Bank ring-fencing should be scrapped to support the UK economy, bank bosses from HSBC, Lloyds, NatWest and Santander UK said in a letter to the finance ministry, which said it would work with them to boost growth.
In a letter sent to British finance minister Rachel Reeves this week, first reported by Sky News yesterday, the chief executives said bank ring-fencing – which separates consumer lending operations from more volatile investment banking – “is not only a drag on banks’ ability to support business and the economy, but is now redundant”.
A spokesman for HSBC confirmed the letter existed as reported and that the bank was a signatory.
The ring-fencing rules were introduced after British taxpayers had to bail out several failing lenders during the 2008 financial crisis.
Banks have long argued that the rules are too onerous and hamper Britain’s competitiveness versus other global financial centres. Reeves has stepped up pressure on regulators and other public bodies to remove barriers that might be hindering growth.
In their letter, the bank chiefs said that given global economic challenges, it was crucial that the government removed “unnecessary constraints on the ability of UK banks to support businesses across the economy and sends the clearest possible signal to investors in the UK of your commitment to reform.”
“Removing the ring-fencing regime is, we believe, among the most significant steps the government could take to ensure the prudential framework maximises the banking sector’s ability to support UK businesses and promote economic growth”, the letter said.
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