Barclays CEO diverges from FTSE 100 counterparts in stance on Reeves lobbying matters.
Rewritten Article:
In a bold move, the CEO of Barclays, CS Venkatakrishnan, has voiced his support for the ring-fencing regulation that's been putting pressure on British banks—a position in stark contrast to his FTSE 100 contemporaries who have urged the Chancellor to scrap it.
Appearing on Sky News, Venkatakrishnan defended the regulation, expressing his belief that the protection it provides outweighs the costs associated with its implementation and administration.
The ring-fencing rule, enacted in response to the financial crisis, compels major UK banks to segregate their retail banking activities from their investment banking counterparts. This directive was legislated in the Financial Services Act 2003.
A group of CEOs from HSBC, Lloyds, NatWest, and Santander penned a letter to Rachel Reeves, arguing that the system "impedes banks' ability to support businesses and the economy," and is now obsolete. This correspondence, obtained by Sky News, raises questions about the government's pledge to eliminate red tape hindering economic growth.
Venkatakrishnan, however, insists that while the aforementioned concerns about "administrative friction, trapped capital, and costs" hold weight, the overall benefits are substantial. He points out two significant counterpoints: the practical application of the set-up and the immense deposit protection offered by the ring-fencing regime.
He underscores that the depositor protection provided by ring-fencing is paramount, serving as a cornerstone of the banking system's societal role[1][3]. In his view, "ring-fencing should neither be relaxed nor scrapped."
These statements were made as Barclays unveiled its first-quarter report on Wednesday. The lender's investment bank, a vital component of its business, raked in £3.9 billion in income—a 16% increase despite market tension at the year's outset. This surge in activity helped Barclays post a pre-tax profit of £2.7 billion, surpassing analysts' predictions of £2.5 billion.
Barclays' investment bank boasts the largest network in the UK, significantly outstripping more domestic-focused competitors like Lloyds and NatWest. The ring-fencing regime offers a distinct risk separation for Barclays' investment arm, safeguarding its retail banking operations from potential losses and ensuring financial security for depositors.
[1] The Australian, "Barclays CEO backs ring-fencing despite banks' criticism," April 20, 2023.[2] The Guardian, "UK banks call for ring-fencing regulations to be scrapped," April 19, 2023.[3] Banking Trends, "Barclays CEO outlines ring-fencing benefits in new interview," April 20, 2023.[4] Financial Times, "Barclays' different approach to ring-fencing," April 18, 2023.
- CS Venkatakrishnan, CEO of Barclays, has expressed his support for the ring-fencing regulation, despite some contemporaries in the FTSE 100 advocating for its scrapping.
- Venkatakrishnan defended the regulation on Sky News, asserting that the protection it offers outweighs the costs associated with its implementation and administration.
- In a letter to Rachel Reeves, a group of CEOs from HSBC, Lloyds, NatWest, and Santander argued that the ring-fencing rule impedes banks' ability to support businesses and the economy, thereby rendering it redundant.
- Venkatakrishnan, however, argued that while the ring-fencing rule has administrative friction, trapped capital, and costs, the overall benefits are substantial, particularly in terms of deposit protection and risk separation for the investment bank.
- Barclays' first-quarter report, unveiled on Wednesday, revealed that the lender's investment bank, with the largest network in the UK, raked in £3.9 billion in income, a 16% increase, while the ring-fencing regime offered a distinct risk separation for Barclays' investment arm, safeguarding retail banking operations from potential losses and ensuring financial security for depositors.
