UK plans to relax key banking rules set up after 2008 financial crisis

{"text":[[{"start":10.2,"text":"The UK has outlined plans to relax ringfencing rules that force lenders to separate their retail operations from other activities, but stopped short of scrapping them as called for by some of the country’s biggest banks."}],[{"start":22.9,"text":"Lucy Rigby, chief secretary to the Treasury, said the planned changes to one of the main restrictions imposed on UK banks after the 2008 financial crash would “unlock finance for growth” by freeing up £80bn of extra lending, while maintaining key protections against a crisis."}],[{"start":39.15,"text":"Banks have lobbied hard for the government to scrap the rules, which aim to protect deposits from retail consumers and small businesses by requiring big lenders to separate them inside legal entities with higher levels of capital and restricted activities."}],[{"start":54.099999999999994,"text":"The regime stops banks using money from UK retail depositors to fund complex and risky activities, including financing hedge funds, trading in complex derivatives or lending to companies in riskier countries such as China. Banks have argued that the rules are too costly and harm the competitiveness of British lenders."}],[{"start":74.19999999999999,"text":"“Where financial systems are inefficient, we will change them,” said Rigby. “This will unlock finance for growth while keeping the UK banking system resilient, competitive and fit for the future.”"}],[{"start":null,"text":"

"}],[{"start":86.39999999999999,"text":"The Treasury said it would change legislation to widen the type of activities allowed within ringfenced entities, including enabling them to lend to public financial institutions — public-private quangos such as the British Business Bank or the National Wealth Fund."}],[{"start":101.1,"text":"Lenders would be given “an allowance” worth up to 10 per cent of their ringfenced assets adjusted for risk to carry out activities that are at present prohibited, as long as these supported “the real economy”.  "}],[{"start":114.3,"text":"They would be allowed to conduct more hedging activity through derivatives inside the entities and share some pension surpluses with other parts of their business."}],[{"start":123.3,"text":"The Bank of England plans to change its rules to allow ringfenced banks to share more essential services such as IT within their businesses, while the central bank is also reviewing their capital requirements. "}],[{"start":135.85,"text":"Sir John Vickers, the Oxford academic who led the commission that conceived the ringfencing rules, said the “allowance” proposal looked “like a 10 per cent hole in the ringfence — quite a big hole”."}],[{"start":147.54999999999998,"text":"“As the existing ringfence already supports bank lending to the UK real economy, this would seem to allow leakage elsewhere,” he said."}],[{"start":156.79999999999998,"text":"Mark O’Donovan, head of international consumer banking at JPMorgan Chase, said the proposals were a “positive development as we continue to grow our presence in the UK”. The US bank could be subject to the rules if its UK retail bank keeps growing."}],[{"start":171.64999999999998,"text":"The regime applies to banks with at least £35bn worth of customer deposits and affects Britain’s five biggest banks: Lloyds Banking Group, NatWest, Barclays, HSBC and Santander."}],[{"start":186.04999999999998,"text":"Chancellor Rachel Reeves announced plans to reform the rules last year as part of her “Leeds reforms” to overhaul financial regulation to support economic growth."}],[{"start":196.1,"text":"Cleaving off the retail and investment operations of banks with large balance sheets costs lenders billions, while lending outside of the ringfence also heaps on extra costs. The rules cost UK banks a combined £1.5bn a year, according to a review led by former asset management boss Sir Keith Skeoch in 2022. "}],[{"start":217.5,"text":"While most banks have vocally opposed the separation push, Barclays chief executive CS Venkatakrishnan backed the regime last year."}],[{"start":226.4,"text":"The changes have been announced as Sam Woods, the Bank of England deputy governor responsible for prudential regulation, who is seen by bank executives as a key defender of the ringfencing regime, prepares to step down at the end of next month. "}],[{"start":242.55,"text":"He will be replaced by Katharine Braddick, former head of strategic policy at Barclays. Woods was secretary to the Independent Commission on Banking that recommended ringfencing rules in a 2011 report."}],[{"start":262.95000000000005,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779159427_9164.mp3"}