Sir Mervyn King said culture was changing at the big banks
The head of the Bank of England, Sir Mervyn King, has told MPs that the culture at the big investment banks has changed.
Sir Mervyn told the Parliamentary Commission on Banking Standards that the economics of banking had altered.
He said that was also changing the risk-taking culture of the big banks.
But the governor said that it would still be necessary to “ring-fence” every day banking from more risky investment activities.
That move was recommended by the Vickers report into banking that was released last year.
The Bank of England is taking over regulation of the banks from the Financial Services Authority next year.
The Commission on Banking Standards was appointed in July, following the Libor scandal and other episodes that damaged the reputation of banks in the UK.
Sir Mervyn told the commission: “The economics of merchant banking has changed enormously and that will change the culture, but that should not stop any move towards separation [of retail and investment banking].”
Sir Mervyn also said that the regulator needed to be clear about how to safeguard everyday banking from contamination by a bank’s more risky activities.
‘Lessons to learn’
Sir Mervyn’s appearance, with his two deputy governors, follows one by the Chancellor, George Osborne, on Wednesday.
Mr Osborne then called on MPs not to “unpick” a consensus on structural reform of the banking sector.
The commission will present its interim report on professional standards and culture of the UK banking sector before the end of the year.
It will outline “lessons to be learned about corporate governance, transparency and conflicts of interest, and their implications for regulation and for government policy”.
So far, it has heard evidence from major figures in the banking sector.
Evidence has included a warning from RBS boss Stephen Hester that ring-fencing banks’ retail and investment arms could raise the risk of institutions needing to be rescued, but the head of Barclays Bank said he was embracing the ring-fencing move.
BoE boss: 'Bank culture changed' http://news.bbcimg.co.uk/media/images/64303000/jpg/_64303658_64303653.jpg
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