Research Papers and Training Agendas

You can download from here the overviews of all our training courses and also a significant body of research papers issued by Lyddon Consulting between 2000 and mid-2021. More recent papers can be found via our blog.


All Training Agendas revised as of April 2022

We have grouped the training courses into three captegories:

  1. Banking regulation
  2. International banking
  3. Payments and Cash Management

Courses on Banking regulation

SEPA Executive Briefing: Download here

SEPA Compliance: Download here

SEPA Strategic Challenge: Download here

European Payments Regulatory Package: Download here

Payment Services Directive 2: Download here

4th EU Anti-Money Laundering Directive: Download here

Ringfencing and the EU Bank Recovery & Resolution Directive: Download here

Courses on International banking

Basel III Capital & Leverage: Download here

Basel III Liquidity: Download here

Supply Chain & Export Finance: Download here

SWIFT for Corporates: Download here

Courses on Payments and Cash Management

Domestic & Cross-Border Payments: Download here

Basics of Cash Management: Download here

Intermediate Cash Management: Download here

Advanced Cash Management: Download here

Fintech – Financial Technology New Entrants: Download here

The Great EU Budget Deception – the 9th Brexit Paper published by Global Britain

The paper is subtitled “The EU 2021-2027 Multiannual Financial Framework and Coronavirus Recovery Fund: a dagger aimed at the Republic of Ireland, or a con trick on all EU citizens and on financial market investors?”

It is a con trick played on several constituencies: the Republic of Ireland should take some small comfort from not having been singled out.

But it is an outrage as well as a major, and possibly definitive, power grab by the EU apparatus.

You can download the paper here

Protecting global financial markets from Eurozone systemic risk

Here is a new book of which I am co-author, with Barnabas Reynolds and David Blake and published through Politeia, the UK forum for discussing economic, constitutional and social policy.

The Euro is a currency without a Eurozone sovereign legal person backing it. Swathes of Eurozone financial assets are rated and accounted for as if there was such a legal person, whereas the backing for these assets is far less impressive.

The consequence is that the Eurozone financial system is far less well-capitalised than it appears, and that market actors in it are taking far greater risk that they appear to realise. By extension, then, the Eurozone financial system contains meaningful systemic risk, and this systemic risk is being transmitted to investors in the global financial markets.

You can download the book here.

Want to know why Facebook et al pay no UK tax? The answer is the Irish ‘flag of convenience’

We have had a paper published today through the Global Britan think tank about the Irish economic “miracle”, which turns out to be a spurious dog-legging of paper financial flows through Ireland in order to exploit the freedoms of the EU and the international structure for corporation tax, or rather for avoiding corporation tax.

Not one cent is added to or subtracted from global economic output, but Ireland is managing to divert jobs, revenues, investments and profits to itself, that pertain to the economies of the UK, Germany, France…

This is one of the hidden costs of Brexit, which we should garner by re-onshoring this activity, but it is no surprise that Ireland wishes to protect what they have built: it accounts for 40% of their economy.

You can download the paper here

Why the Eurozone’s fate makes an immediate Brexit vital

We have had a paper published through the Global Britan think tank about the fate of the Eurozone.

It has been endorsed by Steve Baker MP, the former Brexit minister who sits on the Treasury Select Committee of the House of Commons:

“This alarming report exposes the huge contingent liabilities with which the UK will be saddled if we accept the negotiated Withdrawal Agreement. Once again we see the astronomical financial problems created across Europe by poor-quality rules imposed from the top down on a continent. The Eurozone will end in tears and we must not be shackled to it at the time. I congratulate the author.”

You can download the paper here

Project Carlton – a stock take on the PSR and PSF 2014-2018 and the cupboard is bare

Project Carlton has been conceived as a stock take of the efforts to reform the UK payments business since 2014 and to evaluate the case for a change in direction.

The reform efforts have been spearheaded by the Payment Systems Regulator and its creature the Payment Strategy Forum, involving a supporting cast of hundreds, including several other official or authority bodies: HMTreasury, the Bank of England, the Open Banking Implementation Entity, Payments UK/UK Finance, the Payment System Operators Delivery Group, and New Payment System Operator/, to name but the main ones.

