Stephen Hester has warned that ring-fencing banks could create systemic risk in the system, the opposite of its desired effect. The chief executive of Royal Bank of Scotland is currently being grilled by the Treasury select committee in Portcullis House, Westminster.
The question is pertinent because some form of internal ring-fencing is the recommendation of the Independent Commission on Banking.
It was put to Hester by Andrew Tyrie, chairman of the committee, and the bank chief at first prevaricated. Put on the spot, he said his belief was that, on balance, ring-fencing would cause problems. Read more
We wrote this morning about Labour’s attempts to reach out to business through two separate initiatives. John Denham, business secretary, has pulled together 22 business advisers (including Lord Sugar and Nigel Doughty) to advise him on issues including regulation, industrial intervention and procurement. Mr Doughty and others – including Stephen Alambritis, formerly of the Federation of Small Businesses – are carrying out a separate review of small business.
In our interview this morning Mr Denham insisted that this did not mean that Labour needed to carry out a “prawn cocktail offensive” of the type launched in the early 1990s. Up to a point he is right: after 13 years in government Labour has banished the old perception that it is intrinsically anti-business. Also, insiders tell me that there are some large business donations in the pipeline which can be announced soon, contrary to our page 3 number on Monday showing that such gifts have dried up. Read more