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BBA call for international co-operation over financial regulation

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The British Bankers’ Association has called for international co-operation over regulatory changes to protect UK banking interests.

During a speech to the Cass Business School in London tonight, BBA chief executive Angela Knight said co-ordination was vital as in the past regulation was not implemented uniformly.

She said: “International implementation on international timetables in an internationally equivalent way cannot be over emphasised if we are to keep an international industry operating here.”

“The Capital and liquidity rules under which the system was operating – Basel II – were implemented comprehensively in only a few countries, of which the UK was one.”

She added: “Although promoted by the G20 we are yet to see just how many of the G20 countries will implement the Basel III changes and also in what manner they implement.”

Basel III will impose capital reserve ratios of 7 per cent on banks among a raft of measures designed to give financial institutions a buffer to absorb economic shocks. Knight said that as the European Union was implementing international rules the BBA had struggled to get the nature of the British banking sector across.

She said: “Cross border in Europe for financial services is mostly from one European country to another. In the UK, however, cross border can be from here to any country in the world – including Europe. Internationality is particularly important for the industry quartered here and a real issue can be getting that awareness adopted in the EU decision making process.”

She said “more and better capital” is essential but that she had found it “quite difficult to understand” some of the negative commentary over Basel III.

She said: “Basel III is very substantial and the timetable is not long either. Although banks in the UK have already recapitalised, more needs to be done across Europe and the US, there are very large sums that still need to be raised.”

Knight said the industry agreed that no bank should be too big to be able to be “resolved”.

She said: “The UK banking industry fully endorses the proposition that no institution should be incapable of being subject to an orderly wind down process. The banking industry cannot be different to other companies.”

She said major banks were currently working on Recovery and Resolution plans to make that possible in future.

The “perceived democratic deficit” at Bank of England must be addressed, she said, before it attains power over macroprudential regulation through the proposed Financial Policy Committee.

She said: “These sorts of regulations have economic and socioeconomic consequences and I consider they are much too serious to be just down to a regulatory rule change when it comes to the actions of a macroprudential regulator.”

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