Stop whining about regulation and start treating customers better. That was the message of Lloyds chief executive António Horta-Osório to his rivals, as he argued the sector’s red tape straitjacketing will only stop once banks convince everyone they can behave themselves.
His actual language was rather more measured, of course. ‘The regulatory burden will only stop growing once the public and regulators trust banks to manage the sector in a responsible manner,’ he told the British Bankers’ Association annual conference today.
‘It must never again sell products that customers do not need,’ he said, without mentioning the record £117m fine Lloyds (which is still 19% owned by the taxpayer) was handed this month for mishandling PPI complaints.
Horta-Osório also had some words for those complaining about the requirement for banks with more than £25bn of deposits to separate their investment and retail banking divisions by 2019.
‘Ring-fencing is happening - the industry should accept this and move on,’ he said. ‘To people who say ring-fencing is ‘too burdensome,’ I would simply say that having an effective ring-fence can, over time, reduce the level of capital required in the banking sector.’ (This is a good explainer on why simpler banks may well be better.)
It’s easy for him to say. Lloyds has a much smaller investment bank than Barclays or HSBC. The latter has said ring-fencing is one reason it may move its headquarters to Hong Kong. It’s already shifting its British retail bank to Birmingham and renaming it (the current hot favourite is Midland Bank, ironically what many of its branches were called before the 1992 takeover by HSBC), paving the way to spin it out if it does head east.
Nonetheless, with Horta-Osório cosying up with regulators and casting himself as the good guy, the ball is in his rivals’ courts.