António Horta-Osório, the chief of Lloyds Banking Group, has called on banks to stop complaining about upcoming regulation on ringfencing of their business.
Horta-Osório says banks need to accept that their retail banking and investment banking arms must be seperate, as recommended in the Vickers Commission, reports the Guardian. The move stops retail banking money being used to fund investment banking operations and must be implemented by 2019.
“Ringfencing is happening. The industry should accept this and move on,” he will say at a British Bankers’ Association conference today. “The principle behind it is right, that is to minimise the possibility of the failure of a bank being again a burden on the British taxpayer.”
“To people who say ringfencing is too burdensome, I would simply say that having an effective ringfence can, over time, reduce the level of capital required in the banking sector,” Horta-Osorio will say.
HSBC has already reacted to the oncoming regulation, saying it will rename its retail banking arm, with the Midlands brand being tipped as the likely new name.
However, HSBC has said the ring-fencing rule, among other regulation, is one of the reasons it is considering moving its headquarters out of the UK.