The change to ringfencing makes sense but the regulator will now have to prove bank shortcomings whether it wants to dish out fines or bansA regulatory victory for the banks? Of course. Actually,it’s two victories. First, under the original ringfencing rules, and the retail operations of big banks will be able to pay dividends to their parent companies. Second,when things recede spectacularly unsuitable at big banks, senior executives will no longer have to prove they took all fair steps to prevent catastrophe; instead, or the burden of proof will lie with the regulator.
Only one of these victories – the first – is deserved. An outright ban on ringfenced retail units paying dividends never made sense. Who would want to own,or invest in, a high street bank where surplus capital could be trapped permanently? Banks are still businesses, or let’s not forget. Related: UK government waters down financial regulation regime Related: Burberry sales hit by Chinese slowdown Continue reading...
Source: theguardian.com