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UK MPs seek electric ring fence for banks

Monday, Mar 11, 2013 - 02:12

March 11 - More pressure will be placed on Britain's banking industry and the UK's Finance Minister as a parliamentary commission calls for even tougher laws on banking standards. How damaging will the report be to Europe's financial capital? Joel Flynn reports

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Banker's pay has been in the spotlight in Europe recently. Now it's how banks operate in the UK which is making headlines. For the past six months MPs on the banking commission have been grilling bank chiefs. Their verdict - new laws proposed by the government don't go far enough. They want tougher rules for British banks, and not just follow the European suggestions for bank savings from the Basel group. SOUNDBITE: Head of Parliamentary Commission on Banking Standards, Andrew Tyrie MP, saying (English): "As many witnesses have said to us, it's we who need to sort out what's best for Britain. We need to work out what's right for our industry, not wait for a lowest common denominator decision from the Basel group." The banking reform bill is just months away from becoming law. It favours ring-fencing retail banking to protect it from riskier investment activities. But the commission say that's not enough. They say if any bank abuses the new regulations, then all banks should be forced to ring-fence -- not just the culprit. It also says the proposed leverage cap - which restricts a banks size compared to its equity capital - is too weak. The recommendations will be a blow to Finance Minister George Osborne. After UK tax payers had to bail out two lenders he wanted to be seen to be being tough on banks. But it's the impact on the UK's banking industry which is a bigger worry to many here in London. Some banks have already threatened to move their headquarters abroad. The British Bankers Association also says it creates uncertainty for investors, making it harder for banks to raise capital. Dominic Elliott is from Reuters Breakingviews'. SOUNDBITE: Reuters Breakingviews Banking Columnist, Dominic Elliott, saying (English): "I think there will be some clear divisions between European banks and U.S. banks. There are a few things that are still yet to play out that may balance things a bit more evenly, but at the moment it looks like U.S. banks will be much less heavily regulated than their European and, specifically, their UK peers." The Commission's final report is not due until May. It wants the government to delay the Reform Bill until after its published in order, it says, to "get it right"

UK MPs seek electric ring fence for banks

Monday, Mar 11, 2013 - 02:12

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