The cupboard is bare. No assets of value have been created. This enterprise should be put into liquidation.

Read the full research here.

Our critique of the Golden Visa industry

This critique of the Golden Visa industry for wealthy “investors” was just published by WealthBriefing. It cites the efforts of St Kitts & Nevis to package up its scheme as a mixture of winter sun break and ecology play, as well as reports of how the Bulgarian nationalisation scheme has been abused.

But the main focus is Cyprus, and its scheme that has attracted over 3,000 “investors” since its own financial bailout in 2013, and how Cyprus’ Golden Visa scheme has become conflated with concerns over their Anti-Money Laundering regime, the large shareholdings in their banks owned by individuals from Russia and the former states of the USSR, and the overlap of individuals under formal US sanctions with those who have used the scheme.

You can download the WealthBriefing article here

Our response to the PSR consultation on their Contingent Reimbursement Model draft code, aimed at eliminating (oh no, sorry, mitigating) Authorised Push Payments Fraud

We have sent a response to the Payment Systems Regulator on their consultation regarding the Contingent Reimbursement Model draft code.

This is about reimbursing victims of Authorised Push Payments Fraud – or not.

The code consists of 12 pages of platitudinous waffle, but if there is a kernel of certainty in it, it is this: few victims will get paid out.

The code is comically one-sided, against the victoms: victims have to show they taken numerous steps, educated themselves, followed banks’ guidance, trained themselves up to become semi-experts at fraud etc etc.

And if they have done all of that, then the banks undertake unconditionally and irrevocably, pari passu, subject to the exclusive jurisdiction of the courts of England, quid pro quo, mutandi mutandis and subject from time to time to their own judgement of the reasonableness of their own controls, processes, policies, staff training, documentation and other factors within their sole and undisputable control which they may or may not be at liberty to disclose and with deductions for any reason on account of hypothecations, imposts, levies, charges, mortgages, liens or other financial burdens whatsoever and within a period of 15 days not counting weekends, Bank Holidays, TARGET Opening Days, regional and local non-business days….to tell the victim to get stuffed.

You can download our response here

Presentation to Vendorcom Special Interest Group on Faster Payments about Authorised Push Payments Fraud

We made a presentation to Vendorcom’s Special Interest Group on Faster Payments about the vulnerability that fraudsters exploit in the Faster Payments system which enables Authorised Push Payments Fraud, and how none of the New Payments Architecture, Confirmation of Payee, or the Contingent Reimbursement Model will resolve it.

You can download the slidedeck here

Presentation to London Association of Foreign Banks Operations conference on Payment Services Directive 2

We made a presentation to the Operations conference of the London Association of Foreign Banks on PSD2, focusing on:

  • Conduct-of-Business rules
  • eBanking security, the EBA Regulatory Technical Standards, the interconnection with Open Banking, and how ASPSPs should accommodate Third-Party Providers
  • the obligation of credit institutions to provide accounts and services to non-bank PSPs

You can download the slidedeck here

Unicredit needs €35 billion more capital

We have published a paper about the capital situation of Unicredit group despite its having got through the recent official stress tests. The stake in its Turkish affiliate and its holdings of Italian public sector bonds require a downward adjustment of €6 billion, and its Non-Performing Loans one of €7 billion – €13 billion of write-downs in all on a current capital of €45 billion, reducing capital to €32 billion.

Then the bank’s Risk-Weighted Assets (“RWAs”) methodology is implausible when it delivera a figure of €361 billion on tangible assets of around €850 billion with an unspecified volume of off-balance-sheet business. This is a discount of over 60%. In our view tangible assets should be discounted at 30% at most, and a €100 billion RWA assumed for off-balance-sheet business.

RWAs in that case would be €707 billion, not €361 billion, and require capital of €67 billion. Capital after the new write-downs having fallen to €32 billion, Unicredit’s shareholders need to be asked to pay in €35 billion.

