SIR WIN BISCHOFF, chairman of Lloyds Banking Group, which is 41% owned by the British state, has said governments and regulators should get their skates on and commit to a unified approach on the regulation of banks and financial institutions, rather than pursuing a smorgasbord of different approaches.
Speaking after the bank’s annual general meeting in Edinburgh last Thursday, Win Bischoff said that a lack of clarity over the direction of regulatory reform is creating uncertainty for institutions, such as Lloyds Banking Group, which operate in a number of different jurisdictions.
“We would prefer if governments and regulators could agree on something and stick with that,” said Win Bischoff, who took over as chairman after investors forced Sir Victor Blank to step down last year.
At the moment, different countries and economic blocs, such as the EU, are pursuing different ways to police reckless banks, including shifting derivatives trading onto regulated exchanges to ensure more transparent pricing.
Various countries are considering proposals to break up banks deemed “too big to fail”; bring the shadow banking system under the regulatory spotlight; introduce a tax on financial transactions; oblige banks to enhance their capital cushions and write “living wills”; introduce bonus caps; and force banks to set up alternative resolution regimes to shift the burden of salvaging collapsed banks away from the taxpayer.
Win Bischoff implied he is agnostic about which approach is favoured, as long as a choice is made fast and applied globally.
Win Bischoff: ringfence not too serious for Lloyds
He added that a “Volcker rule” approach—banning deposit-taking institutions from engaging in proprietary trading, private equity and hedge funds—would not be too serious for Lloyds Banking Group.
However, he conceded it might require the bank’s Lloyds Development Capital private equity arm to be spun off. It could also have repercussions for the remnants of HBOS’s integrated finance portfolio, which Lloyds Banking Group is attempting to sell.
In a pre-election interview on ITV in April, Gordon Brown, the prime minister, conceded his “light touch” approach to financial regulation had been wrong.
This article was published in the Sunday Times on 9 May 2010