View more on these topics

BBA warns ring-fence reforms will hit economy

British Bankers’ Association chief executive Angela Knight has warned bank reform plans set to be published tomorrow risk undermining the UK’s economic performance.

The Treasury will publish a white paper on the Bank Reform Bill ahead of Chancellor George Osborne’s Mansion House speech tomorrow night. It will be based on the recommendations of the Independent Commission on Banking.

In a speech at a City and Financial conference this afternoon, Knight said measures set to be included in the paper will hit banking and have a knock on effect for the wider economy, something members of the ICB reject.

“A growing economy requires a vibrant banking sector to finance it. This is not special pleading on behalf of the industry, it is special pleading on behalf of the country,” she said.

The ICB’s final report, published in September 2011 said banks’ retail arms should be ringfenced from riskier investment operations and made to hold more capital. It also said services to customers outside of the European Economic Area should not be within the ringfence.

Knight said the measures mean some personal wealth management by banks will sit within the ringfence while non-EEA wealth management will have to sit outside it. “This is nonsense, the UK is shooting itself in the foot and there needs to be some better thinking in that area,” she said.

In the US similar reforms have been introduced through the Volker rule which bans deposit taking banks from proprietary trading. Knight said this means British banks operating in America will be “Volkered and Vickered”, a reference to Sir John Vickers, chairman of the ICB.

She said: “Again this does not make sense and it is in areas such as these where the UK policy must now seriously address what is happening internationally and link this country in better with international changes.”

The BBA is also worried about plans to increase the level of capital and liquid assets banks will have to hold, warning it will hit lending levels.

In October, Vickers rejected claims the ICB’s proposals would dramatically increase the cost of bank lending, insisting it will push up costs by just 0.1 per cent of banks’ collective UK balance sheets, estimated to be around £6trn.


Credit check

Graham Glass, lead manager of the City Financial strategic global bond fund, on how to stave off the twin threats of a government bond bubble and credit market illiquidity

Treasury waters down ICB banking proposals

The Treasury has watered down some Independent Commission on Banking recommendations which would have made UK banks hold more capital than limits that have been agreed globally. In a white paper on the Bank Reform Bill published today, the Government confirms it intends to push ahead with requiring banks to ringfence retail activities from riskier […]


Chris Gilchrist: Scrap your psychometric risk questionnaires

The more I think about psychometric risk questionnaires the less useful they appear. My view is advisers would do better to dispose of them and spend more time thinking about risk capacity. Purveyors of psyquests will tell you their questionnaires are constructed to give consistent results. Your client will emerge with the same attitude to […]

China tech and Global Alpha: a new great leap forward

By Robin Geffen, Fund Manager and CEO

Internet giant Alibaba is exactly the type of entrepreneurial company that the high-conviction, top-performing Neptune Global Alpha Fund seeks to invest in. Established just 14 years ago in an apartment in Hangzhou, today Alibaba is larger than Amazon and eBay put together and is challenging some of the most powerful internet companies in the world…

Read more 

Important information

Investment risks

The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm