UK may be using the Wall Street rules to lure banks across the pond
A general view of Barclays Bank Fleet Street branch in London, England.
TEXT OF INTERVIEW
STEVE CHIOTAKIS: The five biggest Wall Street banks have reportedly put more than $90 billion in reserve to pay bonuses this year. But the New York Times reports today some bankers may not get a bonus at all. After the financial crisis, regulators pushed banks to raise their base pay -- to reduce the bonuses that encouraged risk. And, this weekend we learned the UK may be using those new Wall Street rules to lure more banking operations across the pond.
Marketplace's Stephen Beard is with us live from London with that. Good morning Stephen.
STEPHEN BEARD: Hello Steve.
CHIOTAKIS: So this question comes up because of a visit to New York by Britain's Finance Chief this weekend. Let's start with why he was in this country.
BEARD: To meet with the heads of the big Wall Street banks to get them to expand their business in London. But the finance chief Osborne denied that he'd be watering down any planned UK regulations to attract their business. However, when he was asked whether the UK would match the U.S.'s Wall Street reforms, he refused to say. He said he's waiting for the results of an independent report on banking before he decides on any UK regulations.
CHIOTAKIS: So, Stephen, what is the sense in London? Banks have gotten such a bad rap lately, do people even want more banks there?
BEARD: The government certainly does because of the extra jobs and tax revenues, but the big worry here is a mirror image of that in the U.S. There's a lot of worry that London could lose a lot of banking business to New York, because the UK's going to crack down on bonuses and the U.S. apparently is not. Osborne and his business secretary, Vince Cable will meet bank cheifs here today, and Cable told the BBC that if the banks don't curb their bonuses this Christmas, the government could take action.
VINCE CABLE: If they don't behave, if they don't take account of their wide responsibilities, the government has, as a posibility, some form of taxation.
And some analysts say if the govenrment does slap a punative new bonus tax on the banks, there will be a bank exodus out of Britain.
CHIOTAKIS: Marketplace's Stephen Beard. Thank you so much.
BEARD: OK Steve.