City welcomes bank reforms but warns of resistance

 

The City today welcomed plans to overhaul Britain’s banks but warned they could be resisted by the country’s largest lenders.

Radical proposals from the Parliamentary Commission on Banking Standards could see bankers jailed for misconduct and bonuses delayed for up to 10 years alongside a host of other measures. Chancellor George Osborne was today expected to signal the first steps in selling off Lloyds Banking Group and Royal Bank of Scotland in his Mansion House speech.

“These changes include both the velvet glove of culture change as well as the iron fist of changes to regulations, rewards and punishment,” said Professor Andre Spicer of Cass Business School on the commission’s findings. Martin Gilbert, chief executive of Aberdeen Asset Management, said: “The commission has produced a thorough and insightful report, which we hope will support a step change in banking practices behind the financial crisis, and ensure taxpayers are no longer on the hook.

“Improving remuneration structures, increasing accountability and moving away from short-termism should ensure a strong culture of best practice across the sector. We’d certainly like to see the role of chairman become full-time given the size, scale and sheer complexity of banks today. A stable banking sector is essential for a growing economy and the UK will benefit if the right checks, balances and governance are in place.”

Shares in RBS dipped 0.5p to 322.6p and Lloyds Banking Group fell 0.15p to 62p.

Lord Myners, City minister under Labour, warned that any changes would be hard to implement. 

“The banks have successfully derailed a number of similar interventions on capital, ring-fencing, bonuses, and I think we will see a similar response here,” he said. “In many areas, Tyrie has said there should be further reviews… very little is going to happen in the next 24 months as a result of this report.”

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