Latest news with #bankingreform
Daily Mail
an hour ago
- Business
- Daily Mail
Bank of England Governor hits back at Reeves over regulation
By Andrew Bailey yesterday put himself at odds with Rachel Reeves over the Chancellor's outspoken attack on regulation. The Bank of England Governor made clear that he did not share Reeves' recent claim that the enforcement of red tape acted as a 'boot on the neck' of business. Andrew Bailey yesterday put himself at odds with Rachel Reeves over the Chancellor's outspoken attack on regulation. The Bank of England Governor made clear that he did not share Reeves' recent claim that the enforcement of red tape acted as a 'boot on the neck' of business. Speaking to MPs on the Treasury select committee, he urged caution over a proposed shake-up of the ring-fencing system that separates traditional lending and deposit-taking from riskier investment banking. The comments appear to be a shot across the bows of the Chancellor as she seeks to unravel some of the reforms put in place during the financial crisis in a bid to boost growth. They suggest she may face an unwanted battle with Threadneedle Street to add to friction with Labour backbenchers over spending cuts and the battle to balance the books, amid dismal economic growth and deteriorating public finances. Reeves took aim at regulators during her Mansion House speech to the City earlier this month. But Bailey chose to dissociate himself from the 'boot on the neck' comments. He said: 'It's not a term I'd use. 'I think there are areas that we clearly should look at it – we've announced a whole range of things we're doing, and that's a good thing. But we can't compromise on basic financial stability and that would be my overall message.' Reeves has also promised 'meaningful reform' of the ring-fencing regime – something being demanded by the bosses of a number of major banks who say they are a drag on business. But Bailey said he favoured keeping the rules. He told MPs: 'I do think that the ring-fencing regime is an important part of the structure of the banking system.' Bailey said the rules make it easier to deal with banks that get into trouble in a way that spares consumers, businesses and households. He added: 'I'm sure there are things that can be improved and we will work constructively to get through that process.
Yahoo
a day ago
- Business
- Yahoo
Bank of England chief says ‘not sensible' to tear up ring-fencing rules
The governor of the Bank of England has warned against tearing up the UK's ring-fencing regime, which he said was good for British banks and consumers, after the Government announced plans to reform the system. Andrew Bailey also stressed that the UK cannot 'compromise' on financial stability amid the Treasury's plans to rip up red tape across the sector. Ring-fencing was brought in after the 2008 financial crisis and requires banks to separate their retail services from their investment banking activities. It aimed to protect UK consumers from the effects of any shocks felt by other parts of a bank and in the global financial markets. But Government plans to reforms the rules, unveiled last week, are intended to make Britain more competitive globally and give banks more flexibility. Mr Bailey told MPs on the Treasury Committee: 'I do think the ring-fencing regime is an important part of the structure of the banking system. 'It makes the resolution of banks if they're in trouble much easier, and it benefits, particularly in terms of the UK, consumers, business and households. 'I'm sure there are things that can be improved and we will work constructively to get through that process.' He added: 'I think it has established itself as part of the system and to me it would not be sensible to take it away at this point.' The ring-fencing shake-up formed part of Rachel Reeves's 'Leeds reforms' – a package of measures which she said are set to be the biggest changes to financial services for more than a decade. Ms Reeves said regulation 'still acts as a boot on the neck of businesses' in many areas, and urged regulators to avoid 'excessive caution'. Asked if he agreed with those comments, Bank of England chief Mr Bailey said: 'It's not a term I'd use.' 'I think there are areas that we clearly should look at it… we've announced a whole range of things we're doing, and that's a good thing,' he told the committee. 'But we can't compromise on basic financial stability and that would be my overall message.' However, Mr Bailey added that, post-Brexit, the UK is in a better position to reshape the financial rule book to suit the sector, rather than relying on EU rules. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Independent