You can download the paper here

US steps in to clean up Cyprus

We had an article published in Lawyer Monthly about the ongoing effors of the US authorities to compel Cyprus to restict its “Cyprus business model” and in particular to clamp down on shell companies. We will see if these renewed effors have any greater effect than the ones ongoing at a lesser pitch for some years.

You can download the article here.

Treasury Select Committee inquiry into the Payment Systems Regulator – our submission regarding “Confirmation of Payee” and Authorised Push Payment Fraud

Based on research we carried out for Project Carlton, we made a submission on NPSO’s proposed “Confirmation of Payee” and on Authorised Push Payment Fraud.

This written submission was made to the Treasury Select Committee for their inquiry into the work of the Payment Systems Regulator.

You can download the submission here

Shortly afterwards both NPSO and the Payment Systems Regulator issued statements on the same subject, and we made a short supplementary submission.

You can download the supplementary submission here

Wolfsberg Group Country Risk FAQs – we need to see the Competition Law advice behind this paper

We have today sent a further call to Wolfsberg Group, this time to publish the Competition Law advice they must have taken before issuing their Frequently Asked Questions about the Country Risk component of bank’ Risk-Based Approach to AML/CFT.

Wolfsberg is a major organisation with 13 of the world’s Global Systemically Important Banks as its members, and its emission have an impact on the marketplace for international banking services far beyond its own membership.

This being the case its action have a priori a Competition Law dimension.

We have asked that they publish their advice received on the matters of both the generality of their organisation and governance and on the specific matter of the Country Risk FAQs, to then be followed by their advice on all the other matters in which Wolfsberg Group has intervened.

Download the full paper here

Virtual Accounts and “On behalf of” payments & receipts: the Wolfsberg Group needs to make major changes to its Payment Transparency Standards

We have called upon Wolfsberg Group to make major changes to the section in the Wolfsberg Group’s Payment Transparency Standards 2017 on “On behalf of” payments.

The guidance is far from complete. In our view it has the effect of giving a clean bill of health to a range of services that are quite suspect given our understanding and analysis of applicable regulations on Anti-Money Laundering and Countering the Financing of Terrorism, or AML/CFT as they are known for short.

All Wolfsberg Group’s 13 members figure in the Financial Stability Boards list of the world’s 30 Global Systemically Important Banks. Wolfsberg guidance has a meaningful impact on market practice, and on international banking services. What is more, they include in their number some of the main proponents of these financial structures, so there is an element of students marking their own homework.

The section that exists in the Payment Transparency Standards 2017 only deals with payments i.e. with outgoing payments looked at from the point of the view of the remitting banks. Even that section needs to be expanded.

There needs to be a whole new section on receipts, looked at from the angle of the beneficiary bank. This side is not addressed at all.

We are also asking that Wolfsberg Group confirm explicitly that any financial institution that issues unique banking details associated in its own records with a specific legal person is an Account Servicing Institution for that legal person and must have a compliant Customer Due Diligence file on the legal person.

Download the full paper here

Bruges Group paper: the Euro’s Battle for Survival – into the Red Zone

We had a paper published by Bruges Group setting out the extreme difficulties in which the Eurozone finds itself, after years of economic stimulus totalling over 3% of GDP per annum and the build-up of both the ECB’s Asset Purchase Programmes and the loans within the TARGET2 system. These imbalances are insoluble, and there is a big bullet to dodge: the treaty obligation on each Member State to reduce its national debt:GDP ratio to 60% by 2030. Several Member States are not yet even in fiscal surplus, let alone on a compliance trajectory, and they cannot turn their situation around without shrinking GDP and making compliance even harder to reach.

There is only one pathway available: completion of Monetary Union, by

  • forcing all non-Eurozone Member States into the Euro;
  • converting the Eurosystem into a legal person and the National Central Banks into its branches;
  • installing an EU-wide Bank Deposit Insurance System;
  • transference of Member State government debts onto the legal person of the European Union, meaning they become the joint-and-several liability of all Member States.

