of prior years 73 106 179

At 31 December 2014 2,719 1,960 4,679

Net book value at 31 December 2014 432 61 493

Net book value at 31 December 2013 344 201 545

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BB

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nnual Report 2014

BBA in numbers

67BBA conferences with

4678 delegates

200member banksheadquartered in over

50 countries

24,000 pageviews of BBA blogs

9,676,705

LEAFLETS DISTRIBUTED TO BANK CUSTOMERS

83responses to

government and regulator

consultations46 pieces of EU legislation tracked

Retail prices index (RPI) inflation 3.2%

Consumer prices index (CPI) inflation 2.5%

Investment return (per annum compound yield)

for members before retirement 6.2%

for members after retirement 3.7%

Nominal rate of salary growth 4.2%

Pensioner life expectancy is based on 90% of the S2NxA tables with allowance for future improvements in line with CM1_2014 projections with a long term improvement of 1.25% per annum.

At 31 December 2014, the Scheme had a total membership of 235 (2013: 238) of which approximately 55% were employees or former employees of the Association.

The employers have agreed to eliminate the Scheme deficit by making contributions of £982,000, in August 2012, February 2013 and August 2013 and then further six monthly contributions increasing in line with RPI inflation +0.5% per annum (with a floor of 1% applying cumulatively from 31 March 2012) from February 2014 through to February 2019. The payments will be shared between the Association and UK Payments (Administration) Limited in the ratio 35:65. The employers also meet the costs of administration, investment management and any insurance premiums payable. The position will be reviewed at future actuarial valuations.

The Association’s contributions are affected by a surplus or deficit in the Scheme but the Association is unable to identify its share of the underlying assets and liabilities in the Scheme on a consistent and reasonable basis. Consequently, in accordance with Financial Reporting Standard 17, the Association accounts for the contributions to the Scheme as if it were a defined contribution scheme.

Analysis of pension charges:

2014£’000

2013£’000

Additional pension contributions 707 687

15 Operating lease

On 22 October 2013, BBA Enterprises Ltd signed new leases on its lower ground and third floor premises at Pinners Hall, 105-108 Old Broad Street. The leases have a commencement date of 30 September 2013 and are over a period of ten years with a break exercisable by either the tenant or the landlord after five years. The total annual rental on both leases is £697,835 with a 12 month rent free period at the commencement of the lease and a 9.5 month rent free period after five years.

16 Transactions with other related

parties

Under FRS 8 the Association is exempt from the requirement to disclose related parties transactions or balances with entities which form part of the Group on the grounds that the British Bankers’ Association prepares consolidated financial statements.

There are no other related party transactions.

17 Discontinued operations

Responsibility for the administration of LIBOR was handed over to Intercontinental Exchange Benchmark Administration Ltd on 31 January 2014 and from this date, BBA Trent Limited (formerly BBA LIBOR Limited) discontinued its operations. •

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www.bba.org.ukBBA

Pinners Hall 105–108 Old Broad Street

London, EC2N 1EXUnited Kingdom