2016년 11월 18일 금요일

[메모] electrified ring fence in banking, in the UK after the crisis of 2008



※ 발췌 (excerpts):

1. Ring-fence needs electrification, says Banking Commission report (12 Dec 2012)

( ... ) Commenting on the publication of the report, the Chairman of the Parliamentary Commission on Banking Standards, Andrew Tyrie MP, said:

"Parliament took the unprecedented step of creating its own inquiry into banking standards, in the wake of the first revelations about the Libor scandal. The latest revelations of collusion, corruption and market-rigging beggar belief. It is the clearest illustration yet that a great deal more needs to be done to restore standards in banking.

The Government asked us to look an one of its main proposals for increasing financial stability─ring fencing─as part of our work.

( ... ... )

For the ring-fence to succeed, banks need to be discouraged from gaming the rules. All history tells us they will do this unless incentivised not to.

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.

Furthermore, we need periodic reviews of the sector to reassure us that the ring-fence as a whole is working. Thougher measures may yet be required.

( ... ... )

1. Electrifying the ring-fence:

Para 93:

- The Commission ...welcomes the Government’s action to bring forward legislation to implement a ring-fence.

Para 104:

- While ring-fenced banks will carry out the majority of essential economic functions which need protecting, it is important to be clear that it is these functions that enjoy protection and not the bank itself or its shareholders or creditors. There should be no government guarantee of ring-fenced banks, nor perception of one. Neither does ring-fencing mean that risks from non-ring-fenced banks can be ignored, as such institutions will remain systemic and difficult to resolve.

Para 163:

- The ring-fence envisaged by the Government may, in the long run, not provide an adequate degree of separation. Nor may it be adequate to buttress banking standards. Additional powers are essential to provide adequate incentives for the banks to comply not just with the rules of the ring-fence, but also with their spirit. In the absence of the Commission’s legislative proposals to electrify the ring-fence, the risk that the ring-fence will eventually fail will be much higher.

Para 164:

- The Commission recommends that the forthcoming legislation add reserve powers to implement full separation.

( ... ... )


2. Britain’s electrified ring fence (World Finance, 4 Feb 2013)

The British chancellor has proposed a ring fence separating high-street retails banking from investment banking branches within institutions will need to be 'electrified' with severe sanctions. Osborne will publish the Banking Reform Bill giving regulators the power to split banks up if they do not comply fully with new rules designed to protect British taxpayers.

"My message to the banks is clear: if a bank flouts the rules, the regulator and the Treasury will have the power to break it up altogether─full separation, not just ring fence," Osborne said in a speech in Bournemouth.

The British Bankers’ Association (BBA) said the new bill would bring “uncertainty for investors” and make it more difficult for banks to raise capital, leaving them with less available money to lend to the private sector. Anthony Browne, chief executive of the BBA has warned that moving away from the universal model of banking will compromise banks’ abilities to provide all the services British businesses will require.

For the time being regulators will only have the power to split up individual non-compliant banks, rather than a complete industry-wide separation. However, there have already been calls to give regulators sweeping powers over the ring fence.

( ... ... )


3. UK banking review urges 'electrified' ring-fence (US News, 21 Dec 2012)

The U.K. government needs to get tougher in its proposals to reform the banking industry by splitting high-street activities from riskier investment banking, Britain's Parliamentary Commission on Banking Standards said Friday.

The commission reported Friday that proposals for a "ring-fence" to protect retail banks needed to be "electrified" to discourage banks from probing for loopholes.

Commission Chairman Andrew Tyrie says that would mean giving regulators the power to force a complete separation of a lender's retail business from its investment banking. Risky investments including exotic derivatives undermined banks' stability in 2008, prompting taxpayer bailouts of two big U.K. banks.

( ... ... )

4. MPs: protect bank deposits with 'electrified' ring-fence (Citywire, 21 Dec 2012)

The government's Banking Commission has called for the 'electriication' of the proposed ring-fence around consumer deposits in banks following more 'collusion and corruption' in the banking sector.

A report by the Parliamentary Commission on Banking Standards, chaired by Andrew Tyrie, said ring-fencing consumer deposits from banks’ riskier business is welcomed, but the government must go further to protect consumers deposits and protect taxpayers from the risk of another bailout.

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