THE majority of people working in the City believe banks should be forced to draw up contingency plans for their own demise, with eighty-four per cent in favour of mandatory ‘living wills’ for banks, according to the latest City A.M./PoliticsHome “Voice of the City” poll.
The support for wind-down plans throws the weight of the City behind proposals that Sir John Vickers’ Independent Commission on Banking is expected to make this morning, and shows there is now very little appetite to see the UK government prop up failing banks with further financial bailouts.
The survey also found that 64 per cent of City workers – and the same number specifically in the banking sector – support the idea of ring-fencing certain bank operations.
Examples given included critical operations such as retail deposits and payments processing as candidates for segregation, but the devil will be in the detail when it comes to exactly how ringfencing could work.
But Vickers is likely to face strong lobbying against some of his other key proposals. Just 34 per cent of respondents felt that enforcing demergers to increase competition was desirable, with support falling to 28 per cent when focused on the banking sector’s response.
The Lloyds-HBOS merger is expected to be heavily criticised in this morning’s report, and with mandatory branch sales a possibility for some institutions the banks are likely to lobby strongly against the findings.
The City also poured cold water on the idea of a complete separation of banks’ investment and retail arms, with 69 per cent of the banking community rejecting Vince Cable’s call for a UK version of Glass-Steagall.
With friction already rife within the coalition on the subject, the debate is likely to rumble on as the Commission heads for its final report, due in September.
PoliticsHome interviewed 513 people from the specially recruited 'Voice of the City' panel by email between 6-8 April 2011. Members of the panel that respond to at least 80 per cent of surveys between now and September will be entered into a prize draw to win a luxury weekend in Paris. Full T&Cs available on request.
New members can apply to join at www.cityam.com/panel.