A London judge criticized the time it’s taken to implement ring-fencing rules designed to reduce risk at banks after the 2008 financial crisis, as Barclays Plc becomes the first lender to seek approval of its new structure from the courts.
"Five years is a long time” to implement the rules, no matter how delicate the process, Judge Geoffrey Vos said at a hearing Tuesday. "The world was a very different place 10 years ago."
Under new U.K. laws introduced in 2013, all banks with deposits of more than 25 billion pounds ($35 billion) must separate their retail banking activity from the rest of their business to protect customers from their riskier investment banking operations. Lenders have until January 2019 to make the shift, which will affect five U.K. banking groups: Barclays, HSBC Holdings Plc, Lloyds Banking Group Plc, Banco Santander SA and Royal Bank of Scotland Group Plc.
Barclays is seeking court approval for its ring-fencing plans, which include keeping its staff pension scheme within the investment bank. The decision has met with objections from pension participants because it would mean the plan falls outside the ring-fenced unit. The pension plan has 230,000 members and a deficit of 4.8 billion pounds, according to a copy of Barclays’s court documents. That figure has shrunk from a deficit of 7.9 billion pounds in September 2016, the bank said in the documents.
"The notion referenced in various press articles that BBPLC will be a ‘casino’ bank is wholly inappropriate," Barclays’s lawyer, Martin Moore, said in skeleton arguments, referring to the bank’s main trading unit. "It will have over twice the capital and has a more diversified business."
No Brexit
Judge Vos warned Tuesday that his approval of the plans "is not a rubber stamp," even though the structure has been agreed on by regulators. He also said he was surprised that no reference had been made to Brexit, as Britain enters its last year within the European Union.
"One of the real problems with the financial world that we live" is the speed with which it moves, said Vos. "This is not a single exercise, it has to be a continually responding process."
To contact the reporter on this story: Suzi Ring in London at sring5@bloomberg.net.
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Anthony Aarons, Keith Campbell
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