A plan for banks to police their own behaviour risks flopping before it even launches, with several large investment banks considering not taking part.
No foreign bank has yet committed to the Banking Standards Review Council (BSRC), which was set up by UK banks after several scandals – and a substantial minority are sceptical of it. The plan was for all banks that operate in the UK to come together under the scheme.
MPs who have worked on standards fear this will undermine the group.
“If some big banks say they will not sign up to this ever, then I don’t think the group has a future,” Mark Garnier MP, who sat on the Parliamentary Commission on Banking Standards, told City A.M. “If they decide to see how it works out before deciding, then perhaps it does. But it may mean the group’s remit keeps changing if it tries to be all things to all people.”
Ex-CBI boss Sir Richard Lambert established the group, and believes it will can get off the ground despite lacking the support of key banks.
“I do not think this will gain 100 per cent support from the industry, but I am confident, it will get enough to be credible,” he told City A.M. “We have not asked anyone to sign up yet, but I have had good discussions with the US banks. My view is there has been a positive shift in attitude – some were sceptical at first, but are less so now.”
Lambert argued it is not intended to solve all of the sector’s problems, but should help improve standards.
He is handing the reins to grandee Dame Colette Bowe next month.
She will set out details of the group and invite the whole sector to join.
But foreign investment banks are understood to have serious concerns.
It is thought that Goldman Sachs and JP Morgan are among the more sceptical banks, while Deutsche Bank and Morgan Stanley are thought to be undecided. However, Bank of America Merrill Lynch, Citi, UBS, Credit Suisse and Societe Generale are expected to be more sympathetic to the group.
Some fear co-operation may open banks up to anti-trust lawsuits. Bankers also believe tougher regulation could render the group obsolete before it starts to have an impact.
As a result, MPs fear the BSRC could be left without a purpose.
“Dame Colette Bowe said her appointment presented a very big challenge,” said Teresa Pearce, who sits on the Treasury Select Committee. “If major players like Goldman Sachs are opting out then that big challenge just got a whole lot bigger.”
The banks declined to comment.