Top banks call for earlier start for ring-fence

Tim Wallace
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THE QUICKER politicians finalise and introduce new regulations, the quicker banks will be able to implement them and move on with stabilising the industry, the chairman of HSBC and chief executive of Barclays said yesterday.

The Financial Services Bill is currently going through parliament, covering areas including the ring-fencing of retail and investment banking operations, and capital requirements.

“If we do not have detailed rules until 2015, it is unlikely we can implement much before 2019,” HSBC chair Douglas Flint told the Parliamentary Commission into Banking Standards (PCBS).

“When we have the final rules, we will work as fast as we can.”

Barclays boss Antony Jenkins explained there is currently a lack of detail on how the ring-fence will work – for example, if the aim is to protect the retail bank, he said it would make sense for the group to transfer capital from the investment bank to the retail entity if it is required. But there are currently no guidelines on how that capital could be moved, and whether it could later be moved back to the investment arm.

But Santander’s UK head Ana Botin warned MPs and peers against rushing through the changes, arguing it is better to have good rules than quick rules.

She also identified uncertainties with the proposals, around the products which will be allowed in the retail banking arm.

“Ninety-nine per cent of UK assets are from individuals, families and businesses, and it is our aspiration to be the SME bank of choice,” she told the commission.

“We offer certain products in interest rate management and foreign exchange management, simple products. We believe it is very important to be able to service the customer from the ring-fenced retail bank.”

But currently she cannot be sure which side of the ring-fence they will fall into.