- banks are still too big to fail, single biggest issue for supervisors
- financial policy committee would like to have greater powers on leverage
- unknown question if BOE has enough powers to solve too big to fail problem
- Bailey; EU proposals to cap bankers’ bonuses runs risk of pushing up fixed pay
- Bailey: concerned EU proposals remove ability to claw back large parts of bankers’ remuneration before too big to fail is solved
- King: would be much happier with leverage ratios of 10-20 in the very long run
So far the comments are nothing that hasn’t been bandied about for a while; the inevitable requirement for banks to ringfence their risk divisions by splitting from the main institution is clearly in the background, the dissatisfaction from banks with these proposals is still there and the stance of the UK’s attitude to bonus caps vs europe was underlined again yesterday by Osborne.
- King: surprised that top bankers had easier access to to senior politicians than regulators ( why be surprised ?!)
- bankers’ access has not changed since the financial crisis
- bonus cap creates ‘sound and fury’ to distract from real bank regulation issues
Sound and fury ? I might ask permission to borrow that one !
- King: we have not been decisive enough in either recapitalising or restructuring RBS
- must not let RBS muddle through, need to recognise losses in restructuring
- RBS has assets that are loss-generating and need to be separated into a ‘bad bank’ (see my comment above)
- should only take a year to sort the above RBS issue – it’s dragged on too long
