Response to the First Report of the Parliamentary Commission on Banking Standards
Chris Cummings, Chief Executive of TheCityUK, said:
A strong financial and professional services sector is vital for the future prosperity of the UK, so we must ensure it remains internationally competitive. The sector is keen to work with policymakers and regulators to ensure that the UK public has a stable and sustainable banking system that provides growth, encourages innovation and competition and reflects best practice.
Banks have a vital role to play in supporting sustainable economic growth by lending to businesses and investing in innovation, so we need a regulatory system that encourages that outcome. The ‘acid test’ for all regulatory reform must be: does it help create the right environment for sustainable economic growth and job creation?
Our report on SME financing shows that when capital requirements are increased in a recessionary period, banks repair capital ratios by reducing their balance sheets and cutting new lending. At this point in the economic cycle, we need to keep in mind how we bolster financial stability while not limiting access to business finance to avoid weakening our economic recovery. The balance doesn’t feel right at the moment.