a day ago
- Business
- The Independent
Bank of England chief says ‘not sensible' to tear up ring-fencing rules
The governor of the Bank of England has warned against tearing up the UK's ring-fencing regime, which he said was good for British banks and consumers, after the Government announced plans to reform the system. Andrew Bailey also stressed that the UK cannot 'compromise' on financial stability amid the Treasury's plans to rip up red tape across the sector. Ring-fencing was brought in after the 2008 financial crisis and requires banks to separate their retail services from their investment banking activities. It aimed to protect UK consumers from the effects of any shocks felt by other parts of a bank and in the global financial markets. But Government plans to reforms the rules, unveiled last week, are intended to make Britain more competitive globally and give banks more flexibility. Mr Bailey told MPs on the Treasury Committee: 'I do think the ring-fencing regime is an important part of the structure of the banking system. 'It makes the resolution of banks if they're in trouble much easier, and it benefits, particularly in terms of the UK, consumers, business and households. 'I'm sure there are things that can be improved and we will work constructively to get through that process.' He added: 'I think it has established itself as part of the system and to me it would not be sensible to take it away at this point.' The ring-fencing shake-up formed part of Rachel Reeves's 'Leeds reforms' – a package of measures which she said are set to be the biggest changes to financial services for more than a decade. Ms Reeves said regulation 'still acts as a boot on the neck of businesses' in many areas, and urged regulators to avoid 'excessive caution'. Asked if he agreed with those comments, Bank of England chief Mr Bailey said: 'It's not a term I'd use.' 'I think there are areas that we clearly should look at it… we've announced a whole range of things we're doing, and that's a good thing,' he told the committee. 'But we can't compromise on basic financial stability and that would be my overall message.' However, Mr Bailey added that, post-Brexit, the UK is in a better position to reshape the financial rule book to suit the sector, rather than relying on EU rules.
Bloomberg
6 days ago
- Business
- Bloomberg
‘Credible Threat' To Powell, €2T EU Budget Rejected, Failing UK Water Industry
Your morning briefing, the business news you need in just 15 minutes. On today's podcast: (1) Once again, President Donald Trump demonstrated his power to shake up global financial markets. This time, by returning to one of his favorite topics: whether to fire Federal Reserve Chair Jerome Powell. (2) The US President said he would send letters to more than 150 countries notifying them their tariff rates could be 10% or 15% as he forges ahead with his trade agenda. (3) JPMorgan Chase keeps putting more distance between itself and key first half saw the bank's market value surpass that of its three largest competitors — BofA, Citigroup and Wells Fargo — combined. (4) Wall Street banks were optimistic Donald Trump's second term would unleash a dealmaking boom. Instead, it's delivered a trading bonanza. (5) When Jon Cunliffe arrived at the Bank of England in 2013 he had a daunting task: implement the biggest ever clean-up of Britain's banking system — designed in the wake of the financial crisis — to prevent highly leveraged lenders from collapsing. Tempted out of retirement in 2024, the 72-year-old has been asked to pull off a similar job, but this time as the architect of a reform package to fix the UK's heavily indebted and wildly unpopular water industry (6) Germany has rejected the European Commission's €2 trillion ($2.3 trillion) budget proposal, hours after it was announced by European Commission President Ursula von der Leyen in Brussels. (7) UK Prime Minister Keir Starmer and German Chancellor Friedrich Merz will sign a new Anglo-German treaty in London on Thursday that includes a commitment to assist each other in case of armed attack.
