Regulator Denies City 'Witch Hunt'


The head of the Bank of England's regulatory body has denied a "witch hunt" against the financial sector as he defended its actions in tightening up rules.

Andrew Bailey, chief executive of the Prudential Regulation Authority (PRA), made the remarks amid signs of a backlash over some of the changes being introduced in the wake of the financial crisis.

HSBC has said that it is considering moving its headquarters out of the UK in the wake of regulatory and structural reforms.

These include "ring-fencing" to separate banks' risky investment arms from retail banking operations serving the likes of mortgage borrowers, current account holders and small businesses.

Earlier this month in an article for the Daily Telegraph, former Barclays chairman Sir David Walker, said the arguments for ring-fencing had become redundant.

"There is incredulity in other countries at the prospect that the UK might persevere with a policy that would irrevocably damage its banking system," he said.

The PRA is implementing the ring-fencing policy as well as new rules governing senior managers in the sector.

Writing in the foreword to the PRA's annual report, Mr Bailey said: "One of the most depressing aspects of the experience of the financial crisis was the lack of a clear sense of who was responsible.

"Our desire for change is not out of a wish for witch hunts, but because clear responsibility creates the incentive to manage and mitigate risks.

"I want to be clear that it is not our intention to change the principles of good governance and we do not wish to create artificial barriers within firms, particularly between legal entities.

"Rather, our overriding objective is to ensure clarity on who is responsible for safety and soundness."

:: The Bank of England's annual report revealed that governor Mark Carney was paid £879,773 in the year to February 28 – his first full financial year in charge.

Mr Carney's basic salary is £480,000 and he declined pay increases of 2% in 2014 and 1.5% in 2015, the report said.

His remuneration also includes a £250,000 accommodation allowance "to reflect the additional cost of living in London rather than Ottawa" as well as the value of medical insurance and health checks, plus just over £148,000 on pension benefits.

For 2013/14 the total sum is £586,010 reflecting the fact that Mr Carney joined the Bank in July 2013.

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