Bar­clays chief calls for re­think on free bank­ing

The Pak Banker - - Front Page -

LONDON: The con­cept of free bank­ing should be re­con­sid­ered as part of the de­bate about the fu­ture shape of banks in Bri­tain, John Var­ley, chief ex­ec­u­tive of Bar­clays said, The Fi­nan­cial Times re­ported.

"It is pos­si­ble that free-if-in-credit bank­ing is a struc­ture that has out­lived its time," Mr Var­ley told a Ques­tion Time-style de­bate or­gan­ised as part of the govern­ment-ap­pointed Com­mis­sion on Bank­ing's re­view of the sec­tor.

The con­cept, which Mr Var­ley de­scribed as "idio­syn­cratic by the stan­dards of the world", was "worth ex­am­in­ing", he said.

The com­mis­sion was hold­ing its third pub­lic de­bate as part of a 15month ex­er­cise to ex­am­ine the struc­ture and com­pet­i­tive­ness of the UK bank­ing sec­tor - part of ef­forts to en sure that tax­pay­ers are pro­tected from fu­ture bank col­lapses. The process is due to con­clude next Septem­ber.

Af­ter events in Leeds and Ed­in­burgh, Thurs­day's de­bate - mod­er­ated by Sir John Vick­ers, com­mis­sion chair­man - boasted by far the biggest hit­ters in terms of pan­el­lists. Be­sides Mr Var­ley, it com­prised Dou­glas Flint, who is now chair­man of HSBC hav­ing pre­vi­ously been fi­nance di­rec­tor; Luke John­son, the se­rial en­tre­pre­neur; and Richard Lam­bert, di­rec­tor-gen­eral of the CBI.

Mr Var­ley's com­ments fol­low sug­ges­tions by Lord Turner, Fi­nan­cial Ser­vices Author­ity chair­man, last week that free bank­ing en­cour­aged in­ap­pro­pri­ate cross-sell­ing of other fi­nan­cial prod­ucts from which banks could make a profit.

"It is very im­por­tant to dis­tin­guish be­tween eq­uity in­jec­tions and sys­temic liq­uid­ity in­jec­tions," he said. Bar­clays has of­ten stressed that it did not ben­e­fit from tax­payer sup­port. -PB News

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