Up in the Air: Is Reeves about to challenge ring-fencing regulations?
Mark Kleinman speculates on potential changes to the ring-fencing policy, suggesting Reeves may be considering scrapping the regulation.
The catchy headline "Rachel Reeves rips up ring-fencing" might soon become reality! Bosses from HSBC, Lloyds, NatWest, and Santander UK are pushing for the abolition of one of the most significant reforms post-2008 financial crisis: the ring-fencing rule.
In a letter to Rachel Reeves, they argue that ring-fencing might hamper her economic growth goals and even decrease the UK banking system's safety [1][3][4]. They believe the restrictions imposed by ring-fencing can hinder internal flexibility and reduce resilience within financial groups [1].
While the Treasury has shown an interest in relaxing some elements of ring-fencing, scrapping it altogether seems like too bold a step for Reeves without clear evidence from banks of a more robust commitment to the UK economy [1].
The four bank chiefs hope to announce a roadmap for ring-fence elimination during this Parliament, if successful [1]. Their major competitor appears to be Barclays CEO, CS Venkatakrishnan, who believes ring-fencing offers more benefits than drawbacks [1].
Shawbrook's Relentless Pursuit: A never-ending quest for the perfect match!
In a echo of the film "50 First Dates," Shawbrook Group, a mid-tier lender, has embarked on multiple attempts to merge with other banks like the Co-operative Bank, Metro Bank, and Starling Bank [2]. The most recent attempt involved a casual yet undefined approach to Starling Bank's board [2].
Sources indicate that Shawbrook, aiming for a valuation of £2bn, remains passionate about a deal, especially in the face of a less favorable IPO market [2]. Starling Bank, however, seems set on awaiting more stable and buoyant equity markets for a premium listing [2].
Starling's growing technology arm, Engine, should help boost its valuation further by securing new contracts in other countries [2]. It's unclear if Shawbrook's persistence will bear fruit, but the search for the perfect match continues.
Labour Criticism: Cheap shots from Tories question Kogan's appointment as Football Regulator
The Conservative Party cry of "Labour crony lands football regulator job" shortchanges a closer examination [4]. Truth be told, sports media rights veteran David Kogan was initially invited to apply for the role by the Conservative government before Rishi Sunak decided to call an early general election [4].
A more valid objection could be Kogan's lack of regulatory experience, but MPs on the Commons culture select committee will evaluate him in pre-appointment hearings next week [4]. Here's hoping the 2 Tory members of the committee exercise better judgment and refrain from repeating unfounded allegations of cronyism.
[1] – https://www.aibf.co.uk/daily-review/rachel-reeves-faces-decision-on-ring-fencing-after-letter-from-four-bank-chiefs/[2] – https://www.cityam.com/shawbrook-bank-tried-to-buy-starling-bank-according-to-sources/[3] – https://www.unherd.com/thepost/boris-johnson-plans-to-abolish-the-bank-ring-fence/[4] – https://www.cityam.com/labour-cronyism-allegations-kogan-appointment-independent-football-regulator/[5] – https://www.theguardian.com/business/2023/aug/09/bankers-warn-britain-faces- haut-axis-style-epicentre-of-a-looming-banking-crisis
- Mark Kleinman delves into the potential challenge from Rachel Reeves to the ring-fencing regulations, one of the key reforms post-2008 financial crisis.
- The ring-fencing rule, designed for banking system safety, is under scrutiny as leaders from HSBC, Lloyds, NatWest, and Santander UK call for its abolition.
- Starmer, as the Labour party leader, may face questions over the appointment of David Kogan as the Football Regulator, despite initial invitations under the Conservative government.
- The economy continues to grapple with concerns regarding technology advancements and their impact on businesses, as bankers warn Britain faces a potential epicentre of a looming banking crisis.
- In the world of sports, the equitable distribution of markets and finance is under examination, with questions raised about the alleged cronyism in the appointment process of the Football Regulator.
- The banking sector's call for abolishing ring-fencing surfaces in the general-news headlines, as politicians ponder over its potential effects on economic growth and the banking system's safety.
- While Shawbrook Bank still seeks a valuation of £2bn through mergers with other banks like Starling Bank, the high-tech arm of the competition remains an attractive proposition for securing new contracts in international markets.
