LONDON (Reuters) - Britain set out plans to strengthen regulation of financial markets on Wednesday, including making banks hold higher levels of capital and increase liquidity to prevent a re-run of the credit crunch.
STEPHEN HADDRILL, DIRECTOR GENERAL, ASSOCIATION OF BRITISH
”On balance, the Chancellor is right to resist the temptation to dismantle the Tripartite arrangement and start again. We want effort to be focused on ensuring the system works better, rather than a major structural upheaval which will delay much-needed change.
”We support the proposed Council for Financial Stability. This would deal with long-term risk assessment, flagging up systemic risks such as asset price bubbles. This makes more sense than having a long turf war between the Bank and the FSA.
”A key change should be a more mature, transparent relationship between the FSA and the companies it regulates. This will require a more accountable FSA, with an honest, regular appraisal of its performance.
“This will require a higher seniority of supervisors at the FSA who fully understand the businesses they are supervising.”
TOM O‘RIORDAN, BARRISTER WITH PAUL HASTINGS
“Dressing the shop window doesn’t provide for quality goods -- an existing regulatory system needs careful and strategic application, not a showy overhaul.”
”This is a wholly inadequate response to the challenge facing our financial institutions. (British Finance Minister) Alistair Darling’s announcement of a ‘Council for Financial Stability’ is merely a restatement of the existing Tripartite authority.
“Little detail was given on how macro prudential oversight is to work or who will be in charge. None of this is surprising. Darling knows that the EU’s blueprint for sweeping new regulatory powers makes his proposals a mere sideshow, and of course the Tories said they will abolish most of his regulatory system anyway.”
”Banks have arguably been leading a misleadingly benign life recently, having received massive governmental support without yet having to pay the price for this support. This paper sets out the size and scope of that price, and it looks as though it will be very substantial.
“On the details, most of the White Paper proposals are not a surprise, but they nonetheless represent a huge shift in the regulatory landscape in the UK. Perhaps the biggest surprise is what has been left out as much as what is in the paper -- the Treasury has chosen to duck some of the more difficult issues, including the structural interplay between the Tripartite authorities and the details of a macro prudential framework.”
ANGELA KNIGHT, CHIEF EXECUTIVE, BRITISH BANKERS’ ASSOCIATION
”We believe appropriate and effective regulation, capital applied according to risk and good quality supervision are the cornerstones of a vibrant banking community.
”We welcome moves to create better coordinated financial stability jointly with the FSA and the Bank of England.
“Banking is a global business and reform needs to be thoughtfully handled so moves in the UK dovetail with those overseas ensuring the UK sector remains competitive, otherwise business could move away.”
DEREK CHAMBERS, EQUITY ANALYST AT STANDARD & POOR‘S EQUITY
”It has been a common theme of international and national responses to the financial crisis that improved macro-prudential supervision is required.
“What still seems to be lacking, despite Mervyn King’s request, is a specification of the tools that supervisors can use beyond sermonizing.”
”It seems broadly in line with expectations and at the margins, there are some irritants such as the confirmation of the enlarged and prefunded depositor protection scheme.
“Prefunding is clearly unwelcome, as is a new levy on banks for consumer information systems. But to put it into context, those issues are a drop in the ocean compared with the potential for higher capital and liquidity requirements to be dilutive of bank returns in the medium and long term.”
”We welcome the HMT White Paper which has been published today. We will be working to understand its implications for Barclays and will respond to it in due course.
”Barclays recognizes and fully acknowledges the need for governments and regulators to look at reforms to the regulation of the financial services sector.
“We have been clear for some time that this would likely involve changes in the capital and liquidity regimes for banks. We are wholly committed to playing our part in the process.”
Reporting by Kirstin Ridley and Kate Holton in London