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More bother for bad bankers, says BoE

Thursday, June 11, 2015 - 02:08

The ''age of irresponsibility is over'' for the banking sector, says Bank of England Mark Carney as he announces a raft of new proposals to clamp down on abusive practice after a string of scandals. Do the new proposals go far enough? David Pollard reports.

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The goliaths of banking - already hit hard for bad behaviour. And where it hurts most: in their pockets. Over 200 billion dollars paid out in fines over the last seven years. But if that weren't enough, rogue bankers face an even bigger chance of prison. At least, in the UK, under proposals to clamp down on market abuse. Bank of England governor Mark Carney - addressing finance leaders in London. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "For those who free-ride on your reputation, the age of irresponsibility is over." The latest big fines were imposed just weeks ago. RBS and Barclays among five banks paying out nearly six billion dollars for rigging forex markets. Around nine billion dollars has been paid so far for abuse of the LIBOR benchmark interest rate. The new UK measures could allow prison sentences of up to 10 years for insider trading. Thousands more senior staff on the hook to make sure staff stick to the rules. A new Markets Standards Board to promote good practice. And more scrutiny of so-called ''rolling bad apples'' - those fired for misdeeds who then go straight on to another job. More rules, though, could mean more costs. And the lure of cheaper locations abroad. Azad Zangana, European Economist at Schroders. (SOUNDBITE) (English) AZAD ZANGANA, EUROPEAN ECONOMIST, SCHRODERS, SAYING: ''There are some parts of the world where regulations haven't necessarily kept up, and whether banks decide to relocate will largely depend on the differential in cost of regulations but also the profitability in being located in somewhere like Asia versus the UK.'' And despite the new proposals, UK regulators have some catching up to do with their US counterparts. The billions paid out by Bank of America still dwarfing other fines. Though even in the US, they could go further. (SOUNDBITE) (English) AZAD ZANGANA, EUROPEAN ECONOMIST, SCHRODERS, SAYING: ''Usually what's happened is the regulator has settled out of court with these banks, so it's questionable whether anybody has learnt any lessons from those mistakes.'' As for the bill for the regulations: that would most likely be passed on to the customer. Paying for banks' misdeeds is hardly a new idea - but that doesn't mean customers will like it.

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More bother for bad bankers, says BoE

Thursday, June 11, 2015 - 02:08