ABI response to Turner review conference discussion paper
Responding to the FSA’s Turner Review Conference discussion paper on a new regulatory framework for the banking industry, Peter Montagnon, the ABI’s Director of Investment Affairs, said:
“While we do not see a formal Glass-Steagall approach as practicable, it might be helpful if market pressures led to banks reorganising themselves into more manageable units, with either a utility or an investment banking focus. The application of more rigorous capital requirements to the trading book would promote such a market development, which we would broadly support.
“We are more sceptical about liquidity and capital surcharges for ‘systemically important’ banks, not least because ‘systemically important’ is difficult to define.
“It is vital that that any restructuring of bank capital must be done in an orderly way, so as not to destabilise the market in subordinated bank debt, for example through forced early redemption at a discount, as this market is critical for funding UK pensions.”
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