The chief executive of Barclays has launched a staunch defence of Britain’s bank ring-fencing regime even as his main rivals lobby the government to abolish it less than a decade after its introduction.
Speaking exclusively to Sky News, CS Venkatakrishnan said the protection that ring-fencing provided to bank depositors outweighed the costs of implementing and administering the system.
His defence of ring-fencing – introduced as part of Britain’s response to the 2008 financial crisis – pits Mr Venkatakrishnan firmly against the bosses of HSBC Holdings, Lloyds Banking Group, NatWest Group and Santander UK, who wrote to Rachel Reeves, the chancellor, last week to warn that the regulatory framework was inhibiting lenders’ ability to help drive UK economic growth.
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“The point that the other banks make about a bit of friction, trapped capital and administrative costs are correct,” Mr Venkatakrishnan said.
“However, there are two counterpoints: we have spent the money on the set-up and we make it work; but the more important fact is that you have to weigh against this the immense amount of depositor protection that the ring-fencing regime gives the country.
“The ring-fencing regime is a very good one and a very strong one.
“Depositor protection is the single-most important element of the banking system and the single-most important part of banks’ engagement with society.
“I don’t think ring-fencing should be relaxed or scrapped.”
The ring-fencing regime establishes a ‘firewall’ between banking groups’ retail arms and their investment banking operations, protecting either if the other were to run into serious financial difficulties.
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