Britain to gain as EU may ease bank ringfence

Tim Wallace
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THE UK will benefit from plans to let national regulators decide whether or not to implement a ringfence, lawyers said yesterday.

Britain’s ringfence plans had looked as if they would clash with the EU’s, making implementation difficult and costly for banks and regulators.

But documents seen by the Financial Times indicate national regulators may get more of a say over whether or not they choose to implement the EU plan.

Britain’s ringfence, designed by Sir John Vickers, aims to protect retail depositors and banks’ small business customers. The EU’s ringfence, designed by Errki Liikanen, has a different aim and instead quarantines the investment banking arms as a separate unit.

As a result of the change, lawyers believe Britain and its banks will have an easier time implementing the rules.

“There is still a lack of clarity on what is required from Europe, but presumably this does make it easier to comply with the Liikanen report,” Pinsent Masons’ banking partner Tony Anderson said.

However, he also warned that the UK could still face trouble with an EU plan to clamp down on proprietary trading by banks in a similar way to the US Volcker Rule.

The European Commission also noted that it does not want to rules to vary too much between countries.

“Commissioner Michel Barnier will present, in the next few weeks, a proposal which is the final piece of the puzzle to solve ‘too big to fail’, in other words: to ensure all banks can be resolvable and not require taxpayer bailout when they face difficulties. This is essential for the overall systemic stability of financial system,” said a spokesperson from the commissioner’s office.

“This is also important to maintain a level-playing field and consistency in the single market – to ensure that banks don’t move to where regulation is weakest for example.”