Bank watchdogs are damaging recovery, warns Barclays chief

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The Barclays chairman, Marcus Agius, has lambasted Britain's banking watchdogs, accusing them of heaping additional rules on banks, beyond those agreed internationally, and damaging Britain's competitiveness and economy as a result.

Writing to George Osborne, the Chancellor, in his capacity as chairman of the British Bankers' Association (BBA) Mr Agius said: "There has been considerable concern shown by the industry that this country is applying these requirements in a manner that is super-equivalent in the UK and so resulting in a non-level playing field, particularly with those countries with which we compete most critically.

"This is most notable when the UK applies additional requirements to the agreed standards; when it implements them earlier than others; and when it does not use the flexibility the standards permit or not in a manner reflected elsewhere. These are issues that are not just for banks; they directly impact the provision and pricing of finance to the economy."

The latter could be seen as a sideswipe at the Government over demands that banks lend more to small businesses.

A deal, under the auspices of Project Merlin, on this and a possible "big society bank" was expected this week but has been delayed, although industry sources have sought to play down talk of a spat by blaming "diary issues" relating to its announcement.

However, banks have long argued that if capital requirements on them are made too tough, they will have to limit cash made available for lending.

Mr Agius backed up his conclusions by pointing to two reports sent to Mr Osborne. The first, Bank of the Future, prepared by the City law firm Freshfields, found that the UK was far ahead of other economies when it came to implementing reforms agreed by the G20 group of nations, including those on capital and liquidity.

It compared Britain with the US, Canada, France, Germany and Australia. The second report, UK Banking Regulation – Level Playing Field Issues, looks in more detail at the new rules and how they have been applied. Angela Knight, the chief executive of the BBA, said the Government planned to stop "gold plating" regulations from Europe but added: "It is about more than that. It is about how you implement regulations, whether you use the flexibility offered. We have to look at this, and focus on the recovery."

The economy was found to have endured a shock contraction of 0.5 per cent in the fourth quarter. Banks have been repeatedly attacked, not only for the payment of excessive bonuses, but also for not supporting Britain's faltering recovery by providing financing.

Break up RBS, says ex-boss

The banker behind Royal Bank of Scotland's takeover of NatWest believes the deal should be reversed.

In a submission to the Independent Commission on Banking (IBC), Sir George Mathewson also called for Lloyds Banking Group to be split up.

Sir George said the IBC should consider dividing RBS into the two banks he put together 11 years ago in a £20bn amalgamation. At the time, it was Britain's biggest-ever bank merger. "This action, along with the split-up of Lloyds Banking Group, would lead to significantly improved competition," he said.

Sir George was chief executive at RBS and then chairman from 1992 to 2006. The IBC said those who had provided evidence were evenly split on whether the banks should be broken up.

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