Mervyn King: Banks 'exploit gullible customers'

Mark Leftly@MLeftly
Sunday 06 March 2011 01:00

High street banks are bracing themselves for share sell-offs and more public criticism tomorrow after the Bank of England Governor launched an astonishing attack, warning of another banking crisis if the sector is not reformed.

In a remarkable newspaper interview, Mervyn King complained that banks' only concern was to "simply maximise profits next week" and that "imbalances" were returning to the sector. He also criticised the bonus culture, and appeared to suggest that he will find ways of clamping down on banks making money out of "gullible or unsuspecting customers".

The comments are seen as hugely significant as the Bank of England will soon be taking over regulation of the industry. The Deputy Prime Minister Nick Clegg yesterday joined the renewed attack, saying he agreed "the job of making our banks safe and responsible is not yet complete".

However, the industry protested that it had "reformed radically" since the crisis that forced the Government into a series of multibillion-pound bailouts in 2008. The big banks have announced strong results in recent weeks, with Standard Chartered confirming a pre-tax profit of more than £3.7bn last Wednesday.

"The banking industry recognises that some of its number got it badly wrong during the crisis," Angela Knight, chief executive of the British Bankers' Association, said in a statement.

Mr King's attack comes ahead of a week in which members of the Monetary Policy Committee, chaired by him, are again expected to be divided over whether to raise interest rates.

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