Bank of England's Haldane urges further 'unbundling' of banks
Wed 03 Oct 2012
LONDON (SHARECAST) - Andrew Haldane, the Bank of England’s executive director for financial stability, said he believes structural reforms to banks need to go further than currently planned.
Writing in the Financial Times, Haldane said that, rather than being worried about plans for banks, investors should be concerned reforms do not go far enough.
"There is a strong case for regulators stepping in to lessen the uncertainties over valuations," he wrote in the opinion piece.
"At present, investors are pricing for a migraine," he wrote.
"The problem for investors appears to be not so much too-big-to-fail as too-complex-to-price."
On Tuesday an EU advisory group, led by Bank of Finland Governor Erkki Liikanen, called for banks' retail businesses to be legally separated from higher risk activities.
The Liikanen Group's recommendation that traditional deposit-taking should be separated from taxing and other riskier activities echoes recommendations from the UK's Independent Commission on Banking, and the Volcker rules in the USA.
Haldane believes that "despite the alarm some have expressed, if implemented faithfully and simply such structural solutions ought to help solve the too-complex-to-price problem, to say nothing of too-big-to-fail".
"Alongside efforts to strengthen macro and micro-prudential regulation, these initiatives would help mobilise bank funding and lending, just when it is most needed for the economy," he wrote.