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Banking chief calls for tougher safety measures for banks

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by Jan Harris
Banking chief calls for tougher safety measures for banks

Andrew Haldane, the Bank of England’s executive director for financial stability, has warned that the planned safety measures for banks need to be strengthened, the Independent reported.

Speaking to the Parliamentary Inquiry into Banking Standards Mr Haldane said that the Vickers Report’s recommendation to ring-fence investment banking operations should be implemented fully.

He also said that banks which refuse to comply should be broken up and called for the size of a bank’s balance sheet to be limited to around £62 billion.

This would ensure that banks never become “too big to fail” because of the effect their failure would have on the economy.

Mr Haldane told the inquiry: “We [the Bank of England] are strongly of the view that full and faithful implementation of Vickers would be a significant and positive step.

“There are questions about whether it would be sufficient. I would prefer a clearer ring fence in a different place.”

Mr Haldane is calling for retail banking operations to have their own board, policies and HR operations to keep them totally separate from investment banking operations.

He criticised banks’ “antiquated” IT systems and said that the cost of a single banking platform should be evaluated.

This would make it much easier for consumers to switch accounts.

Earlier this week Barclays’ chief executive Antony Jenkins told the Parliamentary Inquiry into Banking Standards that the bank had changed its view on ring-fencing and now embraced the proposal.

His predecessor at Barclays, Bob Diamond, warned a year ago that ring-fencing investment banking operations would cost up to £7 billion to implement.

Also speaking at the inquiry, HSBC chairman Douglas Flint, said that HSBC will delay a decision on relocating its headquarters until 2015, when the new regulations would be clearer.

HSBC had warned that it might move out of the UK because of regulatory reforms.

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News posted: November 8, 2012

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