Bank of England governor Mark Carney yesterday played down the risk of large banks leaving the UK due to harsh regulatory rules.
Moving headquarters abroad will not allow banks to swerve new measures, Carney insisted while revealing the Bank’s latest Financial Stability Report.
“If you’re a global bank, a global institution, it’s not like you can go to some other jurisdiction and not have a credible resolution plan and think you’re going to operate in the United Kingdom or the United States or the euro area,” Carney said.
“It just won’t happen and it’s not like you can have a compensation scheme or governance strategy that doesn’t meet international best standards and expect the same access to those markets as you would if you meet global standards.”
Global financial giant HSBC is considering its domicile arrangements, while sources have told City A.M. that other banks are also weighing up their options. However, the bank levy – which has continually been increased by chancellor George Osborne – is often seen as a greater deterrent to banking activities than post-crisis regulations.
Carney added that British banks’ exposure to Greece remains “very small relative to their capital bases,” yet warned of broader knock-on effects from the Greek political turmoil.
“The footprint of Greek banks in the UK is tiny compared to the size of our economy,” Carney said.
“In contrast, our economic and financial exposure to the euro area is considerable... Our eyes are wide open on this [Greek crisis], our job is not to be complacent.”
ON UK FINANCIAL COMPETITIVENESS
The competitiveness that’s built into the system is much bigger, is much more robust, than any one individual institution.
ON BANK TOOLS TO DEAL WITH GREXIT
Not all the tools (to respond to the Greek crisis) are the responsibility of the Bank of England.
ON PREPARATIONS FOR GREXIT
We have taken the approach in contingency planning that that (Greece exiting the euro) is a possibility and therefore we should prepare for that.
ON REINFORCING EURO INTEGRITY
We think in the medium term we share the view of President Draghi and others, that much needs to be done to reinforce the integrity of the euro, the institutional integrity, the effectiveness of the euro area.