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Parliament report on structure of British banking causes mixed reaction

22 June 2013 02:52 (UTC +04:00)

Baku-APA. The British banking sector was harshly criticized in a report published earlier this week by parliament, and some supported the report while there were also criticisms that it did not go far enough, APA reports quoting local media.

"Changing Banking for Good" is the final report published by the Parliamentary Commission on Banking Standards (PCBS), which was set up in July 2012 in the wake of the London Inter-banking Rate (LIBOR) scandal. It outlines the radical reform required to improve standards across the banking sector.

British Prime Minister David Cameron said he would support recommendations in the report for criminal penalties for irresponsible bankers and a greater control over bonuses.

The PCBS report was hailed by British Banking Association Chief Executive Anthony Browne as "the most significant report into banking for a generation."

"There has already been a huge amount of change in the industry since the financial crisis but the banks recognize that more needs to be done. Regaining trust is an absolute priority -- we want Britain's banking industry to once again set the gold standard for professionalism and integrity," Browne said.

However, the report drew criticism from the leader of the largest trade union in Britain, Unite.

Trade union leader Len McCluskey said the Commission had missed a "golden opportunity" to fully nationalize RBS, and use it as "a dynamo which helps drive Britain out of the economic doldrums."

"The difference between the pay of the highest and lowest paid in Britain's biggest banks is completely unacceptable. Spreading reward more evenly across the banks would embed a culture of fairness and responsibility," McCluskey added.

On the same day the Commission published the report, Chancellor of the Exchequer George Osborne outlined the future of the British banks nationalized at the height of the global financial crisis in 2008-09.

He said he was ordering an examination over the coming three months into the restructuring of RBS into two banks -- one for sale to institutions and the public, and the second to hold RBS's bad debt.

Commenting on this, Mark Boleat of the City of London Corporation told Xinhua on Thursday, "As the majority shareholder, this is a matter for the chancellor. We support any action that provides best value for taxpayers and will help the banking sector return to normality."

Boleat added, "The recommendations outlined in this report put forward some sensible suggestions on incentives, improved accountability and increased competition designed to encourage long-term thinking and sensible risk management."

Boleat said the CLC was ready to set up dialogue on how to implement the Commission's recommendations and warned that reforms had already been implemented and they "should be properly assessed before more changes are introduced."

He said, "What the banking sector needs is clarity and certainty from policymakers over the future shape it will be required to take in coming years."

The report also drew criticism from experts in the field.

He said, "This is a scholarly report which will meet considerable resistance over time from the banks," said Lord Myners, who served as the financial services secretary in the government from 2008-10, with direct responsibility for affairs in the British finance sector.

"They have successfully derailed a number of similar interventions on capital, ring-fencing, bonuses and I think we will see a similar response here," he said.