Analysis: Bankers call for more bang to the great response of British finance

Shortly after Britain left the European Union, Finance Minister Rishi Sunak pledged a series of measures he dubbed ‘Big Bang 2.0’ to ensure the City of London remains one of the world’s leading financial centers.

Four months later, many financiers say her reforms to date are a far cry from Margaret Thatcher’s explosive changes of the 1980s known as the Big Bang which led to London dominating much of global finance. over the following decades.

“There is a lot of process going on, but it doesn’t amount to a Big Bang 2.0. It’s more about fine-tuning than radical change,” Miles Celic, chief executive of TheCityUK, which promotes the financial sector.

Britain’s £ 130bn ($ 181bn) financial industry has lost thousands of jobs, a trillion pounds of assets and billions of euros in daily stock and swap transactions in Amsterdam since its inception. Complete departure from the bloc on December 31 separated the financial center from the continent. Read more

Prime Minister Boris Johnson’s government has responded by proposing changes to make rules on stock quotes, fintech firms and insurers more flexible, as well as a review of capital and proprietary trading rules.

And last week, he asked the Bank of England to start reviewing a central bank-backed digital currency that Sunak dubbed “ Britcoin. ” Read more

But the Treasury faces constraints on how far it can go, with competing interests, the need to stick to a global rulebook, and the Bank of England has opposed the easing of many of the stringent regulations introduced after the 2008 financial crisis.

This has left many in the industry uncertain whether enough changes are being made to attract many new businesses overseas, calling on the government for a clear long-haul roadmap.

“A vision would set a framework for regulators and give our partners, the countries we do business with, a sense of travel and ambition in this area,” said Celic.

The Treasury said in a statement it was boosting competitiveness in a series of reforms ranging from changes to listing rules to Britain’s first ever sovereign green bond.

“The Chancellor has set a clear vision for a more open, innovative and greener financial services sector – and we are moving quickly to get there,” said a Treasury representative.

A senior executive in the asset management industry said it would be good to hear Sunak make a “strong statement before the summer” on supporting more flexible regulation and keeping the UK market open, regardless what other countries are doing.

The stakes are high given that the UK financial services industry employs 1.1 million people and raises around £ 75.5 billion in taxes per year, a figure PwC consultants expect to mitigate in 2021, the city of London being effectively cut off from the EU so far. its largest export market.

But many rule changes will require legislation, meaning they may not come into effect until 2022 or beyond.

Conor Lawlor, director of financial markets and wholesaling at banking sector body UK Finance, said reforms so far are well paced but need to accelerate.

“We look forward to seeing it go into implementation.

THE BIG IDEA?

The Treasury is still waiting for Brussels to say whether parts of the industry can have direct access to the EU if it deems the relevant UK rule broadly equivalent to its own.

But bankers say that as the EU has said it is “in no rush” to decide, the government should stop trying to access its old backyard and focus on further reforms which will help the sector to better compete with New York, Singapore and the EU. .

“What we are really asking the government to continue with the reform, to bring forward all regulatory reviews because there is no logical reason to wait,” a senior official at an international bank told Reuters in London.

On the wishlist of many bankers is a more comprehensive multi-year commitment that includes taxation, the ability for financial firms to easily recruit from overseas, and ways to retain international banks, such as a capital adequacy regime. tailored.

“So far we’ve just seen a bunch of little ideas stuck together in new packaging, but does it count enough?” said the banker.

The Bank of England has cautioned against prioritizing the city’s competitiveness or diluting capital standards, when the financial sector itself has different priorities.

Domestic insurers and lenders are more concerned with tailoring the rules better for them rather than doing everything to strengthen the city’s global appeal.

Bankers want to carry out the reform as soon as possible, aware that they have been left behind since the British referendum on Brexit in 2016.

Britain, however, tends to be wary of continental-style “big plans”, Celic said.

Nonetheless, Jonathan Hill, the former EU commissioner who drafted recommendations to attract more listings to London, said there was now a rare moment to improve competitiveness as regulators, government and industry British lined up.

“The challenge for all of us is how to keep the momentum going,” Hill said.

(1 USD = 0.7198 pounds)

Our Standards: Thomson Reuters Trust Principles.


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