Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

'Electrify' bank ringfence, says Tyrie's standards commission

'Electrify' bank ringfence, says Tyrie's standards commission

The Parliamentary Commission on Banking Standards has called for a complete overhaul of banking culture in the wake of the Libor scandal.

In a detailed review of the sector, the Commission chaired by Andrew Tyrie slammed banks in week which saw UBS hit with a massive $1.5 billion for manipulating the Libor rate.

'Investigations into Libor have exposed a culture of culpable greed far removed from the interests of bank customers, corroding trust in the whole financial sector,' the report said.

While the Commission supported the proposals set out by Sir John Vickers to protect their retail arms by 'ringfencing' them, it believes the government should impose tougher measures to insure banks abide by the rules.

It said: 'The Commission welcomes the creation of a ringfence. It can, in principle, contribute to the government’s objectives of making the banking system more secure. It is essential that banks are restructured in a way that allows them to fail, whether inside or outside the ring-fence. Ringfencing can also help address the damage done to culture and standards in banking.'

'But the proposals, as they stand, fall well short of what is required. Over time, the ringfence will be tested and challenged by the banks. Politicians, too, could succumb to lobbying from banks and others, adding to pressure to put holes in the ringfence.'

For the ringfence to succeed, the Commission said banks need to be discouraged from 'gaming' the rules. 'All history tells us they will do this unless incentivised not to,' it said.

'That’s why we recommend electrification. The legislation needs to set out a reserve power for separation; the regulator needs to know he can use it.'

The Commission also recommended periodic reviews of the sector to ensure the ringfence is working.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Taxicab Tenner: AXA IM's Nicolas Trindade

Taxicab Tenner: AXA IM's Nicolas Trindade

After a summer break, it is the turn of AXA Investment Manager's Nicolas Trindade to give a £10 view of how fixed income is faring.

Play Wealth Manager Olympics: the Relay

Wealth Manager Olympics: the Relay

In the final round of the Wealth Manager Olympics, our intrepid athletes team up for the relay.

Play Wealth Manager Olympics: the Shot Put

Wealth Manager Olympics: the Shot Put

After busting a gut in the 100m sprint, our wealth manager Olympians displayed their brute strength in the shot-put.

Read More
Your Business: Cover Star Club

Profile: gearing up for the shift from consolidation to start-ups

Profile: gearing up for the shift from consolidation to start-ups

‘I think the industry is evolving rapidly, but not necessarily as a whole,’ says the head of recently launched Charles Nicholson AM

Wealth Manager on Twitter