Signs of a more "constructive" relationship between the Government and leading bankers emerged yesterday after the Chancellor, Alistair Darling, held what amounted to peace talks with senior executives over breakfast at a Davos hotel. Still, some of the exchanges sounded as crunchy as the unyielding muesli normally encountered at such venues.
Mr Darling told journalists before his meeting with the likes of Bob Diamond, president of Barclays, Peter Sands, the chief executive of Standard Chartered, and Stephen Green, chief executive of HSBC, that the banks ought to stop feeling sorry for themselves, get themselves off the front pages and see that although they had made progress they had "more to do". "Don't feel sorry for yourselves. Work with the Government to see how you can improve the situation."
For their part, the bankers seem responsive. Earlier this week Mr Diamond welcomed "more intrusive" regulation; yesterday Mr Sands said: "There is a common language with regulators, central bankers ... and increasingly a very constructive dialogue. The more challenging strand of how banks and bankers craft a new relationship with society is on the political side."
Mr Darling made it clear again that he shared the banks' scepticism about President Barack Obama's plan to break up big banks. He suggested that "living wills" and higher risk-related capital requirements, where there is "widespread agreement" internationally, would be more effective in preventing "casino" style speculative trading by banks on their own account than Mr Obama's plans to limit proprietary trading to customer service.
Mr Darling also refused to rule out further curbs on bank bonuses after the bonus tax runs out this year (which he confirmed it would). He would only say that there was a Budget and pre-Budget report between now and the 2011 bank bonus season. Various official reviews have suggested "fining "banks through increasing capital requirements if they are judged to be incentivising staff to take excessive risks.
The Chancellor also voiced his "frustration" at the slow progress being made by central banking committees based in Basel, such as the Bank for International Settlements and the Financial Stability Board, on a new international regulatory framework for the banks. The deadline of this autumn is slipping to next year, and Mr Darling said that "time is not on our side". He also warned about the danger of some G20 members backsliding on reforms agreed at summits held at the height of the crisis, especially now growth has resumed.Reuse content