Osborne poised to call banks' bluff
Chancellor George Osborne will call the bluff of banks that have threatened to quit the UK if a report recommends they should be broken up, according to a newspaper report.
Big banks, including HSBC, Barclays, and Standard Chartered, have hinted they could leave London if the Independent Commission on Banking (ICB) suggests measures that drive up the cost of being based in the UK, according the Sunday Times.
The ICB, which is investigating how to stabilise the sector and avoid future bail-outs, could call for banks' retail arms to be split from their investment arms in a move insiders say would make it cheaper to relocate overseas.
But a Treasury insider told the newspaper that Mr Osborne thinks it unlikely that any bank would leave this country.
He said: "We take much of this with a pinch of salt. Nobody is leaving things the way they were before the crisis.
"If Bob Diamond is serious about taking Barclays to New York, he should listen to Jamie Dimon of JP Morgan, who has been complaining about the new regulatory framework there.
"Does anybody really think HSBC would want to go to China? There are all sorts of reasons why that isn't going to happen."
The commission was set up last June to conduct a review after the financial crisis left Britain with one of the most highly concentrated retail banking markets in the world, with the top five groups accounting for 85% of UK personal current accounts and 70% of savings accounts.
Its initial findings, which will be made public tomorrow morning, are likely to conclude that allowing Lloyds Banking Group to take over HBOS was a mistake because it left the bank with too much market share, said the newspaper.
It could recommend that taxpayer-backed Lloyds, which has 30% of personal current accounts and 21% of the savings market, should sell more branches.