By Brian Kesten
The Bank of England’s Prudential Regulation Authority announced
new rules last Thursday aimed at insulating deposits from
the institutional risks of investment banking, which will go into effect in
2019. As a result, British institutions including Barclays, HSBC, Lloyds and
Santander UK – institutions with more than $38 billion in deposits – will be
forced to carry roughly $5 billion more in capital reserves. In addition, the
ringfenced portion of the institution will be staffed separately, and must be
treated as a third party.
U.K. regulators did offer concessions to the banks, which
will face heightened regulatory standards overall. The largest U.K.
institutions will
not be prohibited from transferring capital from the
retail arm to other parts of the bank. In addition, Treasury officials withdrew
their plans to enforce a “reversal of burden of proof,” which would
have held senior managers accountable via fine or ban for
violations under the manager’s supervision. News of these regulations bumped
up the stock prices of British financial institutions.
As U.S. regulators and banks battle over the implementation of
the Volker Rule, the regulatory scheme in Britain bears
watching.
0 comments:
Post a Comment