Former Independent Commission on Banking chairman Sir John Vickers has questioned the emphasis put on some of his banking reform proposals by HSBC.
The economist was speaking to the House of Lords economic affairs committee today (30 June), nearly a month after HSBC chief executive Stuart Gulliver criticised the proposed ring-fence.
It had been suggested that a ring-fence could be a factor in the bank’s decision to leave the UK. Sir John told the committee that the reform, currently being implemented by the PRA, is needed now more than ever.
He said: “In my view the case for these measures is every bit as strong today as it was when we made our report four years ago, if anything stronger.
“I am sure HSBC takes all sorts of things into account. I was surprised at some of the emphasis put on that because they had before that expressed some support for ring-fencing in 2012.”
Sir John, who is currently Warden of All Souls College in Oxford, said there remained some risk to the taxpayer because of banks such as RBS being too big to fail.
He said: “I think the risk is diminishing but it is still pretty sizeable and an important step to diminishing it further will be the full implementation of ring-fencing because then in the next crisis the government of the day can adopt a different policy to retail and investment banking.”
Sir John also dismissed the concept of “universal banking” which Mr Gulliver had criticised the UK for “rejecting”.
He said: “One reason why our crisis was so bad was that, particularly in the case of RBS, the government’s completely understandable desire to save the retail banking on which the economy depends necessitated saving the entire structure.”
Jonathan Symonds, chairman of HSBC Bank, appeared before the committee afterwards along with George Culmer, chief financial officer of Lloyds Banking Group.
He said: “The concern that we had as a global bank was implementing some protective legislation in the UK without having resolved some of the more global aspects of resolution and recovery.
“The point I would have today is that given all the other tasks that we have to do to improve the quality of our bank in the UK, this is a very substantial set of extra challenges which I am not sure brings the strength to our bank that was envisaged at the time.”
He added that despite its reservations HSBC is “entering into the spirit” of the reforms and implementing them.
