Don’t split banks, says E&Y partner

Ed Miliband

Labour and Lib Dem party conference delegates have been warned in no
uncertain terms against splitting the high street and merchant operations of
banks, and the need for international agreement before raising taxes on banks or
curbing bonus payments.

The caution was delivered at fringe meetings at both conferences by Patricia
Jackson, partner and expert on financial regulation at Ernst & Young.

She said after the Labour meeting: “I think the reaction from delegates was
fine. It was not particularly negative.”

Jackson spoke out in Manchester just two days after newly-elected Labour
Leader Ed Miliband signaled his intention to look at imposing higher taxes on
banks, without giving further details.

Speaking at the meeting organised by the Policy Exchange think tank, she said
the merger between Lloyds and TSB had curbed competition, though new players are
entering the market.

She said restricting high street banks from market trading would be ”
difficult” given their need to trade in different instruments to protect their
own balance sheets from risks and help customers.

And higher taxes needed international co-ordination to avoid banks jumping
borders to take advantage of different regimes.

She agreed the banking sector did need fundamental change, but pointed to the
“success story” of the City, including the operations of domestic and
international banks.

She was speaking yesterday evening to the subject, Baby Out With The
Bathwater: Has Regulatory Reform fallen Short of Gone Too Far?

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