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Monday, 18 April 2011

Twisted knickers over Vickers

Some Financial wizard at another pink paper has tried to whip up a storm over the fact that the Vickers Commission could not control the capital of any EU incorporated bank that wanted to buy up a UK retail banking network and operate it as a UK branch of the foreign bank.

European Union “passporting” rules allow banks from across the EU to operate in each other’s markets as “branches” subject to regulations in their home-country, rather than full-blown subsidiaries that would have to operate under UK rules.

Banks such as France’s BNP Paribas, Germany’s Deutsche Bank and BBVA of Spain, which might be tempted to enter the UK retail banking market, would only be subject to their home market capital rules.  Indeed there is little reason why UK banks that are already foreign owned (Abbey, Clydesdale, Yorkshire, AIB (UK) etc) could not be restructured this way.

Of course it sounds like the indirect source of this whining is coming from UK banks who would see their source  of cheap finance for bond trading and the rest drying up, but as a a tax payer, why should I care? I would happily see the responsibility for all these banks passed to foreign governments, with more downward pressure on the over remunerated third-raters at Barclays and RBS.

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