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The UK housing market has exhibited signs of slowing growth in the past few days. Bank of England figures show that the number of mortgage approvals were just 160 higher in July than in June and only a little higher than the average for the previous 6 months. The National Housing Federation is also forecasting that house prices will fall by 3% next year.
Given that the real impact of the Government Spending Review scheduled for the 20th October has yet to bite into the economy, one can only wonder what effect a slowing housing market and rising unemployment will have on consumer confidence, particularly in the crucial run up to Christmas.
That said the banking sector in the UK posted encouraging half year results, Barclays reported increased profits to £3.95bn up from £2.75bn, HSBC’s profits more than doubled to $11.1bn and RBS returned to profitability to the tune of £1.14bn, good news for taxpayers who own 83% of the shares, although some of that profit was due to changes in accounting rules.
Most of the gains are due to far fewer loan impairment charges than in the previous couple of years and an increase in retail and commercial banking divisions. Contrasting with recent times the investment banking arms have struggled, Barcap for example saw its income fall by 38% compared with 2009.
In the US, banking profits are also on the up and lender profits have now reached pre-banking crisis levels owing to a fall in the rate of loan losses. The US banking market is polarised, however, with larger banks performing well but smaller banks still in the doldrums. The Chairman of the banking regulator, FDIC, said that almost 2 out of 3 banks are reporting better like for like figures.
As the old saying goes “what happens in America happens over here” so hopefully the worst is behind us and the sector can look forward to increased activity in 2011, despite the wider economic turmoil which is set to come out of the public sector.
Demand for interim managers in the financial services division at Interim Partners is very strong. We have just posted record results for July and August and appointed two new members to the team who will help expand the practice.
As always, I welcome comments and observations on the sector from interim managers in our network.
Andrew McIntee is a Director and Head of Financial Services at Interim Partners.
The question of retail banking charges on overdraft fees have been back on the agenda this week. Research for Panorama reveals that high street banks surveyed are charging as much as 167% interest on unauthorised overdrafts and an average of 32% interest on authorised overdrafts, despite advertised rates of around 19%.
Vince Cable, the Government’s Business Secretary and long term critic of the banking sector couldn’t resist a broadside. Mr Cable said: “When we talk about restructuring the banks what’s going to come out of this is a more competitive system where the customers are not ripped off.”
According to the Office of Fair Trading, in 2006, Britain’s banks earned £2.6bn in profit from penalty charges. Based on that fact it may appear that Vince Cable has a point, but given that to the general public current accounts are largely offered free of charge banks have to make money from somewhere. The alternative is monthly fees for all which would surely penalise those customers who run their accounts sensibly and therefore do incur penalty charges.
Vince Cable also made the point that the banking system is now even more concentrated than before the crisis leading to less choice which allows the banks to increase margins. It was however the former Prime Minister who waived competition laws to enable Lloyds to take over HBOS, thus putting Halifax, Lloyds, C&G, Scottish Widows and Bank of Scotland under the same roof.
The FSA are also putting significant pressure on banks to strengthen their balance sheets, something which can only be done if the banks continue to make good margins.
The question remains, are banks ripping off customers or do they represent a vital pillar of the economy trying to get back on its feet?
I would welcome your comments.
Andrew McIntee is Director, Financial Services at Interim Partners.
I am delighted to announce that the Financial Services practice has appointed Natalie Fennell as an Account Manager. Natalie will have special responsibility for delivering our preferred supplier agreement with Lloyds Banking Group, which includes brands such as Lloyds TSB, Halifax, Cheltenham & Gloucester, Scottish Widows, Clerical Medical and Bank of Scotland.
Given the amount of change being undertaken by the organisation and the subsequent demand for interim resources we have taken the decision to invest in our relationship with LBG. Natalie has an extensive track record of developing and delivering contract resourcing solutions within large organisations and will without doubt be a valuable addition to the team.
Clearly this represents a significant opportunity for Interim Partners to expand further into the financial services market and we would be delighted engage with interim managers who have experience within the sector.
Andrew McIntee is Director, Financial Services at Interim Partners.