The Guardian
15-07-2025
- Business
- The Guardian
Tread carefully with reform of bank ringfencing, chancellor
Rachel Reeves called it 'the biggest set of reforms to financial regulation in a decade', and, in one narrow sense, her Leeds Reforms would qualify for the description. If the ringfencing regime for banks were to be scrapped, we really would be entering a new era – or going back to an old one, since the separation of banks' retail and investment banking activities was the single biggest regulatory change introduced after the 2008-09 crash to try to prevent another blow-up. Reeves on Tuesday, however, merely announced a review to look at how reforms to ringfencing could 'strike the right balance between growth and stability, including protecting consumer deposits'. One hopes that does not mean outright abolition, which is what banks such as HSBC, Lloyds and NatWest have been urging on the grounds that the rules trap capital and impede growth. The stout defence of ringfencing from Andrew Bailey, governor of the Bank of England, has always felt more compelling: the regime has made banks safer and removal would increase the cost of loans and mortgages. It would surely be hard for a chancellor to override the Bank on this core question, especially when Barclays – which, in theory, might have most to gain from abolition as it has the largest investment bank – is also in the defence camp. A fudged outcome would see more activities allowed within the ringfenced entity. It is technical stuff, but also deeply important. Get it wrong and the cautious voices sounding the alarm over a government in search of a sugar-rush of growth via financial deregulation would have a point. Tread carefully, chancellor: ditching ringfencing in its entirety risks unlearning the lessons of the last crisis. In other respects, however, Reeves's red tape-slashing, investment-boosting, obstacle-removing reforms can be criticised in the other direction: yes, some changes are sensible tidying-up exercises but others are underwhelming. Take the showbiz headliner: the advertising campaign to encourage over-cautious savers to push a few quid into the stock market. The goal is admirable in itself for the reasons the Treasury gives: savers are doing themselves long-term financial harm if they do not understand that shares beat cash over most long-term periods. • Looser mortgage rules, which allow lenders to provide bigger mortgages worth more than 4.5 times borrowers' annual income. The move could help another 36,000 first-time buyers per year, according to the Bank of England • A permanent government-backed mortgage guarantee scheme, in which taxpayers will pick up the bill when a borrower defaults, in an effort to encourage participating banks to offer more 91-95% mortgages • A government-backed but industry-funded advertising campaign to encourage consumers to invest their cash savings in shares • Plans to allow banks to send information about 'investment opportunities' to savers that have cash sitting in low interest rate accounts, encouraging them to shift money to stocks and shares • A fresh review of ringfencing rules which were introduced after the 2008 financial crisis in order to protect consumer cash from a bank's riskier activities • A review of warnings attached to investment products to ensure that people are 'accurately' judging risk levels • Plans to 'radically streamline' accountability rules for senior bankers and finance bosses • Reining in the powers of the Financial Ombudsman Service, which settles complaints between consumers and businesses • Cutting the rate of interest – and therefore total compensation – paid out to consumers wronged by City firms and imposing a 10-year limit for claims • A new 'concierge service' to court international investors and create a one-stop-shop to promote the UK and provide tailored support to help businesses plan where to invest. But it's not as if the Treasury itself is doing much more than cheering from the wings. The ad campaign will be funded by the industry, which presumably could have launched the thing itself without government endorsement. At the very least, Reeves could have given the volunteers a hand by abolishing stamp duty on shares for purchases within ISAs. Even that gentle step was conspicuous by its absence. Tweaking risk-warning messaging may help at the margins. So will better access for retail investors to corporate debt and corporate fund-raising, as announced by the Financial Conduct Authority (FCA). But if Reeves is truly alarmed (as she should be) by the statistic that the UK has the lowest level of retail investment in the G7 group of rich economies, bolder measures are needed. It could take a generation to change saving habits to encourage 'informed risk-taking' but the crisis in the London stock market is happening now. Stamp duty remains the drag in the background, and is the real test of the Treasury's seriousness. Elsewhere, several reforms look justified: help for 'challenger' banks on capital rules; some loosening of rules to help first-time buyers; a trimming of the size of the authorisation regime for bank senior managers in the interest of efficiency; changes to allow the London Stock Exchange to quote dollar- and euro-denominated shares. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion A third pot of policies are straightforward lobbying victories for the City. That lot includes the neutering of the financial ombudsman service, but the banks may have had a point about the body acting as a 'quasi regulator' within the FCA. The timing of the reform looks terrible while the unresolved car finance affair rumbles on, but the regulatory setup did look basically confused. The onus now falls on the FCA to act sooner to spot looming scandals, which is not a wholly reassuring thought. But let's not overstate the significance of the Mansion House speech. Yes, the financial services industry deserves its place as one of the eight growth-driving sectors within the government's overall industry strategy; it's too big to ignore. But, despite some of the rhetoric, it's not as if the City is currently being strangled by regulation in the way that purer industrial sectors are being hampered by high energy costs. So don't go overboard on ringfencing reform: it is the bit that matters the most.
