© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
December 19, 2012 8:54 pm
David Cameron, UK prime minister, has rejected political pressure to break up Britain’s big universal banks in spite of outrage over investment banking culture in the wake of the Libor scandal.
Mr Cameron insists he wants to go no further than the ringfencing model proposed by the Vickers commission, which attempts to keep high street banking separate from investment banking operations.
But the UBS Libor scandal – following the outcry at Westminster over Barclays' involvement in rate-rigging – has reignited political concern about whether UK authorities should demand a full break-up of big banks.
Andrew Tyrie, chairman of a UK parliamentary commission into banking standards, said the UBS case looked “even more appalling than Barclays’” and that legislators would take evidence early next year.
“This is the manipulation of one of the world’s most important benchmarks over many years for profit, with extensive collusion, corruption and much else besides,” he said.
Mr Tyrie is thought to be attracted to the idea of keeping a full split of universal banks – including HSBC, Barclays and Royal Bank of Scotland – on the table in the event of the Vickers ringfencing model failing to raise standards.
But Mr Cameron told MPs on Wednesday: “We commissioned the Vickers report, which came up with the idea of ringfencing, which was right.
“The key is that we want to ensure that if a bank fails it can fail safely, without taxpayers having to stump up the money to sort it out.”
Renewed hostility towards bankers was summed up by Labour MP David Crausby, who said: “When our bankers get caught fraudulently taking billions of pounds from poor people throughout the world, they just pay large corporate fines and walk away with fat pensions.”
Lord Myners, a former City minister, told the BBC: “This fine is peanuts to UBS.” He called for a fundamental change in bank leadership and for banks to be broken up.
He also said UBS would be able to offset its fines against tax, although the UK Treasury insisted that this was not allowed. “In general, penalties arising from a breach of the law are not allowable as a deduction in computing trade profits,” HM Revenue & Customs said.
The US Department of Justice said the fines were not tax deductible. Swiss tax authorities also said fines could not be deducted in Switzerland.
Additional reporting by Matthew Vincent, James Shotter and Shahien Nasiripour
Please don't cut articles from FT.com and redistribute by email or post to the web.