By Hugh Jones
LONDON (Reuters) – Bank of England Chief Executive Officer Victoria Saporta said on Tuesday the Bank of England’s new goal to help the financial sector remain globally competitive should not encourage risky bets on regulatory standards to win business.
Britain wants “Big Bang 2.0” – a nod to the stock market liberalization of the 1980s that boosted the global reach of the financial sector – to bolster the City of London after Brexit.
The bill before Parliament also gives several regulatory changes to the Council of England and the Financial Conduct Authority as a new secondary goal to help the economy and global financial sector competitiveness and growth.
Saporta said the best way to stay competitive is by having a regulatory system that is open, predictable, transparent and compliant with international standards.
“One thing I want to make clear is that I don’t think regulators should engage in risky compromises like regulatory races to the bottom to win business,” Saporta said at the City & Financial conference.
British Finance Minister Kwasi Quarting is set next month to outline what he described as an ambitious agenda of deregulation by tearing up some financial rules inherited from the European Union, starting last week by scrapping maximum bonuses for bankers, which will include relaxing capital rules. for insurance companies.
Kwarteng said in a meeting with asset managers and insurers on Tuesday that “Big Bang 2.0” next month was a top priority to return the city to being the world’s number one financial center to drive growth.
He said he would “sort” the insurance capital rules, the relaxation of which has met resistance from the Bank of England, but he reaffirmed their independence and existing regulatory structures.
New Prime Minister Liz Truss said she would review UK financial regulators, sparking talk of a merger.
Not to violate the rules
Saporta said compliance with international standards makes it easier for international companies to do business in the UK.
“It avoids the shortcomings that might arise from international companies having to comply with a different set of rules when they operate here,” she said.
Saporta said financial centers are more competitive when regulators have a good reputation for being independent.
But Nicholas Lyons, head of the Phoenix thrift group, and Lord Mayor of the City of London since November, said the city had not been looking for a torch of regulations, but had been like “a dog with its tail between its legs” since the global financial crisis.
“We have this tremendous opportunity now that we have an administration that is focused on releasing the capacity of the city, we actually have an opposition party behind the need for growth and investment, we have a regulator that is resisting some of the urgency that we feel is necessary … but I think we will get there,” Lyons said. “.
Nick Collier, the City of London representative in Brussels, said the ‘rhetoric’ about Brexit dividends, deregulation and Big Bang 2.0 meant the city would not have access to the EU financial market for the foreseeable future.
“But in Brussels … they are very concerned about what the UK is doing. If we get it right, we should be a very deep and vibrant capital market,” Collier said.
Conor Lawlor, managing director at UK Finance, which represents British banks, said it was important to make the most of the desire for reform, because it would not be around forever.