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Barclays calls for regulatory speed up

Tuesday 2 August 2011 – by Jacqui Street

Barclays has called for a regulatory hurry-up after one of its rivals sounded a warning yesterday over the pace of banking regulation.

In its half-yearly financial statement, Barclays’ pre-tax profit fell by 33 per cent to £2.6bn (€3bn/$4.2bn) mainly due to a £1bn (€1.1bn/$1.6bn) provision set aside for payment protection insurance misselling payouts.

While revealing plans to cut a further 1,600 jobs this year, Barclays chief executive Bob Diamond has called for a “speedy conclusion to the bank reform agenda” to boost business confidence.

Diamond says Barclays will take a conservative position until regulatory reform is finalised.

“Obtaining regulatory certainty is critically important for us to make long term investment and risk decisions in each of our businesses,” he says.

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Diamond says Barclays will “continue to engage proactively” with the Independent Commission on Banking and UK government over ring fencing proposals “to ensure a rational and carefully evaluated set of reforms emerge”.

On Tuesday, HSBC group chairman Douglas Flint warned: “The pace and quantum of regulatory reform continues to increase at the same time as the global economy appears to be losing momentum in its recovery.”

Flint said HSBC was concerned about regulation coinciding with eurozone indebtedness, inflationary pressures and commodity price increases, as well as asset price bubbles and budget discipline in the US.

Although the Barclays chief admits “the scale of regulatory change remains challenging” he says the bank “looks forward to the finalisation of new banking regulations over the coming months”.

Diamond insists Barclays easily met the European Banking Authority’s stress tests and says the bank would meet Basel III requirements.

“Our capital, liquidity and funding position is rock solid,” he says.

The Barclays results identify a number of regulatory reforms which may “materially impact on our businesses and earnings” including Basel III and emerging proposals for Systemically Important Financial Institutions.

Barclays also says the US Dodd Frank Act and consumer protection act “contains far reaching regulatory reform although the full impact will not be known until implementing rules are made by government authorities”.

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