UK call for banks to restructure
(7 July 2009 – UK) English regulators have called for a simplification of the structure of banks and increased transparency when it comes to funding in a crisis.
In a financial crisis that has put a large focus on the importance of risk management, Bank of England deputy governor, Paul Tucker, has called for banks to change the way they are structured, for long term stability.
Tucker said that this change was important to bring about the kind of regime shift necessary to restore confidence and trust in the banking industry without the need for government backing.
In a speech to the British Bankers' Association annual conference in London, Tucker said that this crisis has reminded a generation of some old truths and in particular, that banks can fail.
Going forward, the market cannot have a regime where the upside for risk-taking goes to shareholders and management, but the downside falls to the general taxpayer, he said.
So that the downside will ultimately fall to shareholders and put accountability onto management, Tucker said that banks must structure and run themselves to permit orderly wind down.
Tucker said some banks that are deemed too big to fail need a structural overhaul to aid rescue attempts.
He also said that all banks need detailed contingency planning and information in place to help in times of crisis.
Similarly, speaking at the same conference, EU Competition Commissioner Neelie Kroes said that the EU will demand major changes to British banks in return for approval for state bailouts.
Tucker said that this change was important to bring about the kind of regime shift necessary to restore confidence and trust in the banking industry without the need for government backing.
In a speech to the British Bankers' Association annual conference in London, Tucker said that this crisis has reminded a generation of some old truths and in particular, that banks can fail.
Going forward, the market cannot have a regime where the upside for risk-taking goes to shareholders and management, but the downside falls to the general taxpayer, he said.
So that the downside will ultimately fall to shareholders and put accountability onto management, Tucker said that banks must structure and run themselves to permit orderly wind down.
Tucker said some banks that are deemed too big to fail need a structural overhaul to aid rescue attempts.
He also said that all banks need detailed contingency planning and information in place to help in times of crisis.
Similarly, speaking at the same conference, EU Competition Commissioner Neelie Kroes said that the EU will demand major changes to British banks in return for approval for state bailouts.
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