KPMG calls for pragmatic approach to bank ring-fencing solution, or risk impacting industry innovation and customers

KPMG calls for pragmatic approach to bank ring-fencing

Giles Williams, EMA Head of KPMG's Financial Regulatory Centre of Excellence comments in response to the banks submitting their ring-fencing proposals to the Bank of England.

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In response to today’s deadline, whereby the UK’s biggest banks have to submit proposals to the Bank of England on ring-fencing their retail and investment banking activities, Giles Williams, EMA Head of KPMG's Financial Regulatory Centre of Excellence, said:

"The business models for UK banks are not homogenous. Given they are all different, the real challenge is to find what works for them, while also complying with the spirit of what was proposed in the Vickers legislation to protect taxpayers and make sure that customer interests are met."

“This means that the regulator must closely analyse the options to ensure that we don't end-up with a 'one-size-fits-all' solution. If the solution proposed by each are not considered carefully, it will adversely impact industry innovation, and ultimately, the end customers. 

"There are also going to be a lot of borderline issues that will have to be thought through. Are enterprises really going to want a relationship with two parts of what essentially is the same institution? That's going to create some significant inefficiencies for both the bank and the customer unless there is some pragmatism in how to deal with the real practical issues

"There's even a nightmare scenario where UK banks may have to split themselves in three buckets in order to comply with the separate European Commission ring-fencing proposals as they stand. That would be extremely unhelpful not just in terms of added complexity but also from a competition perspective. With this in mind, I hope the policymakers in Brussels will consider and adopt a pragmatic approach to finding an answer that balances the interests of customers, shareholders and society more generally.”

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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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