Of course one way firms can get larger is through mergers and acquisitions, for which PRA approval of the ‘change in control’ is required. A natural question to ask is how our secondary competition objective plays into these situations. The law is actually very clear on this point: when considering whether to approve the change in control, we are required to disregard the competitive impact and to limit ourselves to a consideration of the appropriateness of the new controller. Assessing the impact on competition falls instead to the CMA. Third, there is a tension for us arising from the efforts we make to encourage new and smaller players. My involvement in this line of work really began with the collapse of the largest, and apparently well-diversified, bank in the world right here in the UK. And I have been involved in and observed numerous other episodes of big banks getting into trouble. So I will never believe that there is something inherently safer about larger banks. But nor do I believe the opposite, and there are plenty of examples of smaller banks getting into 3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  trouble, in some of which I’ve been heavily involved. So it is perfectly natural that with our safety and soundness objective in mind we should take a close interest in small firms as well as large, particularly when they are fast-growing, heavy users of central bank funding schemes, concentrated in higher-risk niches and/or untested in a downturn.
Hence, while banks’ exposures to the household sector have been on a strong growth trajectory and account for more than half of banks’ lending portfolio, the quality of the portfolio has remained sound, with a net impairment ratio sustained at a low 2%. The banking system’s exposures to other retail and small businesses have also grown in the last decade, in part due to the established credit track record captured in CCRIS, which have enabled small and medium sized enterprises (SMEs) and micro enterprises to benefit from improved access to financing. These developments in turn, have resulted in a more balanced and diversified credit portfolio of banking institutions. In addition to CCRIS, there exist other private sector-owned credit bureaus in Malaysia that specialise in niche areas of value-added information and that offer differentiated risk management products to financial institutions. With the wider use of information provided by these credit bureaus, a priority has been to put in place a structure and framework for the appropriate oversight of their activities. This is essential to provide the necessary safeguards and to protect the privacy of data subjects. It is also equally important to ensure the accuracy, completeness and timeliness of credit information that is used by financial institutions to form credit decisions. Inaccurate, incomplete and dated or delayed information can have damaging effects on individuals in terms of access to financing, while exposing banking institutions to the risk of losses.