The recent proposal for high street banking to be ring fenced in order to protect consumers from riskier activities associated with commercial and investment banking has caused a stir throughout the industry, with rumours abound of major banks moving their headquarters out of the UK in order to avoid the cost of meeting the new regulations.
Despite the recent furore, Chairman of the independent banking commission Sir John Vickers stated that there was a low probability of banks fleeing the country.
Speaking to the Treasury select committee Sir John warned that the proposed upheaval would increase the cost of many investment banking activities, which are routinely funded in part by deposits from the banks retail operations, however, he asserted his belief that the increase was manageable for most banks and would not damage London’s reputation as a global financial centre.
When asked whether any large UK bank had stated that it was considering leaving the UK because of the proposed changes, Vickers said “the short answer is no”.
The ICB has also come under fire from supporters of the proposed, more stringent, regulations as it has rolled back the timetable for their introduction until 2019, perceived by some as folding to pressure from the banks.
Sir John explained the delays as a measure to protect bankers and the city of London’s integrity: “There could have been a detrimental impact if we had insisted on a shorter timetable.” He said to the committee.
The ICB advised people not to pay attention to what other countries are or aren’t doing, as their situations differ greatly from the UK..