John Vickers’s proposals to force U.K. lenders to insulate their consumer units from their investment banking operations may do more harm than good, according to Lloyd’s of London chairman Peter Levene.
“You could have an absolutely spectacularly ring-fenced, clean, nothing-could-ever-go-wrong banking system,” Levene, a former Lord Mayor of London, said in an interview in Monte Carlo today. “But it wouldn’t have much business left,” he said. “As the banking system makes up around 10 percent or 12 percent of the economy, it is rather important.”
Lenders will have until 2019 to implement the proposals Vickers, a former Bank of England chief economist, published in his report yesterday. Chancellor of the Exchequer George Osborne, seeking to shield customers and taxpayers from another financial crisis, has pledged to implement the proposals, which the report said could the industry as much as 7 billion pounds ($11 billion).
“There are other countries that are very keen on financial services,” said Levene, who is stepping down as chairman of Lloyd’s of London insurance market next month. Banks could consider going to other centers including Singapore, Shanghai, and Hong Kong, he said.
Levene is the founder of NBNK Investments Plc, which is trying to start a British consumer bank. The company is bidding for branches Lloyds Banking Group Plc is being forced by European regulators to sell following its taxpayer bailout.
“Our prime target has been all along, and still is, the 627 branches of Lloyd’s Bank that they have been forced to put up for sale by the EU,” Levene said. NBNK has entered a second round of bidding for the Lloyds branches. “At the end of this month we are supposed to know the result,” he said.