With the most important and closest run general election for decades only a week away, one must assume that the UK’s 1.4 million contractors would have a significant voice now more than ever. Surely now is the time for lobbyists on behalf of contractors and interim managers to up the tempo against legislation such as IR35, which is widely viewed by the sector as nothing more than unnecessary bureaucracy.
In order to generate greater visibility on the issue, the Professional Contractors Group have taken large advertisements in the Times and the Sunday Times lobbying support for contractors to wage war on IR35 and taxation rules for small businesses.
The PCG has held a number of meetings with the major parties, however, in a letter to PCG Chairman Chris Bryce, the Shadow Business Minister, Mark Prisk MP has committed that “a Conservative Government would undertake a fundamental review of small business taxation matters, including IR35.”
The letter further went on to say ”… we want to deal with this problem comprehensively, in a way which provides us all with a lasting solution, not a short term fix.” The PCG state that the Conservatives would set IR35 as a priority for a newly established Office of Tax Simplification.
Regardless of who wins the election, given that contractors contribute £21bn to the economy, the new government would be wise not to ignore the voice of the sector and deliver a long term resolution to IR35
Andrew McIntee is a Director and Head of Financial Services Practice.
The implementation of Solvency II in 2012 will set new requirements within the insurance sector around eligible capital and introduce additional types of solvency capital.
Solvency II will undoubtedly have a significant impact on the shape of the global insurance market. Market consolidation and the restructuring of business operating models are widely expected.
Solvency II will require all insurers to develop new and improved modeling capabilities and integrate such models into core business processes. Currently being reviewed by many insurers are a range of legal entity structures and capital options for their underwriting platforms and holding entities.
What will differentiate the winners and the losers in the new regime will be those who can go beyond mere compliance and use this period of significant change to generate greater performance through increased efficiencies.
All of this adds up to a classic recipe for the use of specialist interim managers within the sector. Solvency II will cascade throughout insurance companies and elicit change in systems architecture, financial controls, risk framework development, Target Operating Model reviews and people strategy.
As with any new regulations, candidates with actual hands on experience of delivery are scarce at the moment therefore interim managers with expertise within the insurance sector will be best placed to take advantage of the demand. Individuals who gained expertise delivering Basel II within the banking sector in the recent past could also be well suited to Solvency II projects.
I would be particularly interested to hear from interim managers with the above experience and I hope that my predictions for the insurance sector prove accurate!
Andrew McIntee is a Director and Head of the Financial Services practice of Interim Partners.
Following on from my blog entry in the New Year which stated (optimistically!) that early indications of a busy year were strong, fortunately this has proven to be accurate and the interim market within financial services has returned robustly. Although I have been in the recruitment sector for 12 years I posted the best ever performance figures of my career in February.
Retail banking, life and pensions and general insurance are the primary markets leading the charge. I would be especially interested in referrals of interims with Business Analysis, Project Management, Solvency II and Risk experience.
I am responsible for delivering an ambitious business plan to expand the financial services practice this year. I am actively considering launching a new front in our Brightpool business focusing on the Compliance market to assist with issues such as complaints reviews and regulatory investigations. I have also made an offer to a highly experienced individual within Brightpool to help cope with existing demand for contractors from our own interim managers.
My wife gave birth to our third daughter, Rose Elizabeth, 5 weeks ago. It’s been 4 years since we had a last baby so I am currently relearning the art of functioning with sleep deprivation. I am spending a little more time working from our London office at the moment, both to spend valuable time with clients and to ensure I get a good nights sleep!
Andrew McIntee is a Director and Head of Financial Services.
I am delighted to announce that in recent weeks the Financial Services Practice at Interim Partners has been awarded a substantial contract with RSA to supply interim change professionals for the next 2 years.
RSA is a FTSE 100 insurance business with £6.5bn of annual premium income and they are implementing large scale transformation programmes during 2010. The contract commenced on 4th January and will focus on the supply of Business Analysts, Project Managers and Programme Managers. This contract award represents a major step forward for our company and hopefully a significant boost for the Change sector of the interim market which faced head winds during 2009.
We have also signed an agreement to become a preferred supplier of interim resources to Lloyds Banking Group. The size of the integration and disposal programme created in the merger between Lloyds and HBOS last year will undoubtedly be a catalyst for interim management demand. This agreement is also is effective from 4th January and will be a meaningful addition to our stable of leading financial services clients including Aviva, Prudential, Aegon, Bradford & Bingley, Bupa Insurance and Royal Liver.
