‘A Defining Year of Change’ - a New Year’s message from chief executive, Angela Knight

I am starting this New Year message somewhat strangely by looking back at 2011. The reason, of course, is that 2011 was a defining year of change.

We all knew that banking reform - and with it the Vickers Commission - would be a major set piece, as would be how the industry could work to support the economy through our work with businesses. Today Vickers is still with us and its proposals will flow through 2012 in the form of government consultations and legislative and regulatory proposals. The consequences will be significant and complex, and will unfold across several years, and so only then will the true judgement on these reforms can be made. 

The banking system finances companies from the very small through to the many multinational companies that operate in this country. So changes made to the financial sector can have wider impacts than intended because banking underpins an economy. The banking system enables millions of people to use their credit and debit cards when they want. Cash machines are available 24 hours a day. The systems for direct debits and other payments all need to work in a way and manner that is simple and easy for the customer. 

Meanwhile the Better Business Finance campaign of 2011 saw many initiatives rolled out nationwide, providing useful assistance for small and medium sized businesses looking to access finance. A large number of the organisations representing the business community helped put together the programme and, in so doing, moved the important question of lending to SMEs into a more constructive place. I am grateful to them for the pivotal role they have played.

But, looking forward to 2012, it is undoubtedly going to be a year of more uncertainty and further change.

For most of us, retail banking will be the most important, and doing that day-to-day business well is a clear priority for the industry. At the same time there is the UK reform agenda to grip and then European and internationally-driven changes as well.

It was in the late 1990s that the responsibility for making much of the the policy on how financial markets operate in all the countries in Europe was handed to the EU institutions. A single market for trade in goods and services was - and remains - a force for good and real economic benefit. Many directives and regulations have been passed, and continue to be created, to bring about and improve this single market: floating in the alphabet soup of the current agenda for financial services are CRD IV, MIFID III, MIFIR, EMIR and MAD.

However, as these EU-derived proposals move on through their procedures, there is often insufficient recognition that, for most European countries, cross-border business is between one EU country and another EU county. But the UK has centuries of tradition of trading around the world as well as with countries closer to home. So, for us, 'cross border' can mean links with neighbours anywhere in the world. That means we have a tricky and essential path to tread to define what should be for national responsibility, what for the EU and where it should be for global standard setters to make the decisions. 

For the banking industry in particular this is critical because the industry that operates in and from the UK is an international operation. I am frequently asked how many banks are members of the British Bankers' Association: when I reply that we have more than 200 member banks and 50 nationalities are represented around the table the questioner is often surprised - it is easy to forget banking is more than the names represented on the high street.

However, all our many banks provide jobs here in the UK. They may do business globally but they pay their taxes locally. Throughout 2012 we, as an industry and as a country, must be totally engaged in the developments of each and every proposal that will affect this country - as well as all those many and varied companies and employers who have chosen to base themselves here. It is overwhelmingly the detail of the many changes that is important and these will need to be infused with common sense and pragmatism.

But it is the eurozone - the dominant theme of the last few months - that will take centre stage in the New Year. 

At one level all we can do is be as well prepared as we can. In the UK the banking industry has collectively done more to improve the stability of the banks than most of our international competitors. We have regrouped and are rebuilding for the future, but that future also requires stability and confidence to be restored in the eurozone countries. The banking industry is determined to work to deserve the trust of our customers - we have an ongoing responsibility to our staff and the wider economy and we will play our part. 

But there remains a toxic mix of the crisis of confidence in the sovereign debt of some countries, in the economic policies of some countries and in the ability of some countries to be competitive and to afford what their people have come to expect. How far the turmoil runs depends on whether the politicians implement their frequently announced proposals and whether the markets consider the actions believable. 

Notes to Editors

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