Head of the financial services regulatory practice Fiona Raistrick says the FSA’s proposals, outlined in the Strengthening Liquidity Standards consultation paper, could force foreign banks to leave the UK.
She says: “Currently firms rely on group liquidity whereas the new arrangements would see individual branches having to be self sufficient in terms of funding, or apply for a waiver from the regulator, causing significant unease for many.
“We have had a number of foreign banks who operate in the UK contact us to clarify the requirements. When we’ve explained the process, the response has been that they would consider leaving the UK’s shores. Some have even gone as far as labelling the requirements ‘ridiculous’.”
Raistrick says forcing UK branches of foreign banks to close will only harm the UK’s reputation on the world’s stage.
She says: “In light of the current economic turmoil the UK should be doing all it can to position itself as a serious financial services player and maintain its competitive advantage.”