December proved to be a very productive month and I placed 7 interim managers, 5 of which were in the week before Christmas. My team has picked up 5 new assignments in the first 3 working days of January so early indications are that by next Christmas we will deserve a well earned rest!
I would like to take this opportunity to wish all those within the Interim Partners’ network a very happy and prosperous new year.
Andrew McIntee is Head of the Financial Services Practice of Interim Partners.
A rush by financial services companies to hire interim managers who specialise in risk and compliance work has driven their pay up by 50 per cent over the past two years, according to a leading provider of such managers.
Interim managers with risk and compliance experience were typically earning up to £1,000 per day before the credit crunch, but many are now earning up to £1,500 according to Interim Partners. Companies are seeking temporary managers to bolster their in-house expertise as risk officers are increasingly asked to challenge decisions by operational managers.
The move is part of a shift in power within banks and financial companies from sales staff and traders towards those dealing with credit control, risk and compliance.
Barclays recently appointed Robert Le Blanc, chief risk officer, and other control and governance managers to its group executive committee.
Jane Hanson, a consultant who advises companies on interim posts, said the shift had been given increased urgency by Sir David Walker’s report on governance in the financial services sector.
“There is now an increased requirement for more experienced, more commercially focused risk management and compliance professionals to operate at a high level often at the top table,” she said.
This was demanding new skills from risk officers, who were required to analyse and challenge executives’ decisions on issues such as portfolio acquisition, pricing or product type, instead of focusing on reporting as they did previously.
Ms Hanson said directors from other parts of the business were increasingly moving to risk roles because of their high profile.
Andrew McIntee, head of financial services practice at Interim Partners, said that before the credit crunch, compliance and risk were sometimes seen as a necessary evil.
“Now the value of these previously unsung heroes is being recognised. They have more say over what deals get done than at any time since the last recession” he said.
“As with all rare skills, the pool for the top talent with a proven track record is small – with everyone looking to recruit at the same time, rates get pushed higher quite quickly,” he added.
Andrew McIntee is a Director and Head of the Financial Services Practice of Interim Partners.
Interim Partners has recently launched Brightpool, a recruitment business which focuses on placing contractors to deliver change and provide resource support to our interim managers.
I am delighted to welcome Helen Storey to the financial services practice who specialises in the Human Resources contract market in the North. Helen brings a wealth of experience gained from working in an international recruitment company focusing on the HR market for the past 6 years.
Helen said: “I am delighted to join Brightpool as it represents a fantastic concept and compliments a highly regarded and established business such as Interim Partners. When I heard about the opportunity I knew immediately it would be an obvious next step for my career as it will allow me to continue to build upon my existing network within the senior HR community.”
I would like to encourage all financial services HR professionals within the Interim Partners network to refer quality HR contractors to Brightpool so that Helen can build upon her already extensive network. Further details can be found at www.brightpool.co.uk
Andrew McIntee is a Director and Head of the Financial Services Practice at Interim Partners.
Statistics from the IMA quarterly survey contributed to by 29 provider members show the much discussed anecdotal evidence of green shoots in the market to be true after all. There has been an 11% increase in the number of assignments completed by providers in quarter 2, 548 up from 493 in quarter 1. The average number of new assignment enquiries received by providers rose from 49 in quarter 1 to 58 in quarter 2, an increase of 18%.
Financial services maintained a 25% share of all private sector assignments during quarter 1 and quarter 2 so any decline in the sector that has occurred due to the turmoil seems to have been arrested. I have experienced the usual increase in activity in September now that we are through the summer period. I have also placed my first assignment focusing on the “top line” so far this year in the form of an Interim Head of Customer Insight which is a departure from the recent domination of cost cutting and risk/regulatory assignments; furthermore the client was willing to offer a minimum of a 12 month assignment contract which contrasts with the status quo of rolling 3 month contracts.
Interims that I regularly speak to tell me they are encountering an increase in activity in the financial services market which is very encouraging. I would be pleased to receive comments from interims within the sector to hear about your recent experiences of the market.
Andrew McIntee, is a Director and Head of the Financial Services Practice of Interim Partners.
