António Horta-Osório, the boss of Lloyds Banking Group, will on Thursday tell his fellow bankers to stop complaining about the wave of regulatory changes being imposed on the industry.
Amid complaints from rivals about the ringfence that banks must erect between their high street and investment banking arms, Horta-Osório will say: “Ringfencing is happening. The industry should accept this and move on.”
“The principle behind it is right, that is to minimise the possibility of the failure of a bank being again a burden on the British taxpayer,” he will say.
The ringfence was a key part of the recommendations by the Vickers Commission and must be implemented by 2019. It is one of a series of regulatory changes that HSBC is expected to consider in determining whether to remain headquartered in London. HSBC has already said its ringfenced bank will be based in Birmingham and indicated it could reintroduce the Midland name on the high street.
“To people who say ringfencing is too burdensome, I would simply say that having an effective ringfence can, over time, reduce the level of capital required in the banking sector,” said Horta-Osorio.
The impact on Lloyds from the ringfence is minimal and Horta-Osório will address the topic at a conference at the British Bankers’ Association on Thursday. The BBA has been calling for a review of the taxation on the banking system, particularly the bank levy, which is also key to HSBC’s decision to review whether to keep its HQ in London.
At a meeting earlier this week, Anthony Browne, the boss of the BBA, hit out against the levy, which has been increased nine times since 2010. He said that the chief executive of a foreign, global bank had told him that the UK government was “acting like an African dictator”. Browne added: “You might think that goes too far – and I understand why this tax is good politics. But it does show the negative impression the UK government is creating in board rooms in America and Asia.”
Horta-Osório will also acknowledge the impact fines have on customer trust. He had £350,000 docked from his bonus after Lloyds was fined £117m for mishandling compensation claims for payment protection insurance. “A succession of revelations about past practices has rocked our industry to its core.
“PPI and interest rate swaps misselling and Libor and foreign exchange manipulation have all taken their toll – and rightly so – on the relationship between banks, their customers and society at large,” he will say.
“The regulation burden will only stop growing once the public and regulators trust us to manage our sector in a responsible manner.”.
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