LONDON (AP) — Britain announced plans Friday to ease banking rules brought in after the 2008 global financial crisis in a bid to attract investment and secure London’s status as Europe’s leading finance center.
Treasury chief Jeremy Hunt said the changes, which follow Britain’s departure from the European Union in 2020, will make the U.K. “one of the most open, dynamic and competitive financial services hubs in the world.”
The package of more than 30 changes includes lifting a cap on bankers’ bonuses and easing capital requirements for smaller lenders. The government also said it will review regulations that hold bankers accountable for their decisions and will relax “ringfencing” rules intended to separate risky investment banking from retail operations.
Hunt said the government was using “Brexit freedoms” to make Britain more competitive. But many economists point out that the U.K.’s departure from the EU has erected barriers to trade and led some firms to shift offices and jobs to other European cities.
Last year, Amsterdam overtook London as Europe’s largest share-trading hub, though London remains the biggest financial services center overall.
The Conservative government says the rule changes will create a “smarter regulatory framework,” and analysts said the financial sector would appreciate them.
“The direction of travel will definitely be welcome,” said Jonathan Herbst, global head of financial services regulation at law firm Norton Rose Fulbright.
He added, however that “it is important for people not to overplay this; there is no sense of any move back to a pre-financial crisis world. Most of the U.K. regulatory regime reflects either international commitments or policy developed over many years to reflect the lessons of experience.”
But critics said the changes could reintroduce the kind of risk that led to the 2008 crisis. The British government at the time was forced to spend billions in taxpayers’ money to save some banks from collapse.
Opposition Liberal Democrat Treasury spokeswoman Sarah Olney said “our financial services need good and smart regulation, not more promises of slashing red tape, or a race to the bottom.”
Prime Minister Rishi Sunak insisted regulation of U.K. financial services would remain “robust.”
“Today’s reforms will ensure the industry remains competitive, we can create more jobs. But of course, this will always be a safe place where consumers will be protected,” he said.
Separately, the U.K. financial regulator fined Santander bank 108 million pounds ($132 million) Friday for lax controls against money-laundering. It said the bank was slow to close suspicious business accounts between 2012 and 2017.
The Financial Conduct Authority said “Santander’s poor management of their anti-money laundering systems and their inadequate attempts to address the problems created a prolonged and severe risk of money laundering and financial crime.”
Santander Chief Executive Officer Mike Regnier said the bank accepted that its procedures at the time “should have been stronger.”
“We have since made significant changes to address this by overhauling our financial crime technology, systems and processes,” he said.
Copyright © 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, written or redistributed.