HSBC chairman calls for halt on rules ringfencing high-street business

The chairman of HSBC is calling on the government to temporarily delay new rules intended to make the banking industry less vulnerable to crisis.

Douglas Flint is asking the government not to force banks to comply with new rules requiring them to "ringfence" their high street businesses from their casino investment banking arms while the industry undergoes a competition investigation.

The chairman of Britain's biggest bank, which is scheduled to publish first half results showing a drop in profits on Monday, has written to the chancellor, George Osborne, and senior regulators to make his views known.

The ringfencing requirements are a key plank of the reform ideas drawn up by the independent commission on banking, chaired by Sir John Vickers, The commission reported in 2011 after being set up by the coalition government when it was first formed in 2010.

But HSBC – which would not comment on the report by Sky News – is concerned that the reorganisation this will require by 2019 is taking place at the same time the Competition and Markets Authority conducts an investigation into the industry which could also require and lead to structural changes.

In his letter, Flint is said to be concerned that the possibility that the CMA could recommend further structural changes that would make it difficult to plan for the future of the bank's UK operations.

The CMA is currently calling for responses to its provisional conclusion – announced last month – that both small business and personal current account customers get a poor service from their banks and cannot tell the difference between products provided by the main players. The watchdog expects any investigation to take 18 months.

Vickers had recommended that such an investigation take place in 2015 after calling on the industry to devise a system for switching current accounts in seven days – which was introduced last September – to encourage competition.

The Treasury declined to comment on the intervention by Flint, who also sent his letter to governor of the Bank of England Mark Carney and deputy governor Andrew Bailey

Flint supports the idea of the ringfence and for efforts by the parliament commission on banking standards for it to be "electrified" – forcing a breakup of a bank which fails to comply. Conservative MP Andrew Tyrie who chaired the commission and chairs the Treasury select committee is also said to have received the letter. HSBC, which according to City forecasts is expected to report a fall in half year profits to $12.5bn (£7.5bn) from $14bn a year ago, is reporting in the same week as Standard Chartered, which like HSBC conducts much of its business in emerging markets. Standard Chartered has already warned the City its profits will by 20% and has been the subject of speculation that shareholders are calling for changes to its management team – led by Peter Sands – which the bank has denied.

Powered by article was written by Jill Treanor, for The Guardian on Sunday 3rd August 2014 17.28 Europe/London © Guardian News and Media Limited 2010


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