Britain reviews core banking rules in light of Brexit By Reuters

© Reuters. FILE PHOTO: The City of London financial district is seen with office skyscrapers commonly known as ‘Cheesegrater’, ‘Gherkin’ and ‘Walkie Talkie’ seen in London, Britain

By Huw Jones

LONDON (Reuters) -Britain on Tuesday launched an independent review of capital and proprietary trading rules introduced following the global financial crisis as it seeks to bolster the City of London’s global competitiveness after Brexit.

Since the start of 2019 Britain requires HSBC, Barclays (LON:) and other banks to “ring-fence” the retail arms of their operations with capital to shield them from any losses in their riskier, investment banking arms after taxpayers had to bail out lenders during the financial crisis.

Proprietary trading refers to banks using their own money to take bets on stocks, bonds and other assets on their own account rather than trading on behalf of a client.

“Over the last decade, UK banks have seen significant changes to the environment in which they operate, including the fallout from the COVID-19 pandemic, the UK’s exit from the EU, and wider changes in the UK financial sector,” the independent review said in its call for evidence.

The review was called for by the finance ministry and the independent panel is chaired by City veteran Keith Skeoch. The panel includes John Flint, former CEO of HSBC.

Banks also hold multiples of capital in their safety buffers compared with a decade ago, making them far more resilient in the face of shocks.

But any recommendations to ease ring-fencing are likely to face resistance from the Bank of England.

The review lists a series of questions to ask people’s views on the two sets of rules.

Britain’s full departure from the European Union on Dec. 31 means it no longer has to comply with the bloc’s financial rules, freeing it up to tailor regulation to UK lenders.

“This review presents a unique opportunity to assess the observed impacts of the regulatory regimes, intended or otherwise, for financial stability, competition, competitiveness, and the balance between these in light of the changes in the UK financial sector and wider economy,” the review said.

Ring-fencing, which requires an independent board and additional compliance requirements, is applied to banks with retail deposits of more than 25 billion pounds, and banks are expected to push for a higher threshold.

New banks have said the extra costs make it harder for them to build up scale to compete with established banks in mortgages.

The review will report back to the finance ministry within a year.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Be the first to comment

Leave a Reply

Your email address will not be published.


*