The Mail on Sunday

Knight riding to defend the ‘pin-striped Scargill’ banks

DON’T BLAME US, SAYS EX-MINISTER AS TOP POLITICIAN­S LINE UP TO ATTACK HER INDUSTRY

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IF the ‘clash of the Chancellor­s’ is anything to go by it is going to be a tough General Election campaign for the banks. Alistair Darling, Vince Cable and George Osborne competed live on television last week to see who could give bankers the biggest kicking.

For Angela Knight, chief executive of the British Bankers’ Associatio­n and the woman who at times has seemed the sole voice defending banks over the past two years, it all looks very worrying.

‘If you are behind in the polls, you just have to come out and shout, “I am going to do this or that to the bankers” and your ratings will jump,’ she says.

But she warns the would-be Chancellor­s and Prime Ministers: ‘A General Election campaign lasts for six weeks – then you have to govern for five years.’

Despite two years of turmoil in which billions of pounds of taxpayers’ money have been used to prop up the banking system and with public opinion outraged by multi-million pound bonuses, Knight argues that the British banking industry is of great value to the nation and that politician­s should beware of passing laws that might damage it.

She says: ‘Politician­s have a legitimate interest and concern about banking and inevitably banking will be part of this election campaign. The UK is the largest internatio­nal centre for global banking. It provides jobs for one million people and is the largest payer of tax both directly and indirectly through the personal taxes of the people it employs.

‘For 30 years the nature of the UK was that we might change our regula- tion and taxation, but it was steady and sensible. We have shaken that belief and the more politician­s egg each other on, the more we will do a disservice to this country’s economy.’

Knight, a former Treasury Minister in John Major’s government where she helped prepare the ground for the demutualis­ations of Halifax, Alliance & Leicester and Bradford & Bingley, strenuousl­y tries to avoid being party political – and since her industry appears to have no political allies this is usually quite easy.

In last week’s debate, Cable called bankers ‘pin-striped Scargills’ who were ‘holding the country to ransom’.

But those who have watched Knight’s performanc­e during the banking crisis admire her stamina. As other bank bosses have run for cover, the 59-year-old Knight managed a schedule of meetings, hearings and media appearance­s that would have tested the most testostero­ne-fuelled trader.

The banking crisis comes on top of the traditiona­l complaints of the public against their banks. Last week a formal complaint was made to the Office of Fair Trading over poor Isa rates.

But Knight, ever the evangelist, insists things are better on all fronts. ‘I think people have a different view than 18 months ago. The banks have spent a lot of time asking their customers what they want and changing their retail offerings,’ she says. But while accepting that some changes may be needed in the way our banks are run, Knight is desperate to guide the finger of blame for the recession away from the British banking industry.

‘The banking problems stem from the US. It is those problems that have affected the world’s banks. The economic problem here is of our own making,’ she says.

This may come as a surprise to many who thought the first major bank collapse was British (Northern Rock) and that British banks made major mistakes of their own, from Sir Fred Goodwin’s ill-considered takeover of ABN Amro to the reckless lending by HBOS corporate banker Peter Cummings.

Knight argues that groundwork for reform has already been laid. ‘We have taken more steps than any other country in increasing capital in the banks, she says. ‘The next stage is economic recovery and that must be the priority of government. Stage three will be paying back the taxpayer and stage four will be other countries catching up and getting an internatio­nal solution to banking.’

KNIGHT believes that some ideas, such as splitting up the banks into old-fashioned High Street operations and casino banks, should not and will not happen. Even plans by President Obama to split the banks will in practice be watered down, Knight argues, and events in Washington suggest she will be proved correct.

But a tax or levy on banks to curb speculatio­n and recognise their potential need for bailouts seems more likely. Knight is resigned to some such tax coming, probably orchestrat­ed by the G20 and the Internatio­nal Monetary Fund.

‘Everything we have heard so far suggests it will be a tax that will be kept by each country. And they will call it a levy not a tax but it will go into the Treasury,’ she concedes.

This week is likely to mark the formal start of the General Election. It also marks the start of Knight’s fourth year as head of the BBA. Ominously she took up the role on April 1, joining from stockbroki­ng trade body the Associatio­n of Private Client Investment Managers and Stockbroke­rs, where she had been chief executive for a decade.

Will she go on to see another April Fool’s Day in banking? ‘If you start not being able to bring a different view of things to your job and become stale, that’s the point at which you have to recognise you have reached your shelf life. Few of us recognise that moment for ourselves,’ she says.

So has she reached that point at the BBA? ‘I am still up for it,’ she says defiantly.

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