StudentShare solutions
Triangle menu

The UK Banking System - Essay Example

Not dowloaded yet

Extract of sample
The UK Banking System

Many of these do not have a physical presence in the UK but can accept deposits on a cross-border basis. Assets and liabilities of the UK banking sector reached 4,165bn at the end of 2003, nearly three times the 1993 total. Although their share decreased somewhat during the past decade, foreign banks still held over half of UK banking sector assets in 2003. European banks accounted for nearly a half of this, followed by US and Japanese banks (Delta Quest Network, 2005).
Bank of England is responsible for maintaining overall stability of the financial system as a whole. Since its responsibilities for supervising individual banks were transferred to the FSA, the financial stability role of the Bank has been to focus on identifying and limiting systemic financial risk. This involves close monitoring of the financial system infrastructure, particularly payments systems. The Bank also monitors economic and financial market developments, as part of an overview of the system as a whole.
Now-a-days, the main focus of most of the banks is on risk management primarily on reputational, regulatory, operational and strategic risk, as well as the more traditional credit and market dimensions of risk. There are a number of factors responsible for this increased focus. The major of them are globalization, the relatively favourable economic environment - such that the UK banking sector has made record profits again this year, it remains highly capitalised and asset quality remains strong; the reputational impact that high profile regulatory issues are seen to have had - on both the retail and wholesale side - and the shift in the regulator's focus towards governance and control issues; and the unprecedented volume of regulatory change (Hale, 2004).
Both the UK and world economy are continuously gaining advantage from a sustained period of consistent growth. The banks have benefited from the economic health, producing a strong financial performance over the last few years and in the first half of 2004. They remain well -capitalized and there are no signs of any serious deterioration in asset quality. Yet, the risk of macroeconomic outlook continues to exist.
The move to slightly higher interest rates is the first aspect to be considered. To state the obvious, higher interest rates will increase the cost and reduce the affordability of both the stock of consumer lending and new loans. Although the monetary authorities both in the UK and abroad are managing the turn in the interest rate cycle with great care, regulators are required to acknowledge the risk that the shift to a more moderate rate of growth in consumer borrowing may not be universally smooth (Hale, 2004).
Secondly, the decline in lending margins. A long period of strong personal sector credit quality, coupled with strong competition for lending business, has helped squeeze margins to historically low levels. The effects of this on the bottom line have been disguised by strong volume growth. There are two downside risks for the banking sector in the UK as felt by the FSA. The first is that, the period of strong volume growth may be coming to an end. The second is that a downturn could expose banks as having under- priced risk through the cycle.
The Northern Rock Crisis
Northern Rock is ...Show more

Summary

The UK banking sector is the third largest in the world after the US and Japan. In addition to having one of the largest commercial banking industries, the UK is also a major international centre for investment and private banking. The UK banking sector's strong international orientation is reflected in the substantial foreign presence and sizeable assets of foreign banks in London.
Author : amirahodkiewicz
The UK Banking System essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"The UK Banking System"
with a personal 20% discount.
Grab the best paper

Related Essays

Can Islamic Finance Ever Become A Mainstream Product In UK
banks. Islamic financial institutions are bound by Sharia law, which forbids the collection of interest, or engaging in speculative activities. This study examines whether Islamic financial products can be applied as mainstream products in the U.K. Can Islamic Finance ever become a mainstream product in the U.K.
8 pages (2000 words) Essay
Present and evaluate the possible bank reforms emerging from the US and the UK
A failure on the part of the banking community to check the existing loopholes in time and the inability on the part of the monitoring mechanisms to correct the things when they could be, led to this debilitating fiasco in the US and the UK banking system (Muolo & Padilla 2008).
6 pages (1500 words) Essay
Banking failures
The paper operates mainly based on research questions which can be stated as follows: What is the impact of regulatory framework on UK banking system? Does it protect the financial stability of banking and financial institution of banking system? What are the significant impact of corporate governance and ethics in preventing banking failure in UK financial system?
7 pages (1750 words) Essay
Aftermath of the 2007 financial crisis in UK
Government bodies all over the world have been hit hard by the 2007 global financial crisis. The UK economy has not been any exception as the condition has become extremely volatile. The economic crisis has proved the enormous monetary loss that is associated with the collapse of the global financial stability, and has enhanced its importance as the stepping stone towards economic growth.
6 pages (1500 words) Essay
Banking Crises in UK
The emergence of new regulatory requirements such as BASEL II, anti-money laundering rules and implementation of other strict rules and regulations have reduced the competitiveness of the banks because significant resources seems to have been diverted towards the implementation of these regulations into the organizations.
9 pages (2250 words) Essay
Islamic banking system study
In any case, innovation has been proved to be a key element of successful strategic decisions – including policies that refer to governmental activities and those related with the private
12 pages (3000 words) Essay
Utility, Morality and Ideology in lending and credit: a comparative study of financial law in UK and Saudi Arabia
banking system and concomitant lending and credit criteria have been under increased scrutiny and stricter regulations have been introduced. This study
6 pages (1500 words) Essay
Can Islamic Finance Ever Become A Mainstream Product In UK
This study examines whether Islamic financial products can be applied as mainstream products in the U.K. The emergence of the capitalist system that focuses on the acquisition of individual profits has
8 pages (2000 words) Essay
The UK banking system has some ability to supply money endogenously by relying on liabilities to satisfy an increase or decrease in loan demand what would accommodate an increase or slowdown in economic activity.However, banking firms are limited in this
A quick look at historical statistics reveals a still growing stock of debt in the UK, and a growing global population, carbon dioxide emissions, and (non-renewable) energy use. Sustainable development implies to equity, fairness, and social coherence in the form of a
6 pages (1500 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation