John Vickers defends banking reform costs
The chairman of the ICB said he stands by his estimate that the annual cost to banks will be around £4bn to £7bn.
Speaking at the House of Lord Economic Affairs Committee meeting today (18th October), he said: “We stand by our estimate for costs to banks, especially as our analysis is from various reports by specialist analysts. I am aware there are estimates out there which are higher, but we believe their analysis is flawed.”
Mr Vickers also used the meeting to stress he thinks it is unlikely that British banks will move overseas as a result of tighter regulation.
This comes after the ICB was asked to consider structural and related non-structural reforms to the UK banking sector to promote financial stability and competition.
The 363-paged Final Report said that retail banking activities should have economic independence and this requires the UK retail subsidiary of a wider banking group should meet regulatory requirements for capital, liquidity, and funding to create a strong ring fence.
Members of the committee also raised fears the additional cost to banks will result in an increase in the cost of borrowing for customers.
This notion was also echoed earlier today at an Evidence Session with the Treasury Select Committee where Matthew Fell, director for corporate affairs of the Confederation of British Industry, and John Hitchins, UK banking leader for PricewaterhouseCoopers, said the cost of lending will shoot up as a result of the Vickers’ reform.