Call for levy on banks for future bailouts
Published 29/01/2010 | 05:00
THE Finance spokesman for Britain's opposition Conservative Party supports the idea of a worldwide levy on banks to fund future bailouts, modelled on one introduced by the Swedish government.
"The example that I hold out is the Swedish example," said George Osborne, who is favourite to become Chancellor of the Exchequer after the UK general election this year.
"It's a more forward-looking approach; not just looking to pick up the costs of what went wrong," he said at the Davos forum.
A Conservative government would support such a levy, as well as a split of proprietary trading from retail banking, if it were part of an international agreement, but the UK had to be careful about its competitive position.
The chairman of Lloyd's insurance market Peter Levene, said London will lose financial firms to Switzerland and China if the UK implements new regulation without international co-operation.
"If the UK, the US, France, Germany all get together and say 'We're going to tighten regulation,' then some people are going to say, 'Fine, we'll go to Switzerland, Singapore or Shanghai'," Levene said.
"Unless you've got some co- ordination, it's not going to work," he said.
Only three of the 19 publicly-listed insurers in Lloyd's of London have their headquarters located in the UK and one of those, Chaucer Holdings, said this month it is considering relocating overseas because of tax.
Levene compared the current debates on regulation to the US implementation of the Sarbanes-Oxley law in 2002 in the aftermath of the Enron and WorldCom collapses.
"When the United States brought in Sarbanes-Oxley it was a great benefit for London," he said. "Without co-ordination on a global scale, you'll just have regulatory arbitrage (where firms move for lighter regulation)," he said.