British watchdog to get tough
(25 May 2011 – Britain) Draconian powers for a new regulator could force British banks to sack directors, alter strategy, abandon takeover bids and scrap dividends and bonuses.
The powers were revealed yesterday by the Bank of England (BOE) and the Financial Services Authority (FSA) as they announced plans to sweep away the old 'rules-based' system of bank supervision and replace it with a more intrusive 'judgement-based' approach.
The new approach will include a scoring system and all 1019 banks, building societies and credit unions operating in Britain will be assessed on risk of collapse and given a rating between one and five.
Scores could be made public by the FSA, but only once it has established a system for winding up failing banks without causing panic.
Bank supervision will be based more on the judgement of supervisors making subjective, forward-looking assessments about possible vulnerabilities.
It will focus more on the big picture and try to move away from the reactive, box-ticking culture of the past.
The regime would be 'fundamentally different', according to FSA chief executive Hector Sants and the chief executive designate of the new body, the Prudential Regulation Authority.
The new approach will include a scoring system and all 1019 banks, building societies and credit unions operating in Britain will be assessed on risk of collapse and given a rating between one and five.
Scores could be made public by the FSA, but only once it has established a system for winding up failing banks without causing panic.
Bank supervision will be based more on the judgement of supervisors making subjective, forward-looking assessments about possible vulnerabilities.
It will focus more on the big picture and try to move away from the reactive, box-ticking culture of the past.
The regime would be 'fundamentally different', according to FSA chief executive Hector Sants and the chief executive designate of the new body, the Prudential Regulation Authority.
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