The talks between Goldman and JPMorgan fueled fears of weakened rules

Goldman Sachs and JPMorgan noted meetings with a high-profile group looking into the future of lock-in reforms, raising concerns about the role of big banks in crafting financial bailouts.

The meetings came as the Treasury sets up a task force to review the future of the bank shutdown, according to people familiar with the matter.

Records obtained by Financial News show how influential City groups, including Wall Street banks, got the ear of a panel reviewing the rules far more often than groups representing consumers.

While the panel recommended the government keep the core of the lock-in regime, which seeks to safeguard consumer deposits by separating them from investment banking, it suggested a number of tweaks.

“With banks writing their own rules, it’s no wonder the public is losing faith in the government’s ability to listen and meet their needs,” said Positive Money senior economist David Barmes.

A Freedom of Information Act request by FN shows that Goldman Sachs held two meetings with the group before its report. The bank had previously done so he questioned the closing thresholdciting it as a barrier to the growth of its Marcus digital bank, which launched in the UK in 2018. Goldman declined to comment on its commitment to the review.

Other banks holding meetings included JPMorgan, which continues to build its nascent Chase savings brand in the UK, HSBC, Barclays and NatWest.

Banking and business lobby groups such as the Confederation of British Industry, TheCityUK and UK Finance also feature, leading to questions from some campaigners about the level of influence financial services firms may have had in results compared to consumer groups.

JPMorgan, Goldman Sachs, HSBC and Barclays declined to comment. NatWest has been contacted for comment.

The lockout rules were put in place in the wake of the financial crisis, separating consumer deposits from riskier investment banking activities in an attempt to protect retail operations in the event of another collapse.

Former Standard Life Aberdeen boss Keith Skeoch was asked to chair an independent panel into whether the rules were still up to scratch. Your report, published in Marchbacked keeping the £25bn deposit threshold at which banks must separate their operations, but argued that when banks are deemed “resolvable” under a separate bankruptcy regime, they should be removed from the network closure, along with other tweaks that amounted to a slight relaxation of the regime.

Since then, the government has remained silent on the recommendations. The new taskforce is made up of senior officials from the Bank of England and the Treasury, who will help inform the government’s next steps and potentially end the state of limbo, people familiar with the matter told FN.

A source close to the review said several officials supported the panel through a secretariat and some of those staff have now been assigned to the task force.

TO READ Closure review leaves UK banks with uncertain future

According to campaign and research group Positive Money, nearly a third of the Treasury Secretary’s meetings in 2020 and 2021 were with the financial sector and its lobbyists, far more than any other sector, and almost three quarters of the Bank of England past and present. decision makers have held roles in private finance.

Marloes Nicholls, head of policy and advocacy at The Finance Innovation Lab, told FN: “The biggest takeaway from the Skeoch Review is that capping is doing its job – protecting people’s money and taxes from the costs of reckless casino banking. As the report endorses the fence, it’s puzzling that it also opens the door to removing it in the name of big bank competitiveness.”

However, a person close to the review said the lack of a consumer voice was partly due to a lack of proactive involvement by these groups.

“We had good traction with all the banks involved. We had conversations with them, they made presentations, we followed up on the presentations … so that we really understood what they were telling us and the evidence that was presented to us,” they said .

“We actually found it very difficult to get someone to speak from a customer perspective. So not just individuals, but small and medium businesses as well. It wasn’t for lack of trying and reaching out.”

Others in the city have pointed out that the lobby tends to go quiet around the closure by major banks. Since they’ve spent time and money breaking up their businesses, many may not be willing to undertake another massive task to undo this work so soon.

A financial services partner at a City law firm that works with major banks said: “The closure was a major issue for the industry, because they spent many years implementing it. It’s not just” This is a retail customer, go here, an institutional customer here.” – There’s a lot of overlap. The systems needed to be split. It was a massive project. After they’ve done that, they’re going to scramble to change it. all?”

The source close to the review also said that while the government is pushing to cut regulatory red tape to deliver a Brexit dividend to the City, it did not seek to influence the closure findings.

“Treasury played it with a pretty straight bat,” they said. “There was absolutely no pressure from the Treasury to push us one way or the other.

“We certainly don’t think this is going to lead to a bonfire of regulation that takes us back to the culture that existed in the banking industry before the crash.”

A Treasury spokesman declined to comment on potential timelines for government action on the panel’s recommendations.

An update had been planned to the Dinner at the Mansion House of City leaders on July 19, where now-former chancellor Rishi Sunak could have unveiled the government’s post-Brexit plan for financial services regulations.

However, the reform agenda has been called into question by the departure of the Minister of the City, John Glen, who was leading much of the work.

To contact the author of this story with comments or news, email Justin Cash



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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!