Nathanaël Benjamin: New tides

Speech by Mr Nathanaël Benjamin, Executive Director for Authorisations, Regulatory Technology, and International Supervision of the Bank of England, at UK Finance, London, 20 July 2022.

Central bank speech  | 
27 July 2022

 Good morning everyone.

Thank you for the introduction, and thanks to UK Finance for inviting me to speak today.

As those of you who are keen swimmers will know, there is a big difference between a visit to the local pool and swimming in open waters. The pool is predictable and safe. You know where you are going. There are no currents. There is no surf. It is usually not too deep, you can often touch the ground easily. And the water is (generally) kept at a comfortable temperature. Performing in this environment is easy. Conditions in the last decade, including at times supported by major government stimulus, have resulted in a benign environment for investment banks to do business in. Many reported record earnings last year. In such waters, it would be easy to be complacent and kid yourself that you are a good enough swimmer to take on the open ocean. That would, of course, be very dangerous.

In January, my colleague Rebecca Jackson and I wrote to Chief Executive Officers of international banks operating in the UK to outline the PRA's priorities for the year ahead. Whilst waters were calmer at that time, we could see waves on the horizon. We warned that future cyclical and structural changes could materially threaten profitability and sustainability of certain business models.