Peter Sands, the chief executive of Standard Chartered, launched an attack on the reforms proposed by Sir John Vickers' Independent Commission on Banking yesterday and suggested that regulators should be prepared to water down the proposed "ring-fencing" of retail banking and the higher capital ratios that Sir John prescribed.
Speaking at the World Economic Forum in Davos, Mr Sands suggested that the Vickers proposals might actually make the UK financial system more unstable.
"The banks that we see fail – and the data completely support this – tend to be small, regionally concentrated retail banks and wholesale-funded medium-sized wholesale banks. But this appears be exactly the kind of model of banking that the ICB are actually putting forward," he said.
"So I do think that we need to be quite careful in thinking that structural change is a panacea or is necessarily going to improve the fragility of the system."
Mr Sands, who became CEO of the UK-headquartered global bank in 2006, also said regulators should be prepared to respond to the "unintended consequences" that the reforms would throw up by being "adaptive".
"It is inevitable when you are changing so many aspects of the regulatory architecture that you will get outcomes that you don't expect," he said.
"I don't think the regulatory community should be embarrassed or apologetic about that because when you change a lot of stuff, that's going to happen. What I do think people should take on board is that in that context you need to be adaptive. You need to say 'this hasn't quite worked out the way we thought, let's change it a bit'."
He added: "That's not giving in to lobbying, it's just being sensible."Reuse content