Chancellor George Osborne to meet Senior Bankers over Reform Plans
Sector: Banking & Finance
9th September 2011
The informal consultation process is expected to last about two months, though no formal plans have yet been set for the talks, which will involve new meetings with George Osborne and the heads of Britain's largest banks. Speaking on Thursday, the Chancellor said it would be "very foolish not to learn the lesson of what went wrong" as he spoke of the need for banking reform after what he described as "probably the greatest banking crash" in Britain's history.
Speculation mounted on Wednesday that the Commission will recommend in its report that the Government should legislate immediately to require UK-based banks to ring-fence their retail arms. Ring-fencing is intended to allow the authorities to seize a bank's retail banking business should the rest of a lender get into trouble. Recommending a split between retail and investment banking will prove controversial. Banks argue that it could do more harm than good and that the case for such a change has yet to be backed up by a rigorous cost/benefit analysis.
The issue of the need for a full analysis of the Commission's recommendations is likely to be one of those discussed in the talks after the report's publication. A note published on Thursday by analysts at Barclays Capital said the Commission's report was unlikely to provide "the answer" and said because of "resource and time constraints" the body's final paper was likely to "outline the principles rather than being prescriptive and detailed".
On Wednesday, Ana Botín, Chief Executive of Santander UK, became the latest of Britain's bank bosses to meet one-on-one with Mr Osborne to discuss industry reform. Ms Botín took to the meeting a set of recent industry reports from banks, including studies by Credit Suisse, Citigroup and HSBC, who have warned the changes could impose significant costs and lower profits. Lord Burns, chairman of Santander UK, told MPs on Thursday that retail operations should be protected from other parts of a bank, saying "they should be run on a subsidiary model".
Source: Telegraph
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