|Jenkin warns against raising costs for British banks|
|Monday, 19 September 2011 13:57|
Bernard Jenkin MP warned against raising business costs for banks, and the implications this would have for small businesses in Britain.
In response to a statement by the Chancellor of the Exchequer on the Independent Banking Commission Report on 12th September, Mr Jenkin asked: "I welcome my right hon. Friend’s comment that we should not confuse the interests of bank shareholders with those of taxpayers. Should we not also remind ourselves, however, that unless the shareholders are doing well, the bank balance sheets will not be doing well, and ultimately small business borrowers will not be doing well. He is winning the argument on the reforms, but will he reassure the House that he is mindful of the cost of capital of banks? By raising business costs for banks, we would be in danger not only of driving them offshore, but of raising the costs of capital for UK business."
George Osborne responded: "Of course, that is the difficult balance that we all must get right. The challenge is to ensure that banks can lend well, as people have been asking them to, while at the same time ensuring that they have a greater cushion should things go wrong. In his report, one of the things that John Vickers points to is that if a bank is ring-fenced, its retail deposits are more likely to be used to support retail lending than to support an investment bank’s activities. He thinks that the ring fence could positively enhance lending opportunities for ring-fenced banks."