View more on these topics

‘Ringfencing will not halt the recovery’

Members of the Independent Commission on Banking have dismissed claims that its reforms could damage the banking sector and the economic recovery.

As the ICB’s report was released this week, the British Bankers’ Association warned that the impact of the reforms on the economy and on banks’ ability to support customers must be fully understood.

Speaking at the report’s launch in London, ICB member and ex-JP Morgan co-chief executive Bill Winters insisted the reforms are not a disaster for banks or the economy.

He said: “There are vested interests that will try and shape our proposals to suit individual banks. It is quite natural but they should be pushed back aggressively.”

The commission estimates the annual pre-tax cost of the reforms will be between £4bn and £7bn, or between 0.09 per cent and 0.16 per cent of the balance sheets of the UK’s four biggest banks.

It puts the cost of the financial crisis at £40bn a year.

Responding to claims that the chief executive of a major UK bank believes the reforms will be “a disaster” for the economy and his bank, ex-Barclays chief executive Martin Taylor, who sits on the commission, said: “I have no sympathy. He should ask himself about the bank’s business model.”

The ringfencing of banks’ retail arms is designed to put an end to the implicit Government subsidy that they will be bailed out if the investment arm fails.

Commission member and Financial Times journalist Martin Wolf dismissed concerns that banks will move abroad, saying they would struggle to find a similar arrangement in another jurisdiction.

Chairman Sir John Vickers said the reforms should not be blown off course by the concerns. He said: “We cannot allow the too big to fail problem to become a too delicate to reform one.”

Recommended

MM leader: Stop scaring the public

The recent hysterical Consumer Focus “pension churning” report and Ivan Massow’s new business plan have put the issue of trail commission firmly into the public gaze. In the run-up to the introduction of the retail distribution review and with the FSA on the look-out for a potential commission closing-down sale it was always likely that […]

FSA extends sale and rent back regulation

The FSA has extended its regulation of sale and rent back by bringing all transactions under its control from today unless it is to family members or a partner. The changes make it clear that anybody who conducts sale and rent back business – even a single transaction – must be authorised by the FSA, […]

3

First peek at Aviva’s income protection TV campaign

Aviva has delayed its critical-illness TV campaign in favour of an income protection advert, which will launch on Sunday. The campaign will consist of 14-second idents and will air on ITV during period drama Downton Abbey. They tell the story of Gary (pictured), who had to leave his job after a motorcycle accident and received […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Bill Winters is 100% right.

    And… Ring-fencing is the bare minimum required – as retail deposits have for years meant to be ring-fenced from the investment bank gambling in the world’s markets. Already!

    The credit crisis would be weaker if proper regulatory oversight had been functioning. Still there are bankrupt banks using accountancy tricks to pretend that they should keep their license – and the regulators play along.

Leave a comment