Standard Chartered savages bank reforms

Standard Chartered yesterday broke ranks with its banking rivals by publishing a withering broadside against the Independent Commission on Banking's proposals for reform.

In its submission to the ICB the bank argued that the commission's proposals increased the chances of banks failing, left the taxpayer at greater risk from the financial sector and would weigh heavily on the economy.

The bank, which focuses on emerging markets and has no UK high street presence, is the first to reveal its response to the ICB's interim report after the deadline for submissions passed on 4 July. The ICB is aiming to publish the rest by the end of this week.

The interim report, published in April, stopped short of advocating breaking up Britain's banks but called for the separation of retail and investment banking to lessen the risk to economically vital functions and reduce what it insisted was an implicit taxpayer subsidy.

Standard Chartered said in its submission: "When we look at the ICB proposals with the context of everything that has happened or is in prospect, we are deeply concerned. Whilst the package of reforms may have some benefits in reducing the potential impact of future crises, they may actually increase the probability of bank failures and will certainly impose a significant cost on the UK economy." Key points in the document include:

* Ring-fencing retail banking could imply that retail-focused banks are wholly backed by the taxpayer, potentially encouraging risky lending;

* The ICB's £10bn-plus figure for taxpayers' subsidy of UK banks is wrong and is based on skimpy analysis;

n The UK should copy Asia and intervene with measures such as loan-to-value and income-multiple caps to stop markets getting out of hand;

* Making banks boost their capital reserves will deter investors from providing capital and force banks to reduce lending;

* The proposals risk forcing up the cost of credit for UK firms and weakening London as a financial centre.

The bank's views will be taken seriously by the Government and its regulators because Standard Chartered withstood the crisis better than its rivals and provided the blueprint for the 2008 banking bailout.

The bank, which has threatened to quit the UK if regulation becomes too heavy, said: "It could be argued that the impact [of the ICB's proposals] is beneficial [to us] since implementation of the recommendations would distract and damage key competitors. However, we could be negatively affected by second-order or indirect consequences, such as a diminished role for London as a leading international financial centre."

Andrew Tyrie, chairman of the Treasury Select Committee, has repeatedly called for the banks to release their proposals to the ICB to allow a public debate before its final report on 12 September. Britain's other banks are waiting for the ICB to unveil more than 150 responses to its proposals in the next few days.

Standard Chartered rejected HSBC's proposal that ring fencing should be along accounting lines, and Barclays' call for "operational subsidiarisation", which provides for key functions to be split off when a bank fails but no prior division along business lines.

Instead it called for a narrow definition of retail banking within the ring fence to minimise costs and allow funds to be moved between banks' operations.

Start your day with The Independent, sign up for daily news emails
Life and Style
love + sex A new study has revealed the average size - but does that leave men outside the 'normal' range being thought of as 'abnormal'?
Arts and Entertainment
The Palace of Westminster is falling down, according to John Bercow
voices..says Matthew Norman
Steve Bruce and Gus Poyet clash
Graham Norton said Irish broadcaster RTE’s decision to settle was ‘moronic’
Arts and Entertainment
Jake and Dinos Chapman were motivated by revenge to make 'Bring me the Head of Franco Toselli! '
arts + ents Shapero Modern Gallery to show explicit Chapman Brothers film
Arts and Entertainment
Kurt Cobain performing for 'MTV Unplugged' in New York, shortly before his death
music Brett Morgen's 'Cobain: Montage of Heck' debunks many of the myths surrounding the enigmatic singer
ebooksA special investigation by Andy McSmith
Life and Style
Brendan Rodgers
football The Liverpool manager will be the first option after Pep Guardiola
Amazon misled consumers about subscription fees, the ASA has ruled
Arts and Entertainment
Myanna Buring, Julian Rhind-Tutt and Russell Tovey in 'Banished'
TV Jimmy McGovern tackles 18th-century crime and punishment
Arts and Entertainment
Paul Whitehouse as Herbert
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Austen Lloyd: Law Costs HOD - Southampton

£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn