3 Min Read
LONDON (Reuters) - Britain's banks have asked the financial regulator to speed up finalizing new rules to protect their retail customers from riskier parts of their operations to enable them to meet a 2019 deadline.
The Bank of England (BoE) has ordered banks to "ring-fence" their branch activities to protect taxpayers from any future exposure to the sort of multi-billion pound bailouts required to rescue lenders during the 2007-09 financial crisis.
By dividing up a bank's activities, it would make it easier to wind up troubled sections without the risk of dragging down the healthy parts of the business.
The BoE's Prudential Regulation Authority gave banks and other interested parties until Tuesday to respond to its initial proposals.
The British Bankers Association, a lobby group for the industry, said in its response that it wants to speed up the consultation.
"In order to deliver the reforms on time - banks, the regulatory authorities and a number of government agencies will need to pull together to avoid any bottlenecks," said BBA Executive Director Paul Chisnall.
"In particular we’d like the regulators to try to put in place the new regime as quickly as possible to allow banks to make final decisions about how to structure their businesses,” he added.
In a submission to the regulator seen by Reuters, the BBA said its members do not consider that the publication of formal proposals can wait until the third quarter of 2015 and wants them to be published no later than the second quarter.
It warned that the 2019 deadline is "tighter than meets the eye" and that banks looking to set up separate IT and operational systems could find it extremely challenging to meet unless the current timetable is brought forward.
The BBA also said that there is a possibility that millions of customers could have their account sort codes changed as a result of the changes.
The PRA declined to comment.
Any bank with 25 billion pounds or more of UK deposits will need to set up a ring-fenced unit. At present, six lenders would be affected - HSBC, Lloyds Banking Group, Barclays, Royal Bank of Scotland, Santander UK and the Co-operative Bank.
Among the requirements will be new boards for the ring-fenced entities, new staff contracts and separate pension schemes. Banks will also need to separate their risk-management and IT operations.
Additional reporting by Huw Jones; Editing by Michael Urquhart