Financial Services Bill

My Lords, I, too, thank my noble friend Lord Hamilton for giving us the opportunity to debate this question, which the Bill hardly deals with; namely, whether we should require fundamental changes to the structure of our financial institutions. Having worked for 27 years for two British banks and for two years for a Japanese-owned bank, I have some experience of that. In my experience, where separate subsidiaries conducting different businesses were incorporated under one holding company, it was actually extremely difficult to co-operate with the other co-owned part of your group. If I was working for the investment banking part of Kleinwort Benson, for example, I could work much better with the asset management division of SG Warburg than with Kleinwort Benson’s own asset management division. The separation of investment banking and commercial banking businesses can be achieved under common ownership. I agree that there must be much increased capital backing for the deposit-taking and retail business, and for the proprietary trading businesses which will take the margin out of it. I also welcome any opportunity to investigate whether structural changes are needed, which I have no doubt various institutions are doing all the time. However, I would hesitate to require any change in our structure in this country without securing agreement with other major countries with major financial markets. I worry that we anyway no longer have the power to do so as a result of the Government’s having surrendered to the three new European super-regulators our ability to set regulatory policy. However, even if we had such authority, we would be very foolish to proceed in that direction without securing agreement at G20 level with the SEC, Japan, Singapore and Dubai as well as with our principal European partners.