Carney tackles the 'Capital Taliban'

Source: Daily Mail, LondonJuly 27--THERE have been suggestions this week that Barclays has won a victory over what Business Secretary Vince Cable called the 'capital Taliban' at the Bank of England led by Lord King.迷你倉The lender is expected next week to unveil the deadline by which it must meet new leverage rules, which had sparked an extraordinary row between Barclays and the Bank.Antony Jenkins, the chief executive, claimed he would have to cut back on small business lending if forced to move on an accelerated timescale.The claim now is that new governor Mark Carney has delivered a 'snub' to his predecessor, by allowing Barclays more time to comply.Does this notion pass the reality test? The idea Mervyn King took an extremist view on bank capital, regardless of whether it would strangle lending to small firms, is well wide of the mark.King quite rightly wanted to see stronger and better capitalised banks, but he also took a very strong personal interest in improving the flow of credit to businesses up and down the country.For the record, Barclays has a ratio of just 2.5pc, which means that its assets would only have to fall in value by two-and-a-half pence in the pound for it to become insolvent.The vitriol against King is founded on the dubious idea that a requirement for more equity on one side of the balance sheet automatically compels the banks to reduce lending on the other.There are plenty of ways banks could boost capital while maintaining lending to the real economy, such as reducing casino activities or shedding non-core operations.Carney has said nothing publicly in this spat, so the insinuations that he has overturned a discredited King legacy come from anonymous briefings.They also contrast rather strikingly with his on-the-record statements on the subject.In his pre-appointment hearing, he told the Treasury Select Committee he agreed with the logic of raising the ratio, which sets a cap on the amount of loans a bank can make for every pound of capital it holds.Carney pointed out that the leverage ratio in his native Canada, at 5pc, is significantly tougher than the 3pc target for the UK.He also identified it as the main reason banks there 'fared as well as they did' in the financial crisis.In a speech in November last year in his capacity as governor of the Bank of Canada a文件倉d as chairman of global banking watchdog the Financial Stability Board, Carney said that 'a simple, but effective, leverage ratio has been imported from Canada into the global standard. In this light, many financial emperors around the world were seen to have no clothes'.Carney quite obviously will not want to regulate the recovery out of existence, but the record does not suggest he will be a soft touch for the banking industry.THE Government's 'Help to Buy' scheme may be boosting the mortgage market, but it is riddled with risks. The initiative, which is meant to solve the problem of credit-worthy borrowers who cannot raise a substantial deposit, is meant to have a three-year lifespan.But there is no exit strategy and there has to be a danger that the housing market will become hooked on taxpayer-guaranteed loans, as the stock market has become addicted to QE money.The fees the banks will pay the taxpayer to put up these guarantees have not been decided, and lenders will of course push to pay as little as possible.Providing backing to the banks so they can start giving out high loan-to-value mortgages again is a sensible idea, but the back-up does not have to come in the form of state guarantees.It would make sense as the scheme progresses to involve private sector insurers, on a commercial basis, and for the government to withdraw.COMPANY results announcements give the impression of being impartial documents, but many are highly-crafted spin.One usually has to wade through the pages to unearth the truth. The top sheet is almost invariably 'highlights' homing in on the most flattering aspects of performance.Measures such as 'underlying profit' (which has had the nasty bits surgically removed) are trumpeted, and investors have to hunt down the statutory pretax figure.The presentation is confusing for the experts, let alone private shareholders.The Financial Reporting Council, which says it is getting tougher, could do a real service by insisting on a proper format for results announcements that makes it harder for firms to bury bad news under a mountain of positive PR.Ruth Sunderland is Associate City Editor of the Daily MailCopyright: ___ (c)2013 Daily Mail (London, ) Visit the Daily Mail (London, ) at .dailymail.co.uk/home/index.html Distributed by MCT Information Services存倉