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| Bank regulation 'risks recovery' says Angela Knight | Bank regulation 'risks recovery' says Angela Knight |
| (40 minutes later) | |
| UK banks need to focus on lending and paying back taxpayers, and should not be distracted by more regulation, the head of the British Bankers' Association has said. | UK banks need to focus on lending and paying back taxpayers, and should not be distracted by more regulation, the head of the British Bankers' Association has said. |
| Angela Knight said regulatory change could undermine the recovery. | Angela Knight said regulatory change could undermine the recovery. |
| Her comments come ahead of the Independent Commission on Banking's final recommendations due next month. | Her comments come ahead of the Independent Commission on Banking's final recommendations due next month. |
| The commission has already recommended ring-fencing banks' retail operations from their investment banking arms. | The commission has already recommended ring-fencing banks' retail operations from their investment banking arms. |
| Last month, Business Secretary Vince Cable indicated that banks could still be forced to separate entirely their High Street businesses from their investment divisions. | Last month, Business Secretary Vince Cable indicated that banks could still be forced to separate entirely their High Street businesses from their investment divisions. |
| Bank bailouts | Bank bailouts |
| "From now on, the UK's efforts must be focused on the economic recovery," Mrs Knight said. | "From now on, the UK's efforts must be focused on the economic recovery," Mrs Knight said. |
| "This means allowing the banks to finance the recovery first, pay back the taxpayer next, and only then turn to further regulatory change. | "This means allowing the banks to finance the recovery first, pay back the taxpayer next, and only then turn to further regulatory change. |
| "If more regulation remains at the top of the list then this will only have the effect of risking the recovery which is so essential to our future." | "If more regulation remains at the top of the list then this will only have the effect of risking the recovery which is so essential to our future." |
| The banking commission was set up by the government last June to review the UK banking sector after bailing out some of the UK biggest banks during the financial crisis. | The banking commission was set up by the government last June to review the UK banking sector after bailing out some of the UK biggest banks during the financial crisis. |
| However, the government is under no obligation to implement its recommendations. | However, the government is under no obligation to implement its recommendations. |
| "The government set up the ICB to ask the difficult questions that weren't asked before the crisis and this is exactly what the commission is doing," the Treasury said in a statement issued in reponse to Mrs Knight's comments. | "The government set up the ICB to ask the difficult questions that weren't asked before the crisis and this is exactly what the commission is doing," the Treasury said in a statement issued in reponse to Mrs Knight's comments. |
| "We look forward to receiving the final report on 12 September." | "We look forward to receiving the final report on 12 September." |
| Higher costs | Higher costs |
| In its interim report published in April, the commission said that, in the build-up to the crisis, lenders and borrowers took on "excessive and ill-understood risks", and that implicit taxpayer support for the banks encouraged "too much risk taking". | In its interim report published in April, the commission said that, in the build-up to the crisis, lenders and borrowers took on "excessive and ill-understood risks", and that implicit taxpayer support for the banks encouraged "too much risk taking". |
| As a result, it recommended that retail banks should be ring-fenced from investment banks and have their own capital reserves, so they are protected from losses made by traders on stock markets, for example. | As a result, it recommended that retail banks should be ring-fenced from investment banks and have their own capital reserves, so they are protected from losses made by traders on stock markets, for example. |
| It also said that taxpayers should not be liable for future losses, and that depositors should get their money back before creditors. | It also said that taxpayers should not be liable for future losses, and that depositors should get their money back before creditors. |
| These measures would lead to additional costs for banks. | These measures would lead to additional costs for banks. |
| Mrs Knight said in light of the ongoing eurozone debt crisis and stock market volatility, the focus for banks should be on the recovery, not on dealing with more regulation. | Mrs Knight said in light of the ongoing eurozone debt crisis and stock market volatility, the focus for banks should be on the recovery, not on dealing with more regulation. |