Horta-Osorio says it will make system 'stable'
Lloyds boss to break ranks and back bank ‘ring-fence’
Sources say he will tell a bankers conference on Thursday that the plan to separate key operations at the banks will help make the system more stable.
The ring-fence creates a ‘wall’ between high street banking and investment banking and is central to the government’s response to the crisis that brought the financial system into disrepute. Ministers backed the proposal by Sir John Vickers’s commission which said it would help avoid contamination if one area of banking activity got into further trouble.
However, a number of banks have expressed opposition to the new arrangements. Barclays’ former chairman Sir David Walker said the ring fence could cause irrevocable damage to Britain’s banking system and put the country at a competitive disadvantage relative to foreign financial centres. It is a factor in HSBC’s deliberations on whether or not it should retain its headquarters in Britain.
Mr Horta-Osorio takes a different view and, according to the Telegraph, he will the British Bankers’ Association’s annual conference that the ring-fence should ultimately benefit even those banks which are currently feeling the pain of the structural reforms.
It will not go unnoticed that his bank is less likely to be affected than some rivals because Lloyds has a small investment bank and will not be required to invest in a major restructure of its operations.