FirstFT: UK to relax ringfencing rules on some banks

Britain is poised to relax one of the biggest restrictions on the banking sector as part of “Big Bang 2.0”, the long promised liberalisation of post-Brexit financial services rules.

The “ringfencing” of banks with retail and investment arms was introduced after the 2008 financial crash with the aim of reducing risk and preventing banking collapses. Critics have said the rules are inefficient because they require separate pots of capital to absorb potential losses in each part of the bank.

Andrew Griffith, City minister, told the Financial Times’ Global Banking Summit yesterday that change was coming. “We can make the UK a better place to be a bank, to release some of that trapped capital over time around the ringfence,” he said.

The move is part of a broader package of City reforms being drawn up by Griffith which are intended to boost the competitiveness of the financial sector, some of which will take advantage of “Brexit freedoms”.

Five more stories in the news

1. Europe’s business leaders turn more upbeat Across the region, there are signs of a cautiously more upbeat mood among businesses. Low unemployment, greater fiscal support, a drop in energy prices and a mild autumn that has kept gas storage facilities close to capacity have all improved the outlook.

2. Starlink prices in Ukraine nearly double List prices of SpaceX’s satellite communication device have nearly doubled in Ukraine, as Russia’s assault on the country’s electricity grid hits mobile networks. The portable Starlink terminals have provided crucial internet connectivity to the Ukrainian military and civilians in areas with limited mobile coverage.

3. China enlists Alibaba and Tencent in fight against US chip sanctions China is mobilising companies and research institutes, including Alibaba, Tencent and the Chinese Academy of Sciences, to create new chip intellectual property and reduce its dependence on SoftBank-owned Arm, whose technology underpins most semiconductors around the world.

4. London’s financial sector told to tackle class prejudice The body that oversees London’s Square Mile has told banks and financial services companies that half of their senior leaders should come from a working-class or lower socio-economic background by 2030. The City of London Corporation says accents and parentage still dictate career progression in the sector.

5. UK to pay Chinese group £100mn to exit Sizewell project The UK government will pay more than £100mn to Chinese state-owned power group CGN for its 20 per cent stake in Britain’s £20bn Sizewell C nuclear energy project in a bid to reduce Beijing’s involvement in the country’s infrastructure.

The day ahead

Eurozone inflation Economists polled by Reuters expect eurozone inflation to have hit 10.4 per cent in November when the data are published today, a decline from 10.6 per cent the previous month.

Economic data France has third-quarter gross domestic product figures, while Germany releases its November unemployment rate.

Corporate earnings LendInvest and Mulberry report first-half earnings, while Salesforce and SAS release quarterly figures.

UK industrial action Communication Workers Union members at Royal Mail are to stage a 48-hour strike, while more than 70,000 members of the University and College Union plan to walk out at 150 campuses in the third of three one-day strikes over pay.

What else we’re reading

A year of pain: investors struggle in a new era of higher rates In November 2021, Federal Reserve chair Jay Powell called time on an era of super-cheap money, throwing out the rule book global investors had used for more than a decade. One year on, fund managers are still adjusting to a brave new world.

‘It just kinda went crazy’: FTX’s lavish spending Sam Bankman-Fried said his motive in building FTX was to maximise the amount he could donate to charity over his lifetime. Yet behind the grand promises was an environment where senior executives in their late 20s and early 30s splashed millions of dollars on everything from sport sponsorship deals to luxury homes.

• Doesn’t anyone do due diligence any more? It’s been a lousy month for the reputation of professional investing, writes Brooke Masters, with the Theranos and FTX dramas showing a broad failure to ask enough questions before handing over cash.

UK trains have veered off track The opening sentence of the Williams-Shapps plan for rail in May 2021 set a modest aspiration: “We want our trains to run on time.” But they are not succeeding, argues Helen Thomas, and too often they just aren’t running at all.

How to think about policy in a polycrisis It is convenient to think about the world in intellectual silos, focusing in turn on macroeconomics, finance, politics, the environment, etc. This may work well in a reasonably stable world, writes Martin Wolf, but sometimes — like now — we must think about how these interact.

Chinese companies head for Singapore to hedge against geopolitical risk As US-China relations deteriorate, more Chinese businesses are “Singapore-washing”. As many as 500 Chinese companies have quietly redomiciled or registered in Singapore over the past 12 months in a bid to hedge against rising geopolitical risk.

Fashion

How do you dress festively without looking like a Christmas decoration? Stylist Anna Berkeley celebrates the outfits that will ensure elegance for the party season. Find inspiration for your next gathering here.