A decade ago, the West’s financial system was teetering on the edge of an abyss. Crisis measures on an unprecedented scale, mainly from central banks, have brought back stability. Here are some of the key financial sector developments, including government interventions, sector actions and regulatory changes from 2008 to 2018.
September 2008
- The UK government takes control of Bradford & Bingley’s £50bn of mortgages and loans
- The Irish government guarantees consumer deposits in the country’s main banks for two years
- Wall Street bank Lehman Brothers files for bankruptcy
- Lloyds TSB takes over Britain’s biggest mortgage lender, Halifax Bank of Scotland (HBOS), in £12bn deal
October 2008
- Iceland’s government takes control of Landsbanki, the country’s second largest bank
- Bank of England (BoE) cuts interest rate by 0.5% to 4.5% as part of a coordinated global attempt to ease crisis
- US President Bush signs the Troubled Asset Relief Program into law
- UK government unveils £50bn plan to part-nationalise major UK banks and pump billions more into helping ailing money markets
- UK announces a £37bn rescue package for Royal Bank of Scotland (RBS), Lloyds TSB and HBOS
- International Monetary Fund approves a US$2.1bn loan for Iceland after the country’s banking system collapses
November 2008
- UK government takes a 58% stake in RBS for £15bn
January 2009
- The Irish government says it is to nationalise the Anglo Irish Bank
- US government provides Bank of America with US$20bn to help it with losses
February 2009
- Ireland says it will inject €7bn into Bank of Ireland and Allied Irish Bank
- RBS reports a loss of £24.1bn for 2008, the biggest in British corporate history
- BoE starts quantitative easing and reduces base rate to 0.5%
March 2010
- Under US Foreign Account Tax Compliance Act, foreign financial institutions must disclose non-US accounts held by US citizens to US tax authorities
May 2010
- Greece receives a €110bn bailout from other eurozone countries and the International Monetary Fund (IMF)
July 2010
- US President Barack Obama signs Dodd–Frank Act into US federal law
November 2010
- Irish finance minister recommends bailout from EU, ECB and IMF
June 2011
- Greek Prime Minister George Papandreou tries to persuade MPs to approve €28bn of cuts, tax rises, fiscal reforms and privatisation plans. Eurozone ministers say the legislation must be passed to receive a €12bn loan Greece needs to pay its debts
July 2011
- Basel III reforms agreed for implementation from 2015 to 2018
September 2011
- IMF meeting: world’s financial institutions declare they are staring into “the abyss”
- Occupy Wall Street demonstration launched in New York
January 2012
- Standard & Poor’s downgrades Austria and France from AAA and Portugal reduced to junk status
- Secret work begins in Brussels in case of a Greek exit from eurozone
June 2012
- Eurozone finance ministers agree to provide Spain with €100bn
July 2012
- ECB president Mario Draghi says he will do “whatever it takes” to preserve the euro, a statement which quells market fears about the break-up of the eurozone
June 2013
- US Federal Reserve chairman Ben Bernanke says he is considering gradually reducing quantitative easing, prompting a so-called ‘taper tantrum’ in the bond markets
December 2013
- UK Banking Reform Act passed. It will, from January 2019, ring-fence retail banking from investment banking to safeguard customers. It also creates requirements for certain amounts of capital to be retained to act as a buffer against market instability
June 2014
- EU publishes the revised Markets in Financial Instruments Directive (MiFID II), aimed to strengthen investor protection and improve the functioning of financial markets, making them more efficient, resilient and transparent
November 2014
- FCA publishes consultation into changes to the Approved Persons Regime
January 2015
- ECB president announces bank will finally adopt full-scale quantitative easing
May 2015
- Deflation hits UK with 0.1% fall in prices
June 2015
- ECB freezes liquidity support to Greece, unleashing run on its banks
October 2015
- BoE’s Prudential Regulation Authority publishes whistleblowing policy statement for banks
March 2016
- The UK’s Senior Managers and Certification Regime (SMCR), increasing personal accountability of senior people in financial services, comes into effect for banks
June 2016
- British voters opt to leave the EU: pound suffers biggest one day loss in history
August 2016
- Ratings agency Fitch lowers Britain rating from AA+ to AA, forecasting an “abrupt slowdown” in short-term growth
- BoE base rate cut to 0.25%
January 2017
- Donald Trump becomes US president
March 2017
- UK SMCR requires banks hiring for a critical function to obtain individual’s references from regulators
June 2017
- US Financial Choice Act passed, allowing for rollback of some provisions of Dodd–Frank Act
- BoE publishes paper on strengthening accountability in banking and insurance
October 2017
- Hong Kong’s Manager-in-Charge regime comes into force
January 2018
- MiFID II comes into force after delay to allow EU to build IT systems to enable enforcement of the new package
May 2018
- US President Trump signs into law regulations reducing Dodd-Frank Act’s oversight for banks with assets below US$250bn
- Barclays’ chief executive fined £640,000 for trying to uncover the identity of a whistleblower, contrary to SMCR rules
July 2018
- FCA extends SMCR rules to almost all regulated firms, including insurers; implementation due in December 2019
- The Banking Executive Accountability Regime comes into force in Australia
August 2018
- BoE raises base rate to 0.75%
- Greece completes three-year eurozone emergency loan programme worth €61.9bn to tackle its debt crisis
The full version of this article appears in the Q4 2018 print edition of The Review. All members, excluding student members, are eligible to receive the quarterly print edition of the magazine. Members can opt in to receive the print edition by logging in to MyCISI, clicking on My account, then clicking the Communications tab and selecting ‘Yes’.
Once you have read the print edition, keep coming back to the digital edition of The Review, which is updated regularly with news, features and comment about the Institute and the financial services sector.
Seen a blog, news story or discussion online that you think might interest CISI members? Email bethan.rees@wardour.co.uk.