UK plans to ease banking restrictions to trigger ‘big bang’ Brexit | Financial sector

Ministers are considering easing rules introduced to stabilize the banking system after the credit crisis as part of the government’s plans to deregulate the City London and trigger the second big boom for financial services after Brexit.

fence rules, introduced after the 2008 global financial crisisrequire lenders to separate their high street operations from other activities such as investment banking or international operations.

Under the potential changes, the UK’s biggest banks such as Barclays and HSBC will continue to be restricted, while smaller lenders such as TSB and Santander UK could be exempted from the rules.

Treasury Secretary Andrew Griffith told the Financial Times’ banking summit: “We can make the UK a better place to be a bank to free up some of that capital trapped around the fence over time.”

From January 2019, UK banks including HSBC, Lloyds, NatWest and Barclays, which hold more than £25bn of core deposits from retail customers and small businesses, have been required to hold more capital to allow them to cover future potential losses in other operations.

The UK government introduced cap requirements to protect retail banking and consumers from shocks that could arise from other, riskier, business activities.

The measures were designed as a way to avoid another taxpayer bailout of the banking system, but critics said the requirement to keep banks’ capital in separate parts of the bank to cover any future losses hurt smaller lenders.

Earlier this year, a government-backed review of such capital allocation arrangements found that capital rules imposed on UK high street banks did not harm competition but may need to be simplified.

The changes to the cap proposed by ministers are part of plans to reform the financial sector and get rid of what some supporters Brexit consider unnecessary regulations after Britain leaves the EU.

The government has expressed its desire to trigger a second big bang for the City of London, repeating wave of deregulation since 1986which transformed the financial sector of the capital into a global center.

However, the government last week Canceled his plans introduce broad powers to allow ministers to overrule regulators, including Bank of Englandafter numerous warnings that such a move would damage Britain’s global reputation.

The powers would give the government the ability to make, amend or repeal regulations on matters within the purview of ministers considered to be of “significant public interest” but the Treasury said it would no longer act with powers to intervene.

Opposition MPs and senior officials, including from Britain’s central bank, warned that the move would threaten the independence and international reputation of Britain and its regulators.