WITH rioting spreading throughout the country last week, a number of other significant stories were relegated to the back the newspapers.
There is no doubt that in any other week a ban on short-selling in four major European countries and the downgrading of the United States’ credit rating after months of political brinksmanship would have been front page news in every publication.
In some ways – given its central location and the high-density of international businesses and well-paid workers – it was surprising that the City remained untouched by the mindless criminality we witnessed last week in parts of London and the rest of the UK.
However, for people looking to cause such disruption, the City represents a daunting prospect. Doubtless the presence of one of the world’s densest security and surveillance networks played a part – bolstered by the Square Mile’s own police force, large numbers of in-house security guards, and an alertness honed over decades of being a potential terrorist target.
And while the Square Mile’s physical security remained intact, moves were also afoot to bolster the security of the banks and investment houses that form such an important part of the its business community.
Last week, the FSA released a consultation paper outlining proposals for more than 250 banks and building societies, as well investment firms with more than £15bn in assets, to draw up “living wills”.
These documents will outline the measures each institution would take in order to try to prevent collapse – including cutting bonuses and selling off substantial assets – or to safeguard investors and deposit holders were such an eventuality to transpire.
Inevitably, there are concerns; many institutions feel that they may be left vulnerable to takeovers and hostile bids and that they will have to commit huge amounts of time and money in order to produce documents that the FSA will deem to be satisfactory.
However, such concerns would be a small price to pay in order to reduce the possibility of future taxpayer bailouts. No longer could any UK-based institutions or UK subsidiaries be deemed “too big to fail”.
The FSA is setting the agenda for the formulation of recovery and resolution plans internationally; a course of action to which our global partners are already committed and which will be the focus of a worldwide plan from the international Financial Stability Board later in the year.
Hopefully, once implemented, these plans will help to ensure that it is not just the City’s streets and offices that are secure, but the financial institutions that operate within them.
Stuart Fraser is the policy chairman at the City of London Corporation