Reforms will cost an extra £13bn a year, analysts say

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The Independent Online

Britain's clampdown on its banks will cost them an extra £13bn a year, more than doubling the cost of implementing new regulatory rules, Goldman Sachs analysts said yesterday.

The Independent Commission on Banking (ICB) proposals will hit UK banks with a £9.6bn bill, the analysts calculated – far more than the top of the ICB's estimate of £4bn to £7bn. The banks also face paying £2.5bn a year for the Government's banking levy.

"This amounts to a UK regulatory 'finish' of £13bn, on our estimates, potentially more than doubling the cost of post-crisis regulatory reforms," the analysts said.

"We believe this regulatory super-equivalence has the capacity to structurally disadvantage UK banks." The extra costs will more than double the £11bn expected bill for implementing the new Basel capital rules, they calculated.

Stephen Hester, Royal Bank of Scotland's chief executive, told MPs recently that the ICB's figure for the cost of its reforms was a big underestimate. HSBC said last week the cost of the bank levy and the ICB's proposal that the bank raises extra loss-absorbing debt will cost it up to $2.5bn (£1.6bn).

Mr Hester told MPs the ICB was "a done deal" but his HSBC counterpart Stuart Gulliver has said the bank could quit the UK if the price is too high.

The Government will announce its decision on which measures to implement in the coming months.