It is that or risk a total economic collapse. No pressure, then.

Download our own version here

Download the Bruges Group version here

Call to the Wolfsberg Group to withdraw its guidance on the SWIFT Relationship Management Application of 2016

Lyddon Consulting has issued a challenge to the Wolfsberg Group of leading international correspondent banks that it withdraw its 2016 guidance “Wolfsberg Guidance on SWIFT Relationship Management Application (RMA) Due Diligence”.

Bob Lyddon, director of Lyddon Consulting and former General Secretary of the IBOS international banking club, says: “The guidance has given a clean bill of health to situations where RMA is in place in support of a correspondent banking relationship – what Wolfsberg calls a “customer” RMA. But it has brought into question the other applications of RMA – what is termed a “non-customer” RMA. The outcome of the Wolfsberg guidance on “non-customer” RMA has arguably been more detrimental to the marketplace than the materialisation of the risks the guidance was meant to eliminate”.

Download here

FBME and its resolution by the Central Bank of Cyprus

FBME has become a “cause celebre” because its treatment by Cyprus’ financial regulators bears few hallmarks of the genuine resolution of a bank that was out of capital and out of resources.

Instead it looks more like a case of scapegoating a small, foreign bank in order to attract attention away from issues across the entire banking sector.

Cyprus received its bailout from the Troika of the IMF, the ECB and the EU in exchange for getting tough on banks that did not run a proper AML/CFT regime – and FBME presented itself as a convenient target.

Download here

Ripple – the big story of Q4 2017

Research paper issued on 1st February 2018.

#Ripple, #XRP, #cryptocurrency, #cross-border payments, #international payments

Ripple is one of the most talked-about phenomena in the cryptocurrency world, and its profile reached new heights in Q4 2017, both because of its own conference (in the same place and the same time as that of SWIFT, the organisation Ripple aims to take down), its own PR machine, and the price of its XRP currency – rising from USD0.25 on 10th October to USD2.25 at the end of the year.

But because XRP is a “commodity” and not a form of money, the monetary authorities take no position on it. Because XRP is not listed on a regulated stock exchange, Ripple is able to talk about it and deal in it in a way that is beyond the scope of investment regulators. People part with real money (in a fiat currency) to acquire XRP, but XRP cannot be spent in shops: it is not legal tender.

As such XRP – and Ripple – float in the ether (though not in the ether-eum).

Download here

Unicredit – out of the frying pan?

Research paper issued on 11th December 2017.

#Unicredit#, #Italian banking, #Italian bad loans, #Italian non-performing loans, #ECB, #Eurosystem

In early 2017 Unicredit launched a rights issue for €13.0 billion to recapitalise the bank. Less clear was that it had already taken provisions against its loans and other difficulties – €12.2 billion –  such the the proceeds of the rights issue had already been used up before the issue prospectus had been printed. Still more concerning is the disclosure that, when the 2016 annual was finally issued, the charges taken in Q4 2016 were €14.3 billion, swallowing up the rights issue, the entire 2016 profit, and the bank’s entire reserves. Reserves actually stood as -€2.5 billion on 31/12/16. In addition to this Unicredit persists with the Internal Risk-Based Approach to credit risk analysis that has led it to have over 20% of its loans go onto Non-performing status, and it uses its capital twice: to support its business in Italy and to support the business of its substantial foreign banking presences. If that were not enough, the critical FINO project has not been completed: the project to clear out the worst of Unicredit’s Non-performing loans in Italy. It appears that the market’s valuation of the FINO portfolio was lower than the heavily-discounted value at which Unicredit was holding it after the €3.5 billion write-down it took on the portfolio in Q4 2016. The ECB has launched an investigation into whether cash payments were made to induce the securitisation vehicle company to buy the FINO portfolio at a value higher than the market valuation, which then spared Unicredit from taking a further loan-loss write-down. If this is the case there would be extremely serious repercussions.

