Commission considers good and bad of British banking

Fri Mar 29, 2013 3:35am EDT
 
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By Matt Scuffham

LONDON (Reuters) - The Archbishop of Canterbury has spent the run up to Easter contemplating the ethics of the trading floor and ways to curb greed in the City of London.

Justin Welby, the spiritual leader of 80 million Anglicans, is one of an influential committee of British lawmakers looking at how to change the culture of an industry laid low by price manipulation, mis-selling and fraud.

Measures to improve competition and to rein in risk-taking and proprietary trading are all being considered.

"We've learnt of various scandals that show the problem to be even greater than we were fully aware of," said commission member Nigel Lawson, who was Britain's finance minister in Margaret Thatcher's cabinet in the 1980s.

Britain's current Finance Minister George Osborne set up the cross-party Parliamentary Commission on Banking Standards last year to look at ethics in banking after Barclays (BARC.L: Quote), one of the oldest names in British banking, was fined $450 million over the manipulation of global interest rate benchmarks.

Osborne later gave the commission additional powers to review his banking reform law, which is meant to help shield taxpayers from future bank failures by ringfencing lenders' retail operations from riskier investment banking activities.

Osborne adopted a commission proposal to "electrify" the ringfence with a threat to break up banks if they fail to adequately protect depositors and taxpayers from investment banking risk-taking.

Flexing its independence, the commission has said Osborne needs to go further by raising leverage standards and forcing the split of all banks' investment banking and retail arms if the new rules designed to protect taxpayers fail.   Continued...

 
The new Archbishop of Canterbury Justin Welby speaks to the congregation during his first service at Canterbury Cathedral in southern England March 23, 2013. REUTERS/Luke MacGregor