U.K. opposition leader Ed Miliband demanded more competition among banks and a new code of conduct for bankers in the wake of the Libor scandal that cost Barclays Plc a record fine and three top executives their jobs,
The big five U.K. banks should become at least seven, with existing lenders forced to sell off hundreds of branches, the Labour Party leader said in a speech in London today. He proposed that wrongdoers who break professional rules should be “struck off” so they can never work for banks in Britain again.
“There isn’t proper competition in our banking system,” Miliband said. “Companies that think consumers have no choice are more likely to behave in predatory ways.”
The U.K. Serious Fraud Office said July 6 it is opening a criminal probe into the attempted manipulation of London interbank offered rates that led to a 290 million-pound ($449 million) fine against Barclays, the second-largest U.K. bank by assets. The scandal has claimed the jobs of Chief Executive Officer Robert Diamond, Chairman Marcus Agius and Chief Operating Officer Jerry Del Missier.
Miliband urged the setting-up of a new financial crime unit at the SFO and said Labour would set up a British Investment Bank to boost credit for small businesses. He accused the government of watering down proposals to shield the consumer operations of banks and said more should be done to tackle excessive bonuses -- “people taking home in a week what other people earn in a lifetime.”
Business Secretary Vince Cable urged Barclays yesterday to avoid provoking “another outrage” by limiting the severance package given to Diamond.
“There isn’t anything government can directly do about it, but in view of the shame that’s already been heaped on Barclays bank, I’d be very, very surprised if the chairman of the board were to allow another outrage,” Cable told BBC television yesterday.
Barclays’s board will ask Diamond to give up at least part of a possible 17 million-pound package, the Sunday Telegraph reported, without saying where it got the information. Discussions have taken place with the Association of British Insurers, the trade group that represents billions of pounds of pension funds’ investments, the newspaper said.
Ed Balls, Labour’s top finance spokesman, said the amount Diamond is potentially entitled to will be seen as “totally outrageous” and urged Barclays to “think really hard” about it.
‘It is totally outrageous that somebody can stand aside because the board decides there’s a problem and then get a payout which is off the scale of anything normal people will earn in their lifetimes,” Balls told the BBC. “How can that be?”
Cable said yesterday that leading banks were “anti-business” and “throttling” the recovery by withholding credit from growing companies. The Bank of England’s asset-buying program “is necessary but not sufficient,” he said. “There has been a breakdown in the mechanism. It just doesn’t get through to companies.”