Summary of Unicredit – out of the frying pan: Download here

Full version of Unicredit – out of the frying pan: Download here

The European Central Bank is bound upon a wheel of fire: it cannot raise interest rates or reduce its Asset Purchase Programmes without a risk of bankrupting itself

Research paper issued on 31st October 2017

#TARGET2, #ECB, #Asset Purchase Programmes, #Euro sovereign debt, #Eurosystem

The Asset Purchase Programmes (“APPs”) are the main plank’s in the ECB’s monetary policy regime. Through it the ECB uses the other Eurosystem members – the National Central Banks or “NCBs” – to buy assets and release cash into the banking system. The programme has been running at €60 billion a month and for some time, and the cash side is settled through the TARGET2 system, the data on which gives an indication of the total size of the assets purchased: around €2 trillion. No indication, however, is given of the marked-to-market value of the APP portfolio and that is a concern. The ECB’s accounts do not show this, and if there if not already a substantial unrealized capital gain, even a small rise in yields on the bonds would create a loss exceeding the ECB’s capital and reserves. In fact, a 10 basis point rise in yields would be sufficient, the size of movement that can happen within the course of a trading day.

Download here

TARGET2 imbalances

A paper written in August 2017 showing the huge and growing unsettled balances in TARGET2 system, between – apparently – the TARGET2-participating national central banks and the European Central Bank. Closer inspection reveals that the orginal construct does not involve the ECB at all, but 552 separate current accounts held by the TARGET2-participating national central banks with one another. These positions are “netted and assigned” to the ECB in a two-stage process that results in a single figure on the ECB’s balance sheet. The legal documents that enable this have not been disclosed but should – if this were an arrangement between a commercial bank and its customer – require the different legal entities in the customer to declare themselves jointly and severally liable for one another’s debts. Were this to prove to be the case in TARGET2, it would undermine the risk-limitation measures on which Member States have insisted, and in effect make each one liable for the debts of all the others: Download here

Banco Popular Espanol

A presentation written in June 2017 about the takeover of Banco Popular Espanol by Santander, supposedly in line with the EU Bank Recovery and Resolution Directive but actually indicating the inadequacy of that Directive and instead using the “White Knight” technique of saving a bank that is about to go down: Download here

Virtual Accounts

A paper written in May 2017 about Virtual Accounts, a technique for financial institutions issuing accounts to customers that appear to be domiciled in certain countries and with certain institutions, when actually only one institution holds a real account and has done full Anti-Money Laundering/Countering the Financing of Terrorism due diligence on the customer, and then only on the customer that holds the real account: Download here

The Brexit Papers

Here are the eight Brexit Papers, issued between October 2016 and May 2017 and encapsulating the extreme financial detriments of the UK’s membership of the EU.

One – the UK’s risks in case Deutsche Bank were to fail: Download here

Two – the Euro as the central objective of all EU laws and regulations: Download here

Three – the distortion of the EU payments market caused by EU regulations: Download here

Four – the UK’s lost corporation taxes and GDP caused by abuse of the EU Freedom of Establishment: Download here

Five – the Netherlands’ tax regime and how it sucks corporation tax out of the UK: Download here

Six – the UK’s liabilities for the debts of EU mechansisms and of other Member States: Download here

Seven – the £30 billion per annum cost to the UK of EU Freedom of Movement: Download here

Eight – the total of £1.1 trillion of contingent liabilities and £51 billion of annual costs that represent the UK’s EU membership: Download here

Brexit Flashcards

These are the fantantastic Brexit Flashcards, written to supplement The Brexit Papers: Download here

Bruges Group papers on the UK’s financial liabilities that come with EU membership

Here are the two papers written for the Bruges Group on the UK’s financial liabilities deriving from EU membership.

The first one was written in 2012: Download here

The second was written for the UK’s referendum on continued EU membership: Download here

Scottish independence

Here are the main papers issued by Lyddon Consulting about the Scottish independence referendum in 2014.

Firstly about the currency – why Scotland must keep the pound and why it can’t: Download here

Secondly about the results of the Smith Commission that devolved more powers onto Scotland: Download here

Terms of business

Here are the business’ Standard Terms of Business – Download here